Aggressive share trading in Fletcher Challenge Forests (FCF) a day before the company announced a US$65m sale of forest cutting rights has prompted the Securities Commission to hold an investigation into insider trading.
The New Zealand company’s share price jumped eight cents during the first 45 minutes of trading the day prior to it announcing the sale of cutting rights of more than 8,940ha of mature trees to UBS Timber Investors and a capital return of US$140m.
FCF suggests the sudden rise was due to positive reports by analysts.
The sale of cutting rights in Tahorakuri forest and the adjacent Tauhara estate represent 8.2% of the company’s 108,500ha of planted forest estate.
The sale is conditional upon UBS receiving regulatory approvals by February 28, consent from its secured lenders and completing due diligence by March 12. It will enable the US-based company to harvest mature trees over the next 13 years.
FCF, which will manage the trees on behalf of UBS, retains the option to buy 50% of the harvested crop at prevailing market prices.
