Sale of NZ's Matariki forests scrapped

WELLINGTON, July 31 (Reuters) - The sale of New Zealand's third-biggest forest estate worth as much as NZ$1 billion ($653 million) has been scrapped because of ongoing tightness in credit markets, the part owners said on Friday.

Joint venture Matariki Forests Ltd, 40 percent owned by U.S. forest group Rayonier (RYN.N), said the proposed sale of the 140,000 hectare (343,000 acre) estate had attracted strong interest, but the owners had decided not to sell.

"The shareholders believed that the continued weakness in the capital markets created uncertainty around funding," Rayonier NZ managing director Paul Nicholls said in a statement.

The other partners in the consortium are funds managed by AMP Capital Investors (AMP.AX) and clients of a Deutsche Bank fund.

The estate of mainly radiata pine forests is scattered throughout the country, with around two thirds of production going to local processors and the rest for exports.

It was put up for sale last September as financial markets were being hit by the global credit crunch.

At the time Nicholls said the joint venture wanted to sell the estate in one deal but would not sell if the price was not right. Most interest had come from fund managers, with a couple of forestry companies also looking.

A successful sale would have seen Rayonier end its interest in New Zealand to concentrate on its North American business.

"They remain committed to Matariki Forests and are confident about future growth opportunities for the NZ forestry sector particularly with the signs of improvement in the global timber markets," Nicholls said.

The last major forest sale in New Zealand was in December 2006 when Carter Holt Harvey Ltd sold around 200,000 hectares to U.S. based Hancock Timber Resource Group, a deal valued at close to NZ$1.6 billion. ($1=1.532 New Zealand Dollar) (Reporting by Gyles Beckford)