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Tenon shareholders vote on Taupo mill sale

NZ Newswire logoNZ Newswire 20/03/2017 Paul McBeth

Tenon shareholders will vote Monday on whether to sell its Taupo wood processing mill to a consortium of US and New Zealand investors and wind up the business.

Or to hold on to the assets and continue as a NZX-listed company.

The Auckland-based company's independent directors Mark Eglinton and Stephen Walker led the meeting in Auckland, with the rest of the board conflicted by virtue of their involvement with Tenon's controlling shareholder Rubicon, which is part of the consortium wanting to buy the mill for US$55 million.

If approved, shareholders will vote on two capital returns expected to generate $2.12 per share for investors, whether to de-list from the NZX and changing the constitution to speed up the liquidation process.

"If shareholders approve the resolutions put to the meeting today, there can be no doubt that the strategic review will have delivered considerable value to our shareholders," director Eglinton said in speech notes published to the stock exchange.

"More than US$125m (including dividends) will have been returned to shareholders, which will equate to a total shareholder return in US dollars of approximately 50 per cent since we started the strategic review process in 2015."

Shareholders approved the US$100m sale of the US operations to New York-based buyout firm Blue Wolf Capital last November, allowing the company to make a US$71m capital return via a share cancellation.

The Rubicon-led purchase of the Clearwood mill in Taupo trumped seven other competing offers.

Rubicon owns about 60 per cent of Tenon, and isn't allowed to vote on a component of the transaction to approve the related party transaction, nor can it vote on de-listing.

Tenon started turning a profit in 2014 after more than a decade of losses as the US home-building sector began to recover, supporting demand for its wood mouldings which it largely sold into the world's biggest economy via Home Depot outlets.

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