Key Shareholder Supports Fletchers Rights Issue

Key Shareholder Supports Rights Issue For Fletcher Challenge Forests

AUCKLAND, 14 November 2000 – Fletcher Challenge Limited today confirmed that Xylem Investments Inc, a US-based specialist forestry investment fund manager, and the largest shareholder in Fletcher Challenge Forests, has announced today that it will be taking up in full its rights entitlements to 135.5 million preference shares.

“It is very encouraging to see such a large, long-term shareholder, owning 8% of the Forests Division, agreeing to support the rights offer and increase their cash investment in Forests” said Michael Andrews, Chief Executive Officer of Fletcher Challenge Limited. “Xylem clearly recognises the value inherent within Fletcher Challenge Forests, and endorses both its strategies and the recapitalisation. Their view is consistent with other major shareholders of the Forests Division,” he said.

The Chairman and Chief Executive of Xylem Investments, Stephen Hurley, said that he saw Fletcher Challenge Forests as a very important part of Xylem’s investment portfolio. “Fletcher Challenge Forests’ focus on sustainable, renewable plantation forestry, backed up by proven marketing distribution and manufacturing strategies, provides us with confidence that this is an excellent long-term investment. Furthermore, it is Xylem’s view that Fletcher Challenge Forests has, in its New Zealand assets, the ‘crown jewels’ of Radiata plantation forestry,” he said.

The Fletcher Challenge Forests Rights Offer was launched this week, and offers shareholders the right to receive, for each Fletcher Challenge Forests ordinary share held, two preference shares at a price of 25 cents per share. Trading in Rights began yesterday, and finishes on December 6. The Rights Offer closes on December 8 – this is the last day on which holders of Rights can subscribe for preference shares. The fully underwritten Offer will raise $427 million to recapitalise Fletcher Challenge Forests.

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