COMMERCIAL Canty Timber Products files prospectus

Press, Volume CXIV, Issue 33527, 7 May 1974, Page 20

COMMERCIAL Canty Timber Products files prospectus

Canterbury Timber Products, Ltd, yesterday filed its prospectus for a public issue of 2,510,000 shares of ,100 c each, to partly finance the erection of a fibreboard plant at Rangiora. and to provide adequate working capital.

C.T.P. was incorporated in Christchurch last year as a private company with a capital of $1,740,000. The flotai tion will raise capital to ‘ $4,250,000. ■ The original shareholders are Reese Bros, Ltd, ! $750,000; Addington Timber Co.. Ltd, $99,998; M.S.D.i Speirs, Ltd $639,999; Dr and Mrs O. F. Haylock $250,000; : others $3. ! Reese Bros is an oldI established Christchurchbased company with interests in timber, builders’ supplies, ' flooring and plastics; Adding--1 ton Timber is an associate i company specialising in milling and marketing timber ; products. M.S.D.-Speirs, a listed public company, is one of the i largest timber and builders’ supplies merchants in the i southern half of the North i Island; it has forestry interests and is substantially involved in subdivision and housing construction. Dr Haylock is chairman of i M.S.D.-Spiers and chairman of Taupo Totara Timber Company prior to its take--over by N.Z. Forest ProI ducts.

The directors are D. D. A. ■ Reese, Christchurch (chairI man), Dr O. F. Haylock, j Bulls, M. B, Restall, Christchurch, A. L. Woodward, ; Marton, M. J. Moriarty, Wellington, H. W. Revell, Christchurch, and L. M. Gillions, Christchurch.

The latest estimate of the cost of the project is $10,131,641 — it is the largest venture to be launched in the South Island for some time.

The balance of the funds i required will be raised by the I issue of debenture stock, I securing a mixture of short, I medium, and long term bori rowing. The concept of the Veni ture is the manufacture of a

inew product for New Zealand — fibreboard — by ; converting wood chips and -other timber waste products -by the use of a defibrating i plant and mixing the fibres . with either phenol or urea (formaldehyde and curing under high pressures and temperatures. The process is a proven one in North America. Japan and Europe, and successful tests were conducted in Sweden with Canterbury samples. The resultant board can be produced in a wide variety of sizes and thicknesses; it is water resistant and suitable for use under all-weather exterior conditions. The product compares favourably with particle board, and commands a premium price; overseas its use is growing at a faster rate than any other form of processed timber products, the directors say. The new company has a contract with the New Zealand Forest Service for the purchase of 30 million cu. ft. of sawlogs and 34m cu. ft. of roundwoods available from the three State Forests at Hanmer, Balmoral, and Eyrewell. This supply is sufficient to last about 13 years; the company will also tender for further raw material from Other sources, especially the large Ashley State Forest. Although the capital costs of plant to make fibreboard are higher than those for plant to make other board, the directors say that in the long run the superior product will capture a significant portion of the existing board market. The estimated cost of plant is $7,155,106, of which about ssm worth is imported from Canada; this contract is at a fixed price and includes technical assistance until well after the plant’s performance to rated capacity. Fifty acres of land have been purchased at Ashley, three miles north of Rangiora; the land has been rezoned. The plant is expected to be in production by September next year; its capacity on a three shift basis it 22 million sq. ft of board. The original feasibility study was prepared on three .assessments: high, low, and predicted. The directors are confident ithat the targets in the pre-

dieted assessments can be met.

An updated feasibility study shows that, given reasonable trading conditions, the first financial year ending March 31, 1976, and including only six months production, will show a loss of about sl.2m. The next year will show a small profit, even though pro-I duction does not reach predicted operating levels. Thereafter, tax-paid profit will average more than $BOO,OOO a year, allowing for deferred taxation and the effect of writing off depreciation at rates lower than claimed for tax purposes. This would represent an earning rate of 19 per cent on the $4,250,000 equity capital. The directors expect -to pay a maiden dividend of 10 per cent for the year to March 31, 1978. The shares are payable 50c on application, and 50c a share on November 1. Of the 2,510,000 shares 1,600,000 have been reserved for allotment to institutions, sub-underwriters, clients of the organising brokers, and employees. The balance of 910,000 shares is available for subscription by the public. The issue will open on May 22; it has been fully underwritten by Francis, Allison, Symes and Company, and Associated Underwriters (N.Z.), Ltd. Hamilton, Hindin, Greene and Company, members of the Christchurch Stock Exchange, are associated with the issue as organising brokers. Stock exchange listing has been applied for.