Wellington, July 31 NZPA - New Zealand's third-largest forest estate, Matariki Forests, has been withdrawn from sale, apparently because buyers had difficulty with funding.

The sale created uncertainty for 90 people employed directly and a contractor workforce of 1200 people.

The estate is unique in that it is made up of forests around New Zealand. About 40 percent are freehold and the rest are a mixture of forestry rights, Crown Forest Licenses and leases.

The estate was expected to fetch up to $1 billion. The shareholders were focused on selling the whole estate.

United States forestry company Rayonier owns about 40 percent of Matariki, with the country's largest fund manager, AMP Capital Investors, holding 35 percent and Deutsche Bank's REEF Infrastructure fund holding 25 percent.

Rayonier New Zealand managing director Paul Nicholls declined to comment on individual bidders, or what they bid, beyond saying there was a range of interests and potential buyers included timber management organisations.

Indicative bids were received in December and final bids were received this year.

The sale coincided with the global financial crisis, and a tightening of credit, but it was also conducted at a time when the New Zealand dollar was low.

Mr Nicholls said the ability to raise funds in the current market was difficult for all the people involved.

Potential buyers were seen as the NZ Super Fund, Maori interests as well as forestry companies and the so-called timber management organisations, which are fund managers specialising in investments in plantation forests.

New Zealand's largest pine plantation forests have been marketed in recent years. The Central North Island Forest Partnership and the forest estates owned by Fletcher Challenge and Carter Holt Harvey have all been sold in billion dollar plus deals.

US-based Hancock Timber Resource Group, the largest timber management organisation, has 236,000ha of plantation forests in New Zealand.

The shareholders were disappointed not to have a sale concluded, but at the end of the day they were not unhappy with the business.

"They will just continue to run the business in the near term to maximise return for their investors," Mr Nicholls said.

The estate consisted of about 132,000ha, of which 33,000ha is in Southland, 30,000ha in Bay of Plenty and 20,000ha in Hawke's Bay.

The estate was mostly grown for the structural timber market. Some of the estate was pruned but it was not a large amount.

"It was a different sort of business to Kaingaroa, which is all in one place," he said.

Kaingaroa Forest in the central North Island is one of the largest softwood plantations in the world.

Matariki had issues with access and vandalism of equipment in its Matahi Forest block in the Bay of Plenty in the wake of police raids in the area.

Mr Nicholls said the issue had been resolved and did not impact on the sale.

The vendor's adviser was First NZ Capital.

Mr Nicholls said the domestic market for forest products was flat but the export market had picked up. The higher exchange rate could change that.

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