Archive | Tenon

Tenon back into profit

Published: 11 August 2005


Tenon Ltd, the former Fletcher Challenge Forests, has turned round from a $42 million net loss in 2004 to make $29 million net profit after tax in the June 2005 year. Discontinued activities provided $64 million of the loss last year and $11 million of the profit this year.



Operating earnings from continuing activities fell from $37 million to $33 million. However, excluding unusuals & forex gains & losses, operating earnings from continuing activities rose by $4 million to $35 million. The company said underlying earnings growth was achieved in a challenging business environment and after an additional $5 million allocation of corporate support costs previously borne by the discontinued activities.


Tenon will state its results in $US from the new financial year because that’s where most of its business is.


Tenon sold its forest assets for $725 million in 2004, allowing the group to focus on its investment in higher-margin wood processing, marketing & distribution activities and return surplus capital to shareholders.


In April it sold its Structural Consumer Solutions business to Carter Holt Harvey Ltd for $171 million, including working capital movements.


The company returned $349 million of capital to shareholders in 2004 and another $321 million early this year out of its forest sales process.


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Tenon considers switching accounts to $US

Published: 14 April 2005


Tenon Ltd said today it was considering adopting the $US as its “functional currency” after it settles the sale of its Structural Consumer Solutions business to Carter Holt Harvey Ltd at the end of April.



Given the likelihood that the $US will continue to slide in the international market, and Tenon’s business is transacted almost entirely in $US, chief executive John Dell said the switch would give shareholders a better understanding of how their company is performing.


He said the underlying performance was masked by translation into $NZ. He, like many others, referred to the $NZ’s appreciation against the $US. Some cyclical highs have boosted the New Zealand currency, but most of the comparative change has been through a $US slide – which I suspect still doesn’t reflect the state of the US economy accurately.


Mr Dell said ebitda for the continuing business would be about $US29 million, which translates to $NZ41 million at a US70c exchange rate.


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Transfer of Tenon Structural To Carter Holt deferred for smoother transition

Published: 31 March 2005


Carter Holt Harvey Ltd’s purchase of Tenon Ltd’s Structural Solutions business, scheduled for completion today, has been deferred.


The companies said it should be completed by the end of April.


They said it had been deferred so they could address certain operational issues, which would enable a sooth transition of the business.


Earlier story:


24 December 2004: Carter Holt to get Tenon’s Structural Solutions


 


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Tenon gets court approval for $321 million capital return

Published: 2 February 2005


Tenon Ltd will send $321 million to its shareholders in 3 weeks after getting final High Court orders approving its share cancellation & capital return.


 


The company will cancel 3 in 4 shares, returning $1.5333 on each of 3 shares, equal to $1.15/share on the original 4 shares.


 


Record date is 16 February and the payout should be made on Wednesday 23 February.


 


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Carter Holt to get Tenon’s Structural Solutions

Tenon Ltd (the former Fletcher Challenge Forests Ltd) has conditionally sold its Structural Solutions business to Carter Holt Harvey Ltd for $165 million plus working capital movements, all payable in cash.


Including additional working capital released from log procurement, the cash to be received would increase to about $170 million.


Tenon chairman Tony Gibbs said in September the company would consider “credible unsolicited approaches” for the business, and Carter Holt (51% owned by US company International Paper Ltd) declared itself a bidder in November.The Structural Solutions business comprises Tenon’s mills & remanufacturing plants at Kawerau, Rainbow Mountain (near Rotorua) & Mt Maunganui, plus related sales, marketing & operational support functions.


Carter Holt will also assume certain obligations & liabilities, including wood & customer supply agreements.Mr Gibbs said Carter Holt was paying “a significant premium to the valuation range of $123-144 million determined for the Structural Solutions business by the Grant Samuel independent appraisal report issued in May this year, and also a premium to the implied value of this business in the current Tenon share price.


“In addition, significant further benefits will accrue as Tenon moves to a cost structure which more appropriately reflects the new narrowed focus of its residual Appearance operations.”The transaction is subject to completion of the Kawerau Sawmill front end upgrade project & other standard commercial conditions. Tenon believes all conditions should be fulfilled in the first quarter or early second quarter of 2005.Commenting on the sale, Mr Gibbs said: “The strategic review process just completed established that we could create more value for our shareholders by selling the Structural Solutions business than by retaining it.


“We conducted a very robust process and we received a number of credible, fully financed offers for the business. We are confident this is the best price we could achieve for the business, and the sale is clearly value-creating for Tenon shareholders.” He said Tenon would retain a significant market presence as a wood products processing, marketing & distribution company through its residual Appearance business.


“Our focus will be on growing our leadership position in the high-end appearance wood products markets on the international stage, where we believe there are good value opportunities for the company.” Tenon will retain its mill & other facilities at Taupo and its overseas activities, including its investments in North America (notably The Empire Co & American Wood Moulding) and in Europe (including the European furniture company Zenia House).When this sale & 2nd capital return are completed, Tenon will continue to have no debt and positive cash on hand.


Earlier stories:


2 November 2004: Carter Holt seeks Tenon mills


29 October 2004: Tenon gets several offers for Structural Solutions business


10 September 2004: Tenon to consider offers for Structural division

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Tenon gets favourable tax ruling on capital return

Tenon Ltd said today a binding Inland Revenue ruling confirmed its proposed capital return in February won’t be a dividend for New Zealand tax purposes.


That means Tenon doesn’t have to deduct any New Zealand tax from the return, no matter whether shareholders are NZ residents or not.


The company said no further tax obligations arose for New Zealand resident shareholders holding their Tenon shares on capital account.The proposal has to be approved at a shareholder meeting on Wednesday 22 December.

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Tenon to cancel 3 shares in 4

Tenon Ltd will apply to the High Court to start the process for a 2nd return of capital – this one for $321 million, on top of $350 million returned in March.


The company, the former Fletcher Challenge Forests, has sold out of forest ownership. It will seek shareholder approval at the annual meeting on Wednesday 22 December for the 2nd capital return.


Assuming approval’s granted – and also assuming a favourable tax ruling – it would obtain court approval in early February and make the payout in late February.


The proposal is to cancel 3 out of every 4 shares.


Shareholders would get $1.5333/cancelled share (total $4.60 for 3 shares cancelled, equating to $1.15 for every share held before cancellation).

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Carter Holt seeks Tenon mills

Carter Holt Harvey Ltd has declared itself as a bidder for Tenon Ltd’s structural & wood-processing business.


It said today it had sought Commerce Commission clearance to buy the assets, including:

Kawerau sawmill & remanufacturing plant
Rainbow Mountain sawmill
Ramsey Roundwood, and
Mount Maunganui Plywood.

Carter Holt Harvey is 51% owned by International Paper Co Ltd of the US.


Tenon is majority owned by Rubicon Ltd, and both were previously parts of the Fletcher Challenge conglomerate.


The Commerce Commission’s role is to determine whether the proposed acquisition has the effect of substantially lessening competition in a market.The commission said a public version of the application would appear on its website soon.


Website: Commerce Commission clearance applications page


 


Earlier stories:


29 October 2004: Tenon gets several offers for Structural Solutions business

10 September 2004: Tenon to consider offers for Structural division

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Tenon gets several offers for Structural Solutions business

Tenon Ltd said today it had received a number of formal proposals after effectively putting its Structural Solutions business on the block in September.


Chairman Tony Gibbs said in September the company would assess “credible unsolicited approaches” to buy its Structural Consumer Solutions business. The company deferred its annual meeting from 28 October so its review of Structural’s future and a capital return could be considered at the same meeting, which will now be held on Wednesday 22 December.


The company said today it intended to allow selected parties to carry out further investigations on the business. Meanwhile, it would be business as usual in terms of the company’s commitment to its customers & employees.


Previous story:


10 September 2004: Tenon to consider offers for Structural division

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Tenon to consider offers for Structural division

Tenon Ltd chairman Tony Gibbs – a man who’s spent much of his business career trying to carve up companies from the outside – said today Tenon will assess “credible unsolicited approaches” to buy its Structural Consumer Solutions business.


Tenon will defer its annual meeting from 28 October so its review of Structural’s future and a capital return can be considered at the same meeting.


“In recent weeks the company has received credible unsolicited approaches in relation to its Structural business activities.


“While the company is a very happy owner of the Structural business and had not sought to dispose of it, the board has determined that in the interests of all shareholders this potential opportunity must be explored, to determine whether we can create more value for Tenon shareholders from continued ownership & operation of the Structural business than we can achieve from a sale to a 3rd party.


“We do not know the answer to that question today, but expect to have an answer within a few months,” Mr Gibbs said.


Tenon has appointed Goldman Sachs JBWere to assist it.


The Structural business comprises mills at Kawerau, Rainbow Mountain (near Rotorua) & Mt Maunganui. It doesn’t include Tenon’s Appearance operations at Taupo, or its overseas activities in North America & Europe.


Tenon, the former Fletcher Challenge Forests Ltd, sold its forests and restructured into the 2 consumer solutions divisions. Structural increased ebitda 5% to $21 million in the June year on similar sales volumes, and improved its ebitda margin on manufactured product from 9.1% to 10.5%.


Mr Gibbs said in the result announcement the New Zealand Structural business was “reasonably mature, but Australia offers good growth opportunities for the company.


“We also see opportunities in the Australasian markets to further expand our product offerings in the structural & outdoor markets – again these product offerings will reflect a migration to higher value & higher margin applications of radiata.”

Website: Tenon

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