22 August 2014 - Rubicon 2014 Annual Review
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Rubicon is a New Zealand-headquartered company.
It listed on the NZX in March 2001 ('Ticker' symbol of RBC) and as at July 2013, it had approximately 7,000 public shareholders on its register.
It was formed out of the separation of the Fletcher Challenge Group, acquiring those businesses that were unable to be acquired by Shell in its acquisition of Fletcher Challenge Energy. In addition, as part of the separation process, Rubicon assisted Fletcher Challenge Forests (FCF) in its re-capitalisation and listing, by acquiring certain forestry biotechnology assets from FCF and by underwriting an FCF rights issue.
Upon its formation, Rubicon's business portfolio comprised the following assets and investments:
- Energy Portfolio
- Shares in NASDAQ-listed Capstone Turbine Corporation
- A fuels terminal in Brisbane, Australia
- The Challenge petrol retailing network throughout New Zealand
- Forestry Portfolio
- A 17.6% ownership interest in Tenon (formerly FCF but since renamed to Tenon)
- The Trees & Technology treestock development business located in New Zealand
- A 31.67% interest in ArborGen - the world's leading forestry biotechnology joint venture (in which Rubicon, International Paper and MeadWestvaco are equal partners)
- An interest in 50% of FTSA - a eucalyptus forest and timber/plywood processing operation in Argentina
- A 3% interest in Genesis Research and Development Limited - a publicly listed New Zealand genomics company
- Cash of $13 million
Although formed from the Fletcher Challenge separation process with these assets, Rubicon is a stand-alone company with no affiliation with any other Fletcher Challenge entity. Its purpose is to create value for Rubicon shareholders by bringing value to its existing portfolio of assets - whether that be by restructuring businesses (as is the case with Tenon), by developing them further (as is the case with ArborGen and Trees & Technology) or by disposing of them (as occurred with our Energy portfolio) - as well as through selective new forestry investment.
Since listing in 2001, Rubicon has achieved the following restructuring of its businesses:-
- Sale of Capstone shareholding for $44 million in cash
- Sale of Brisbane fuels terminal for A$19 million in cash
- Disposal of Challenge network for $53 million in cash
The Challenge disposition was the last step in a complete exit of our Energy portfolio, from which Rubicon raised a total of $117 million.
- The return of $60 million to shareholders by way of a tax-free share buyback
This capital return was consistent with our belief that surplus capital should, as of right, be returned to shareholders.
- In April 2004, we announced the formation of Horizon2, a joint venture between Rubicon and Carter Holt Harvey (CHH). As part of this venture, Rubicon "rolled in" its Trees & Technology business and CHH rolled in its equivalent business known as Forests Genetics.
- In May 2004, we announced a partial takeover offer for Tenon to take Rubicon from its 19.99% ownership position to 50.01%. The offer closed on 3 June, with acceptances that would have taken us to more than 58% of Tenon. As our offer was for only 50.01%, all acceptances were scaled back to that level and the offer was declared unconditional.
- Through 2005 we acquired further Tenon shares on-market, and we currently own 57.4% of Tenon.
- In May 2005, we increased our ownership interest in ArborGen to 33.3%.
- In November 2006, we announced the sale of FTSA for US$5 million.
- August 2007 saw a series of transactions whereby Rubicon acquired CHH's 50% interest in Horizon2, and ArborGen acquired the respective tree improvement businesses of IP, MWV and Rubicon (ie Rubicon's Horizon2 business) for a total transaction value of US$60 million. This allowed ArborGen to significantly advance its business model. In one move, the acquisitions fundamentally repositioned ArborGen from a business in development to an established commercial entity.
Over this same period of time, Tenon has also been considerably restructured. This has included the sale of its entire forest estate, extensive investment in its US distribution activities, the sale of its Australasian structural solutions business, and the refinement of its activities to the North American marketplace. Tenon remains a publicly listed NZ company, and its activities are reported in its annual and interim reports. These can be downloaded from Tenon's own website at www.tenonglobal.com.
Our current focus is on bringing value to our existing Forestry Portfolio - particularly our large investments in Tenon and ArborGen - for the benefit of Rubicon shareholders. (ArborGen's website is www.arborgen.com.)
Rubicon is interested in new investment opportunities in its core forestry arena only where they can add value to existing forestry portfolio. However those opportunities will be weighed up against the alternative use of the funds - i.e. returning cash to shareholders. We are particularly disciplined in our approach to new investment, and the management incentive scheme we have in place (which applies a 17% cost of capital hurdle to annual share price increments) ensures that our focus is on shareholder wealth.
Full descriptions of our business activities and the current issues facing the Company can be found in our Annual and Interim Reports, which can be down-loaded from this website (click here). The history of our announcements to the NZX is also available (click here).