CSR Limited today announced that it had reached agreement to divest most of its remainingTimber Products businesses, following contracts signed with various partiesfor the sale of its panels and solid timber operations.
The sale agreements announced today total around $420 million, which is above bookvalue. They include:
The $330 million sale to an Australian subsidiary of New Zealand forestry company, Carter Holt Harvey Limited, of CSR’s medium density fibreboard (MDF) and particleboard panels businesses, together with CSR’s sawmill at Oberon NSW and CSR’s position in the proposed Oberon joint venture* with Boral Limited.
The particleboard business comprisesfive plants with a combined annual production capacity around 610,000 m3:two plants at Mt Gambier in South Australia, and plants at Tumut and Oberonin New South Wales and Gympie in Queensland. The MDF business comprises the260,000 m3 p.a. capacity plant at Oberon.
The exit from the solid timber business, with the $87 million sale of CSR’s two remaining sawmills to the US-based Weyerhaeuser Company, one of the world’s largest integrated forest products companies.
The sawmills, all of which utiliseplantation softwood timber, are in Tumut, in New South Wales, and Caboolture,in Queensland. Their combined annual log throughput is around 800,000 m3.
Also included in the transaction isthe timber treatment plant at Gilmore, near Tumut and CSR’s 70% stake innational softwood timber distributor, Pine Solutions Australia. Weyerhaeuser- in a 50-50 joint venture with the U.S. investment bank UBS Brinson -purchased the other 30% of Pine Solutions Australia from CSR in May 1999.
CSR has also agreed the terms of sale for its remaining solid timber treatment plant at Narangba, Queensland, to Prime Pine Pty. Ltd. - a privately-owned company specialising in treated timber products - for an undisclosed price.
*The 50-50 joint venture with Boral involves the two companies’softwood mills at Oberon. CSR and Boral announced the signing of a heads ofagreement last week, and Carter Holt Harvey will now take CSR’s position inthat agreement.
The sales toCarter Holt Harvey and Weyerhaeuser are subject to regulatory approvals fromthe Foreign Investment Review Board and the Australian Competition andConsumer Commission. Approval will also be sought by Carter Holt Harvey andBoral for the Oberon joint venture.
The sales toWeyerhaeuser and Prime Pine are expected to be completed by 31 March. TheCarter Holt Harvey transaction is expected to be completed in April. Finaldates are subject to regulatory approval requirements.
CSR ManagingDirector, Mr Peter Kirby, said CSR employees in each of the divested businessare expected to transfer to the new owners.
"Iwould like to thank the 1,300 CSR employees who have contributed so much tothe improved performance of these businesses," he said. "They willbe transferring to well-regarded and successful companies, with clear longterm commitments to the timber industry."
Mr Kirbysaid divestment of the panels business and the remaining solid timberbusiness was a significant move in the restructuring of CSR’s businessportfolio.
Oncompletion of the transactions announced today, CSR will have sold all of itsTimber Products businesses, except the Featurpanels door panel operations.Discussions are currently underway on the sale of this remaining business.
When thetransactions announced today have been completed, sale proceeds from theTimber Products business will total almost $760 million.
"Thehard work by the Timber Products team in lifting the performance of thesebusinesses to enhance their value, together with appropriately-executed dealmaking, has clearly resulted in substantial value creation for our shareholders,"he said.
"Theoutcome for CSR has been much better than when the company first tried tosell this business in 1997."
Uponcompletion of the transactions above, CSR will have sold around $920 millionin assets since March 1998. Over the same period, around $600 million has sofar been invested in growth assets in the United States. These include aseries of quarries, sand mines and concrete pipe operations across severalstates, together with the construction of a new cement mill and a concrete pipeplant in Miami and new pipe plants in several other locations.
"We arereshaping the company to focus on improving and expanding our internationalconstruction and building materials businesses," said Mr Kirby. "Wehave identified a large number of potential investment opportunities - bothbolt-on acquisitions and more significant geographic expansions - and we arecontinuing to assess them against the company’s shareholder value criteria.
"We nowhave the financial flexibility to make choices between growth, share buybacksand other opportunities within our defined business portfolio."
Carter HoltHarvey is Australasia's largest forestry and wood products
companywhich also has pulp, paper, tissue, fibre packaging and distribution
businesses. Thecompany employs 10,500 people, has annual sales of A$2.5
billion andtotal assets of A$6.7 billion.
WeyerhaeuserCompany (NYSE: WY), one of the world’s largest integrated forest productscompanies, with sales of $12.3 billion. It has offices or operations in 13countries, with customers worldwide. Weyerhaeuser is principally engaged inthe growing and harvesting of timber; the manufacture, distribution and saleof forest products; and real estate construction, development and relatedactivities. Additional information is available at www.weyerhaeuser.com.