Court Blocks CSR's Demerger Plan

CSR Limited (CSR), a company that concentrates on the production of sugar and aluminum and manufacture of constructions and building materials have taken a major blow to its $3 billon worth of plan to demerge its operations after the court blocked the proposal on Wednesday. CSR authority previously planned to demerge its renewable energy and sugar business into spin-off named Sucrogen and another CSR company was suppose to maintain the aluminium, building products and property business. However, the plan seems to be under severe threat after the court went against the demerger with Federal Court judge Margaret Stone stating that the dermerger that the company proposed was not consistent as far as commercial principles and public policy is taken under consideration. She also added that the new CSR company could fail to meet its asbestos liabilities due to the fact that it would have less capital to work with.

The judge also dismissed an application submitted by CSR to call the shareholder meeting to discuss the demerger proposal. The NSW government and several other companies placed their objection when CSR asked the court to allow the shareholder meeting to go forward. It is to be mentioned that the ruling could lead towards a formal sale process of the sugar business of the company or could bring China based Bright Food to the center which is interested about the CSR assets.

In an attempt to get a new proposal approved by the court, CSR might consider appealing the judgment or modifying its proposal. The company stated on Wednesday that is was reviewing the ruling. While talking about the judgment, Ben Kakoschke, the research analyst of Patersons Securities stated that the decision of the court was unexpected for many people and it would have negative impact over CSR. Before the company asked for a trading halt prior to the judgment, the CSR Shares were trading at $1.84.