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Yorkcor Evergreen - Contract Terminated With Compensation

Release Date: 25/01/2002 15:16
Code(s): YRK
Wrap Text
25 January,2002
YORKCOR EVERGREEN

In a cautionary announcement released today, JSE Securities Exchange listed forest products group, Yorkcor has announced that the Minister of Water Affairs and Forestry '"DWARF"' has given five years' notice of termination of one of its "evergreen" 'long term' saw log supply contracts. Affected are three plantations on the slopes of the Drakenberg escarpment which have supplied the group's York Lumber sawmill near Bushbuckridge since 1970. The timberlands under contract to Yorkcor are to be incorporated into a proposed "conservation area" for use by South African National Parks.
The Minister asserts that compelling environmental considerations justify the cancellation which is "in the interest of the people of South Africa." Yorkcor chairman Solly Tucker says that the Government had undertaken to ensure that "the plantations shall always be diligently and exclusively devoted to softwood afforestation. This promise is written into the
contract. There was also the undertaking to offer for every successive five year period, the entire volume of logs available from normal silvicultural operations, (but not less than a stated minimum), Tucker says that DWARF has not fulfilled this stipulation which is underpinned by Orders of the High Court and the Supreme Court of Appeal.
"We are very much better off," Tucker points out," that most other
sawmillers who were persuaded to give up, without any compensation, their long term saw log entitlements to make way for newcomers who are bidding for the State assets currently under the privatisation hammer. We were driven to litigate to safeguard our rights. Legal proceedings are still pending." Last year the Government paid Yorkcor over R6 million in damages, interest and costs after the Supreme Court of Appeal confirmed a High Court award against DWARF for under delivery of the volume to which Yorkcor was entitled.
Yorkcor's position is exceptional because is entitled to a five year run down period of normal silvicultural operations on the same terms as are guaranteed under its evergreen contract.
"Significantly," Tucker emphasizes, "we are also entitled to substantial compensation. To quote from the contract on the basis of the value of 'our York Lumber' business on a going concern basis, enjoying the benefits of this contract without interruption. The intention is to place it in least the same financial position as if the contract had not been terminated" . The evergreen contract provides for arbitration in the event that the parties are unable to agree the amount of compensation.
Tucker says that negotiations are underway with the Minister and his
officials, inter alia, to finalise the amount of compensation, the details of operating until the hand over on 1 January 2007 and settlement of the various accrued claims that Yorkcor has against the Department for breaches of contract. The discussions are also addressing the impact upon Yorkcor's workforce and the communities in the vicinity of the sawmill. They have benefited over the years from Yorkcor;s extensive social upliftment programmes in the Bushbuckridge region.
"In line with our policy of transparency, we will announce progress from time to time, if we can. I am confident that Yorkcor will emerge in robust shape from this development - we will be better placed financially, socially and politically," concludes Tucker Ends Issued for : Yorkcor Limited
Contact : Solly Tucker (012) 804 9730 /083 465 9900 Fax : (012) 804 8611 E-mail : Sol@yorkkor.co.za Issued By : Tish Stewart PR Associates
Contact : Tish Stewart (011) 325 4195 / 082 443 6399 Fax : (011) 325 4199 E-mail : Tish@tspr.co.za Date : 25 January, 2002

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