CSR wins demerger appeal

Posted by Nicole Eckersley on 27th April 2010

CSR has won its Full Federal Court appeal against the blocking of a proposed demerger of the CSR sugar and renewable energy business, Sucrogen.

The planned demerger was blocked by Justice Margaret Stone in February on the grounds that the demerger might leave CSR unable to cover the costs of its creditors, particularly asbestos claimants.  CSR appealed the decision on the grounds of errors in law.

On Friday, Federal Court Chief Justice Patrick Keane and Justice Peter Jacobson released a joint judgement on the case, stating that “The prospect that the reduction in capital associated with the demerger of CSR may materially prejudice the ability of new CSR to pay all its creditors, including asbestos claimants, is not so clear as to warrant the conclusion that the scheme could never be approved.”

The decision means that CSR may now propose a demerger to its shareholders.  The company will weigh the demerger against the backup option – continuing talks for the outright sale of the sugar business to China’s Bright Food Group, with an offer on the table for $1.75 billion.  CSR has previously stated that a demerger is its preferred plan.