PRIVATISATION AGAIN A HOT NUMBER FOR YORKCOR

YORK TIMBER ORGANISATION LIMITED

PRIVATISATION OF THE STATE'S FORESTRY ASSETS IN MPUMALANGA HAS AGAIN EMERGED AS
A TOP PRIORITY FOR YORKCOR AND THE TIMBER INDUSTRY AS A WHOLE, YORK TIMBER
ORGANISATION (YORKCOR) CHAIRMAN SOLLY TUCKER TOLD SHAREHOLDERS AT THE COMPANY'S
EIGHTY-FIFTH ANNUAL GENERAL MEETING IN PRETORIA ON FRIDAY, 14 JULY 2000.
"ALTHOUGH THIS HAS BEEN IN LIMBO FOR NEARLY A YEAR, WE EXPECT FURTHER NEWS OF
PROGRESS FROM THE GOVERNMENT ANY DAY NOW," SAID TUCKER.

THE MPUMALANGA PACKAGE COMPRISES 120 000 HECTARES OF PRIME PINE PLANTATIONS:
IT IS THE LARGEST AND MOST VALUABLE PACKAGE EARMARKED FOR RESTRUCTURING.
YORKCOR WAS A LEADING PLAYER IN THE MADIBA FORESTRY CONSORTIUM WHICH LAST YEAR
BID FOR A LARGE PART OF THE FORESTS OF SAFCOL AND THE DEPARTMENT OF WATER
AFFAIRS AND FORESTRY (DWAF).  THE CONSORTIUM INCLUDED STRONG EMPOWERMENT
ELEMENTS: ITS CHAIRMAN WAS FORMER MPUMALANGA PROVINCE PREMIER MATHEWS PHOSA,
WHO LED IT TOGETHER WITH MADIBA MILLS MANAGING DIRECTOR NTHATO MOTLANA.  MADIBA
MILLS IS THE ONLY ENIRELY BLACK MANAGED AND OPERATED LUMBER MILL IN SOUTH
AFRICA.

"THE PRIVATISATION OF THE STATE'S FORESTS IS AN ATTRACTIVE PROPOSITION, BUT THE
PROCESS HAS BEEN UNNECESSARILY LONG AND ARDUOUS," TUCKER SAID.  ALTHOUGH THE
GOVERNMENT HAD IDENTIFIED AND NEGOTIATED WITH 'PREFERRED BIDDERS' FOR ABOUT
HALF THE WOOD RESOURCE ON OFFER, NO TRANSACTIONS HAVE AS YET BEEN CONCLUDED.
THIS HAS DISCOURAGED OVERSEAS INVESTORS.

SOON AFTER THE FIRST ROUND OF BIDS, THE MPUMALANGA PACKAGE WAS WITHDRAWN UNTIL
A FEW MONTHS AGO, WHEN THE MADIBA FORESTRY CONSORTIUM AND A FEW OTHERS WERE
INVITED TO SUBMIT EXPRESSIONS OF INTEREST TO BID AGAIN.  "WE WERE CANDIDLY
ASKED FOR SUGGESTIONS AS TO HOW THE PROCESS COULD BE IMPROVED AND THE

PROPOSITION MADE REALISTIC.  OUR CONSORTIUM SUBMITTED ITS EXPRESSION OF
INTEREST AND PROPOSALS A FORTNIGHT AGO AND WAS EXPECTING A RESPONSE ANY DAY
NOW," SAID TUCKER.

"TENSION PERSISTS OVER YORKCOR'S SO-CALLED 'EVERGREEN' LONG-TERM CONTRACTS.
SAFCOL AND DWAF HAVE SUCCEEDED IN PERSUADING MOST OTHER SAWMILLERS TO

RELINQUISH THEIR SECURITY OF TENURE UNDER SUCH CONTRACTS AND SUBSTITUTE TENURE
OF THREE YEARS OR LESS IN REVISED CONTRACTS.

"OBVIOUSLY, 'EVERGREEN' CONTRACTS SUCH AS YORKCOR STILL ENJOYS ARE SEEN AS
ENCUMBRANCES IMPACTING UPON THE VALUE OF THE FORESTS WHICH ARE FALLING UNDER
THE PRIVATISATION HAMMER," TUCKER TOLD SHAREHOLDERS.  "YORKCOR HAS RESISTED, AS
THE GROUP'S LOG SUPPLY ENTITLEMENTS HAVE A SUBSTANTIAL MARKET VALUE.  THIS
RESISTANCE HAS LED TO LITIGATION WITH SAFCOL AND DWAF.

"DWAF HAS APPEALED AGAINST A JUDGMENT IN FAVOUR OF YORKCOR BY THE HIGH COURT
DELIVERED IN JANUARY 1998.  THE DISPUTED JUDGMENT DEBT, INCLUDING INTEREST AND
COSTS, CURRENTLY AMOUNTS TO ABOUT R5 MILLION.  VARIOUS LEGAL STEPS INITIATED BY
SAFCOL ARE UNDERWAY, MAINLY TO TERMINATE OUR 'EVERGREEN' CONTRACTS AND HAVE
BEEN RESISTED BY YORKCOR.

"WE EXPECT THESE UNFORTUNATE DISPUTES TO COME TO A HEAD SOON.  OUR LEGAL
ADVISORS ARE CAUTIOUSLY OPTIMISTIC," SAID TUCKER.

PROCEEDINGS LAUNCHED BY YORKCOR AGAINST SAFCOL FOR ANTI-COMPETITIVE BEHAVIOUR
WERE ALSO PENDING IN THE COMPETITION TRIBUNAL.  "PROGRESS IN THE MATTER BEFORE
THE TRIBUNAL HAS BEEN FRUSTRATED BY A COMPLAINT LODGED WITH THE COMPETITION
COMMISSION ABOUT THE INVOLVEMENT OF A BIASED FUNCTIONARY DURING THE INITIAL
STAGES OF THE HEARINGS," SAID TUCKER.  HE SAID THE COMPLAINT WAS BEING TREATED
SERIOUSLY BY THE COMMISSIONER AND AN OUTCOME IS EXPECTED SOON SO THAT REVISED
PAPERS CAN BE FILED WITH THE TRIBUNAL.

"WE BELIEVE," SAID TUCKER, "THAT THESE PROCEEDINGS WILL REACH FINALITY ONLY
ONCE THE PRIVATISATION OF THE MPUMALANGA FORESTS IS FINALISED."

"SINCE PUBLISHING ITS RESULTS FOR 1999 LAST MONTH, WHICH INCLUDED A GROUP LOSS
OF R3,5 MILLION, OR 32 CENTS PER SHARE, WE HAVE MADE GOOD PROGRESS.  WE ARE
LOOKING TO A MODEST BLACK FIGURE FOR THE FIRST HALF OF 2000 AND A ROBUST RETURN
TO PROFITABILITY IN THE SECOND HALF.  TURNOVER IS ALREADY 11,3% BETTER COMPARED
WITH THE SAME SIX MONTHS LAST YEAR AND IMPORTANT BREAKTHROUGHS ARE EXPECTED IN
OUR EXPORT EFFORT, PARTICULARLY IN CHINA AND THE PACIFIC RIM," CONCLUDED TUCKER