Hanson's ambitious debt reduction programme took a giant step forward yesterday with the disposal of the remaining assets of the timber subdsidiary, Cavenham Forest Industries, for $1.59bn (pounds 1.05bn). The disposal means that the group has raised more than $2.8bn in the past two weeks, putting a big dent in the borrowings taken on last year from its pounds 2.5bn acquisition of Eastern Group, the electricity distributor.
Although the sale of more than 1 million acres of land in Oregon, Washington and Louisiana to Willamette Industries raised more than analysts had expected, the news failed to ignite Hanson's shares, which have languished since the news at the beginning of the year of a planned four-way demerger.
The shares closed just 2.5p firmer at 192p yesterday as the market continued to doubt the merit of breaking Hanson up into its chemicals, tobacco, building products and energy constituents. Although some brokers have put break-up values of as much as 224p a share on the group, confusion over the tax implications of the split have clouded sentiment.
William Landuyt, chief executive of Hanson Industries, the group's US arm, said that the Cavenham sale had raised more than expected and negotiations by Cavenham's management were concluded well ahead of schedule. "The net cash proceeds will reduce debt and gearing substantially," he said.
Last year Cavenham ranked as the ninth-largest private timberland owner or manager in the US with 1.75 million acres. In the year to September it made profits of pounds 95m, a fall of 19 per cent, as timber prices slumped.
The disposal follows the sale last month of 661,000 acres of timberland in Louisiana and Mississippi to the wood products company Weyerhaeuser. That sale netted Hanson $500m, which was also more than observers had expected.
At the beginning of this month, Hanson also announced that it was raising $780m from the public offer of its Suburban Propane gas subsidiary, the third-largest retail propane distributor in the US. Hanson plans to keep 34 per cent of Suburban, which will sit in its chemicals operation following the demerger.
The deal is a substantial leap for Willamette Industries, which prior to the acquisition owned 1.2 million acres of timberland in the north- west US and the south. The paper, plywood and pulp group, founded in the logging camps of turn of the century Oregon, now operates 91 manufacturing sites in 21 states. Profits in 1994 reached $178m.