CSR Limited said today that it had reached agreement in its negotiations with Amatek Holdings Limited on their respective MDF and particleboard operations, and the sale of CSR’s Formica® laminates business to Amatek .
CSR said the agreement had been signed by both parties, but was subject to a number of external approvals- including from the Foreign Investment Review Board in Australia and the Overseas Investments Commission in New Zealand.
The agreement with Amatek includes:
The sale to Amatek of CSR’s Formica® decorative laminates business in Australia and NZ.
A five year particleboard purchasing agreement. For the first four years, Amatek is expected to purchase from CSR its particleboard flooring requirements, and at least 75% of its other particleboard products. This agreement is non-exclusive and subject to various conditions, including competitive pricing.
Agreement to work together to realise the production and distribution synergies from the two MDF businesses. The parties have agreed that it does not make sense to merge their respective MDF assets at this time.
The Formica® sale would include CSR’s Australian and New Zealand businesses which produce and market Formica®decorative high pressure laminates and low pressure colour melamine laminated board products. CSR will achieve book value on the sale.
On particleboard, Amatek has agreed to enter into a five year supply contract with CSR, under which CSR will supply Amatek from existing capacity within its four particleboard factories - at Oberon, Tumut, Mt Gambier and Gympie. Amatek has an option to extend the supply agreement for a further seven years.
CSR and Amatek will continue to compete in the supply of commodity panels.
CSR’s MDF operations have continued to improve their performance with the conclusion of commissioning at the Oberon MDF plant, and a more favourable market outlook. The business is expected to make a profit this year.