Monday, April 22, 2024

Fletcher buys back seedling nurseries

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Listed tree genetics and seedling producer ArborGen has announced the sale of its New Zealand and Australian assets to a consortium led by Hugh Fletcher for $22.25 million.
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ArborGen will now be a company based in the United States for proprietary seedling genetics in loblolly pine and in Brazil, with production over 500 million seedlings annually. Photo: Wikimedia Commons

Listed tree genetics and seedling producer ArborGen has announced the sale of its New Zealand and Australian assets to a consortium led by Hugh Fletcher for $22.25 million.

The ANZ businesses have annual revenue of US$10m and consist of six radiata pine nurseries in NZ and one for pine and eucalypts in Victoria.

These nurseries have an output of around 40 million seedlings annually and have recently diversified into native plants, hops, blueberries, berries in the rubus genus and camellia bushes for tea.

Fletcher was previously a director of ArborGen up until 2019 when it was called Rubicon and an offshoot of Fletcher Challenge and Fletcher Building.

Because of that former association, ArborGen commissioned Grant Samuel to value the ANZ assets and ensure Geyser’s offer was fair.

ArborGen will now be a company based in the United States for proprietary seedling genetics in loblolly pine and in Brazil, with production over 500m seedlings annually.

Because of its Rubicon history, ArborGen still has over 5000 smaller shareholders in NZ, although its major shareholders live in New York State.

Its head office is in South Carolina.

Chair David Knott, one of the major shareholders, said the sale would release value for the relatively mature ANZ assets and provide flexibility for investment in the high growth US and Brazilian markets.

The consortium goes under the name of Geyser Limited Partnership and includes charitable trusts and families.

It will be able to use the ArborGen name for trading when accompanied by Australasia, Australia, ANZ or NZ.

The sale due for completion on November 30 is conditional on 75% of the permanent employees in ANZ accepting Geyser’s offer of employment.

ArborGen recently downgraded its earnings guidance for the current financial year to US$11.3-11.7m, comparable to the FY21 performance.

Following the FY21 results, which included a net profit of US$3.2m, ArborGen shares (ARB) rose in price from 20c to around 30c, where they remain.

ArborGen says it is the world’s largest commercial seedling supplier and a leading source of advanced genetics in the forest industries.

These products enable more consistent yield and quality of wood in a shorter tree growing time.

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