Orica says demerger plans on track

Tag : Paint Chemicals

Explosives, paint and chemicals maker Orica Ltd says its plan todemerge its consumer products business is on track to proceed fornow.
Asked if Orica would proceed with the demerger, given currentvolatile market conditions, managing director Graeme Liebelt toldjournalists: "At this point we are still progressing the demergerin the original.
"We're obviously going to have to keep watching market conditions.
"As it gets closer to the time we have to release the schemebooklet, we will keep that under active review.
"But at this point it's full steam ahead at the original plan," hesaid after speaking at a Committee for Economic Development ofAustralia lunch in Melbourne.
Mr Liebelt said market conditions for the consumer productsdivision would be the same whether it was part of Orica or astand-alone entity.
"Barring some set of circumstances, which are deeply unusual, wewould rather proceed with the strategy because in the medium termit's the right thing to do," he said.
Orica plans to demerge its consumer products division in February2009.
Orica announced in July that it would spin off the business, in amove to become a pure mining services provider and capitalise onthe resources booms.
The consumer products division includes paint and garden careproducts, with brands such as Dulux, Berger, British Paints,Selleys, Yates and Dynamic Lifter.
Mr Liebelt said current market conditions were not affectingOrica's expansion plans.
"We'll have to watch carefully as to whether the Chinese economy isaffected by recent events because, in the end, the growth of thosedeveloping economies is going to be the key as to whether there's acontinuing robust demand for our customers product (minerals)," hesaid.
Mr Liebelt said that if commodity prices were to fall, he expectedthe production plans of miners would remain largely unchanged.
"If commodity prices fall there will be some mines which are nowsub economic and will suffer as a result of that resource not beingexploited.
"But I think that will only be a marginal effect."
Mr Liebelt said that in the current financial climate Orica, likeother companies, would be paying more to borrow funds.
"In general terms, if you take into account the rise in the basereference rate and then the extra margin that companies like oursare going to need to pay, it might be in the tune of 150 basispoints versus 18 months ago."
© 2008 AAP
Brought to you by
When you see news happening: SMS/MMS: 0406 THE AGE (0406 843 243), or us. More