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CHH purchase world-class Chinese panels business

CHH to purchase world-class Chinese panels business
21 June 2004

Carter Holt Harvey (CHH) today announced it has signed an agreement to purchase Chinese premium panels manufacturer Plantation Timber Products (PTP) for US$134 million.

PTP is a world-class manufacturer of speciality Medium Density Fibreboard (MDF) and flooring products, drawing on sustainably managed plantation timber to service the high growth domestic Chinese furniture, flooring and panels markets.

Chief Executive Officer, Peter Springford said the acquisition was consistent with the company’s growth strategy and a positive step into a market well known to Carter Holt Harvey: “The acquisition of PTP is part of Carter Holt Harvey’s commitment to growing its wood products segment in Australia, New Zealand and Asia. It is a clear demonstration of our ‘multi-domestic’ approach, giving us immediate scale and in-market processing close to our important Chinese customers.”

“PTP is China’s leading specialty MDF manufacturer with a history of high returns in a market forecast to achieve double-digit growth each year for the next six years. The business is a natural fit for Carter Holt Harvey, with two modern, low cost operations and an established distribution network that complements our existing panels manufacturing, product and market expertise. PTP also enjoys secure log supply through long-standing agreements with the Shishou Forestry Bureau and the Leshan Forestry Bureau – joint shareholders in the PTP operations.”

“This is a considered move, coming after 12 months of ‘on the ground’ assessment and extensive due diligence. Carter Holt Harvey has served the Chinese market for more than 25 years, exporting log, pulp, paper and wood products from both Australia and New Zealand. In addition, we already operate representative offices in Shanghai, Beijing and Hong Kong,” said Mr Springford.

PTP employs approximately 1700 people and operates a country-wide network of eight regional sales offices and twenty-six warehouses. The company’s two primary facilities at Leshan and Shishou in central China have a combined MDF capacity of 350,000 cubic metres, increasing Carter Holt Harvey’s focus on speciality MDF and expanding its existing MDF capacity by more than fifty percent.

In its seven years of operation, PTP has established a reputation for quality products and a formidable market presence with strong brands and access to a wider distribution network of more than 770 PTP-branded retail outlets. Demonstrating Carter Holt Harvey’s confidence in the business, PTP will continue to trade as a stand-alone company led by its existing management team.

Four Carter Holt Harvey appointees will sit on the five-person PTP operating company Board of Directors, with at least one senior Carter Holt Harvey manager likely to join PTP to ensure it can draw on the full support and expertise of Australasia’s leading forest products company.

Carter Holt Harvey intends to finalise the purchase of PTP in July 2004. A 15% shareholding in the PTP operations will continue to be held by the Shishou Forestry Bureau and the Leshan Forestry Bureau, long-term suppliers of plantation timber to PTP.

- ends -

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