CSR Ltd
(ASX:CSR) will try to convince the Federal Court this morning that it will still be able to meet its asbestos liabilities if its sugar demerger proposal was to get the green light.
The company is challenging the court’s decision on February the 3rd to disallow a shareholders’ meeting to consider the proposed demerger of its sugar and renewable energy business.
In her original decision, judge Margaret Stone described CSR’s proposal as inconsistent with public policy and commercial morality, and raised concerns about varying actuarial estimates of the liability.
CSR will argue the judgment was flawed, partly because differences of opinion are normal in actuarial estimates.
The company is proposing to offload its sugar business into a new entity, called Sucrogen, with the asbestos liabilities remaining in the new aluminium, building products and property business, which would retain the CSR name.
CSR will argue that the remaining business will be able to meet its liabilities out of its expected cashflows.
If the company loses the appeal, a trade sale of the sugar business is possible, with China’s Bright Foods, which offered to buy the operation.
For the 12 months to March 30, 2009, CSR posted a loss of $326.5 million.
