The Australian Manufacturing Workers Union (AMWU) and Asbestos Victims Support Groups have suggested that a vote to split CSR into two separate businesses could result in part of the company being freed from its liabilities to asbestos victims.
Under the proposed demerger, a new company called Sucrogen will hold the sugar and renewable energy assets, leaving ‘New CSR’ with the manufacturing businesses and their associated asbestos liabilities.
CSR is also considering an offer from Chinese food conglomerate Bright Foods to buy its sugar business for $1.75 billion dollars.
AMWU national president, Paul Bastian, said the AMWU has serious concerns that any proposal to split the company through a demerger would reduce the pool from which funds can be drawn to compensate victims.
“If the sugar business was sold through a trade sale while still part of the CSR group, then the proceeds of that sale stay within the group, some of which can be earmarked to the group’s ongoing asbestos liabilities,” he said in an announcement on the AMWU website.
“A demerger, however, would result in a new company being established without any asbestos liabilities.”
The demerger plans were halted by the Federal Court in February 2010, after the judge ruled the split would leave insufficient funds to compensate asbestos victims.
The judge ruled the demerger offended "public policy and commercial morality" because of its potential impact on asbestos compensation.
But on April 23rd 2010, a full bench of the Federal Court accepted an appeal from CSR that will allow shareholders to vote on the proposed demerger.
The vote is now expected to take place in August 2010, but the proposed demerger has been opposed by the NSW Government, the AMWU, the Asbestos Injuries Compensation Fund and James Hardie.
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