CSR consolidates after $800m capital return through Sucrogen sale

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Damon Kitney

CSR will slash the number of shares on issue after returning $800 million to shareholders through a special dividend and capital return.

This follows the sale of its Sucrogen sugar business.

The building materials and aluminium company said yesterday it would consolidate its shares in a ratio of one share for every three CSR shares currently held, if the proposed capital return was approved by shareholders.

About $138.6 million of the $1.843 billion it received from the formal sale in December of its sugar business to Singapore-based agribusiness Wilmar International would be returned via a special dividend of about 9.13c per share, the company said.

Another $661.4m would be returned via a proposed capital return of about 43.57c per share that required shareholder approval.

If the capital reconstruction is approved, the number of CSR shares on issue will be reduced from about 1.518 billion to about 506 million.

The number of shares on issue had swelled from two capital raisings in the lead-up to the proposed demerger last year of its building materials and sugar businesses.

The demerger was abandoned when CSR succeeded in selling Sucrogen to Wilmar.

“We have issued a lot of shares so it made sense that at the same time we hand capital back to shareholders, we cancel some shares,” CSR chairman Ian Blackburne said.

“We have had very high turnover and high liquidity. So with a one-for-three consolidation, our share price will be comparable to other companies in the building materials sector.”

CSR shares rose to their highest level since mid-December on the news, closing 3.6 per cent higher at $1.71.

A special meeting of shareholders to approve the capital return and other resolutions has been scheduled for February 8 at Sydney’s Wesley Centre.

Following the completion of the capital return, CSR expects to have a net cash position in excess of $75m and a net asset position of $1.5bn.

The latter includes a provision of $442m for all known claims and future asbestos-related liabilities and claims. The company will have no debt.

“We expect our share register to change, with some institutions going off who wanted exposure to sugar and others coming on who want a more pure play in the sector,” Mr Blackburne said.

Chief executive Jeremy Sutcliffe stepped down on December 31, but will remain a director. Former chief executive of building products, Rob Sindel, took over from Mr Sutcliffe on January 1.

While the company has flagged potential acquisitions, Mr Blackburne said the focus for the moment would be internal.

“We recognise there is much work still to be done to get the appropriate returns from the Viridian (glass business). We also have a new management team in place so we need to give them time to get their sea legs,” Mr Blackburne said.

In an interview withThe Australian early last month, Mr Sutcliffe said he did not see major acquisitions on the horizon.

“Rob (Sindel) in an ideal world sees a couple of years of internal fixes, continuing to improve Viridian, concentrating on product innovation, getting a few easy wins and smaller bolt-ons around our existing businesses, before he thinks of any step-out acquisitions,” he said at the time.

Source: www.theaustralian.com.au