Timber sell-off nets $500m for Hanson

MAGNUS GRIMOND

Hanson, the bricks to chemical conglomerate, is to raise $500m from the sale of southern US timber land and sawmill assets from its Cavenham offshoot.

The deal with Weyerhauser - a Washington-based pulp and paper group - comes just weeks after Hanson announced its four-way demerger plans which were poorly received in the City.

It means that the group is on course to net more than the expected $1.5bn from the proposed sale of all of Cavenham's timber and saw mill assets announced in December.

William Landuyt, chief executive of Hanson Industries, the group's US holding company, said: "This puts us ahead of schedule. We now believe total proceeds will comfortably exceed our initial estimates."

Hanson said that talks were continuing for the sale of the rest of Cavenham's southern US assets and timber land in Oregan, regarded as more valuable as it contains more productive, slower-growth woods.

The latest deal left the market unmoved yesterday, with Hanson's shares remaining unchanged at 186p. But Zafar Khan, an analyst with SGST Securities, said it could show that pessimism that the demerger plans cannot be completed on time may be misplaced.

"It's an early indication that the situation might not be as gloomy as some commentators think", he said.

Cavenham was one of the top ten timber land groups in the US, owning 1.75m acres. Its operating profit fell 19 per cent to pounds 97m in 1995 on the back of falling timber prices. Yesterday's sale includes 661,200 acres of timber in Louisiana and Mississippi and four southern saw mills, which produced 500m feet of sawn timber last year.

Hanson's vice-chairman, Christopher Collins, said the proceeds of the sale would be used to reduce the group's $3.8bn of debt.

Observers believe the group will redeem a pounds 500m convertible bond issued in 1991. The debt is expensive, bearing a coupon of 9.5 per cent, and Hanson has the right to repay holders from July this year.