CSR’s demerger plan in tatters
The Federal Court of Australia has today blocked the demerger of the building materials and sugar group CSR.
CSR had been hoping the Court would approve their plans for a shareholder vote on a separation of their sugar and renewable energy divisions into a new company called Sucrogen. But those hopes were dashed this afternoon, with Justice Margaret Stone agreeing with ASIC that there is considerable uncertainty as to how they would fund the asbestos claims against the company. ASIC was joined in their concern by the NSW Government, the Asbestos Injuries Compensation Fund and James Hardie.
The Court ruled that CSR would be “less likely” to be able to meet their asbestos liabilities after a demerger, with Justice Stone explaining that “the demerger is inconsistent with public policy and commercial morality.”
CSR remains in a trading halt as they prepare a statement in response to the judgment.
Last month they received a $1.5 billion for their sugar business from China’s Bright Food, but rejected it on the grounds that the demerger offered shareholders better value.