CHH sales possible after Hart completes review

Graeme Hart, New Zealand's third-richest man, plans a "comprehensive review" of Carter Holt Harvey after his $3.27 billion takeover bid for the nation's biggest timber company.

Offer documents filed with the stock exchange yesterday show Hart's review may result in CHH selling some businesses or making acquisitions.

The disclosure came as CHH said it would close its remanufacturing plant at Tokoroa with the loss of 24 jobs to cut costs as demand from builders in Australasia slowed.

Rank Group, Hart's investment company, offered $2.50 a share for CHH. He has already agreed to pay the same price for a 50.5 per cent stake owned by US giant International Paper.

"Rank expects it will undertake a comprehensive review of Carter Holt Harvey" after the takeover, the documents say.

In addition to asset sales, the company may consider selling shares or borrowing more.

Hart said he would not increase his offer, which is conditional on acquiring at least 50 per cent of the shares. CHH stock rose 1c to $2.54, suggesting Hart will struggle to get most minority shareholders to accept his offer.

CHH said Grant Samuel & Associates would prepare an independent valuation of the company and an appraisal of the offer. Rank will probably send its offer to shareholders in the second half of this month and CHH directors will make their recommendation about the same time.

The axing of the 39-year old Tokoroa plant is the latest in a series of closures as CHH cuts costs to counter a slowing in housing construction.

Only yesterday Statistics New Zealand said new home construction approvals had slumped 15 per cent in July from a year earlier. Excluding apartments, the number of approvals was 22 per cent lower than a year ago. Meanwhile, July approvals in Australia fell 9.5 per cent from a year earlier, the Australian Bureau of Statistics said.

Output from the Tokoroa plant, which annually makes 3000 cubic meters of product including finger-jointed board for mouldings and door and window surrounds, will be shifted to another plant at Rotorua.

"Our remanufacturing sites are facing a strong dollar, increased import competition and softening housing markets," said CHH wood products chief executive Tom Nickels.

Closure was the best option "given the age of the Tokoroa equipment and the challenging market".

The Tokoroa closure could take to 249 the number of workers the company has axed at its sawmills and board plants in Australia and New Zealand this year.

CHH acquired a 20,000 cubic meters-a-year remanufacturing plant as part of its $165 million purchase of four mills from rival Tenon in April. But Robyn Orchard, of CHH, said the decision to close Tokoroa would have been made anyway.

- STAFF REPORTER, BLOOMBERG