CHH looks out for fibre option

By PAM GRAHAM

Carter Holt Harvey is not ruling out expanding the wood-fibre processing businesses it intends to focus on when it sells out of tissue.

The company has Credit Suisse First Boston working on an exit from its tissue business either by a sale to another company, private equity investor or public share sale.

The New Zealand share market's second-largest company has decided it is better at managing wood-fibre businesses than marketing fast moving consumer goods and that is where its future lies.

Chief executive Peter Springford said yesterday the company wanted to be positioned for opportunities in its chosen area and there were "some opportunities out there".

Analysts value the tissue business, excluding Sancella, a feminine hygiene joint venture with SCA of Sweden, at between $620 million and $680 million.

SCA, Europe's top tissue maker, is seen as a potential buyer of the tissue business as is Georgia Pacific and Procter & Gamble.

Any buyer gets a number one market position in toilet paper and paper towel sales in both Australia and New Zealand.

Carter Holt's brands include Sorbent and Purex toilet paper, Handee towels and Treasures nappies.

Springford said the company had not come to any conclusion about what exchanges an IPO would be on. The tissue business is managed by Australia-based executive Don Matthews.

"What we are trying to do is make more money ... and that is going to mean some reshaping of the business," said Springford.

Options for the money raised from a sale of the tissue business included reducing debt, increased payouts to shareholders, or acquisitions.

The company has already paid down debt.

Carter Holt has been buying wood processing businesses in Australia for a decade, taking on operations with technical problems in areas it had expertise in or others that were struggling as standalone businesses. Its biggest site in Oberon in New South Wales has a sawmill, flooring and medium density fibreboard plant.

It remains a small player in the Australian corrugated box market where Visy and Amcor together have 90 per cent of the market.

Amcor is now the world's largest maker of plastic bottles for soft drinks through a global expansion that has raised questions about whether its head office will remain in Australia.

Springford said Carter Holt had asked itself "what can we grow in?"

The company was good at running wood products, packaging, pulp and paper and forestry businesses.

The announcement of the intention to investigate selling the tissue business came at a time when the focus had been on whether Carter Holt would follow Fletcher Challenge and try to sell its forests.

Though Springford has said the company was "long on trees", he has also said that it is not a good time to be selling forests when margins had been squeezed by the high kiwi dollar and a rise in shipping costs.

"Anyone who wants to sell at the moment is not going to get a good price and I'm very strong on that.

"To maximise value we have to get our timing right and I believe it is the right time for this one [the sale of tissue]."