In a 19 November 97 letter from Perpetual Trustees to our lawyers, John Mallon stated that the original purchase price of Bideford Forest was $2,672,500.  Indeed, the title transactions downloaded from Terranet indicate that Rangitumau purchased 226.1181 ha in June 95 for exactly that amount.  NZEB received a procurement fee of $133,625, which is 5% of that amount.  That should total $2.806 million.  But the New Zealand Forests Trust prospectus said Flat Rock Forests Trust sold it to them for $3.357 million on credit.  The 19 November 97 letter from Perpetual Trust to our lawyer said that NZFT sold it back to FRFT for $3,090,495, a difference of more than $284,000.  However FRFT’s unaudited 31 March 97 annual return (issued 12 Dec 97) said in note 6 that when FRFT reacquired Bideford, it cancelled $1,731,495 in debt owed by NZFT and cancelled $1,671,311 in units.  This totalled $3,402,806, a difference of almost $600,000 (the same amount as the down payment in cash NFZT had paid FRFT originally).

This means FRFT paid at least $2,672,500 + $133,625 + $730,306 (the excess of the $3.357 million sale price to NZFT over the return credit of $3,402,806) which = $3,536,431.  Forme’s March 97 value was $2.633 million.

This forest was originally owned by Bideford Forests Limited (now archived).  It was bought as the sole asset of Rangitumau Forest Limited, a company apparently set up for that purpose and was thereafter sometimes called the Rangitumau Forest.  This forest was listed in the 97 sales brochure as 172.5 ha freehold, though the full PriceWaterhouse report described it as a forestry right only.  The April 95 mortgage against the forestry right is for 226 ha.  Where are 54 ha.?

PW placed the cost of bush at $3.252 million.  (How they arrived at that figure is unknown.)  According to the 31 March 95 annual return and Appendix A of the 13 February 97 notice of a meeting to consider the Trust’s overlimit borrowing ratios, FRFT borrowed $1.53 million for this purchase and issued redeemable units to the vendor (valued at $1.20 and since redeemed) for the rest.  The trust’s borrowing limit had already been exceeded at that point, so why buy a forest then?  And on credit?  (Especially one whose chance to make a profit was marginal at best.)

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