Auckland, Nov 13 (Reuters). New Zealand's Fletcher Challenge Forests Ltd said on Wednesday it planned a NZ$50 million ($24.6 million) share buyback and signalled a shift away from growing trees towards timber distribution and processing, returning excess capital to shareholders as it went. The company, still smarting from its failure to secure the Central North Island forest estate, also said it was no longer pursuing any ownership involvement in the 163,000 hectare estate. Chairman Sir Dryden Spring said Fletcher Forests was looking to move from the back end of the market - growing trees - to the front end in the form of more investment in distribution and higher value processed product. "That's a shift and it's a long term one. That should not be misinterpreted as selling forests overnight," Spring told a news conference after the company's annual meeting. Spring told the meeting that shareholder returns had been unacceptable and the current share price of NZ$0.22 ($0.11) was well below the company's net asset backing of 41 cents and below analysts' assessments of fair value at around 33 cents. Fletcher Forests has large accumulated tax losses available, which thwart its ability to pay tax free dividends, so a return of capital was seen as tax-efficient. "I think in the case of Fletcher Forests it (the buyback) makes a lot of sense," said one share market analyst. "There's no point in paying dividends because Fletcher Forests doesn't pay tax, it's sitting on a lot of tax losses," the analyst, who declined to be identified, said. Chief Financial Officer John Dell said the company would target a ratio of net debt to earnings before interest, tax, depreciation and amortisation of about three times from the current two times. The initial tranche of the buyback will comprise an on-market purchase of NZ$50 million, details of which will be announced in conjunction with interim results in February next year. Fletcher Forests shares, 17.6 percent owned by fellow Fletcher Challenge spin-off Rubicon closed up one cent at NZ$0.22. Fletcher Forests booked a NZ$249 million loss in the year to June mainly because of the write off of its investment in the Central North Island forestry partnership which was put into receivership last year. Fletcher Challenge made a bid to buy the 163,000 hectares estate in conjunction with China International Trust and Investment Corp (CITIC) earlier this year, but the deal was voted down by shareholders. "We are no longer pursuing any ownership involvement in the CNIFP," Spring said. Spring, in an update on the company's progress to date, said earnings before interest and tax (EBIT) in the first four months of the new financial year totalled NZ$28 million compared with NZ$20 million a year ago. The net profit after tax for the period was NZ$13.3 million against NZ$9.1 million last year ($1=NZ$2.03).