Coillte, the State forestry company, intends to acquire the major shareholding in Louisiana-Pacific Coillte Ireland Ltd within the next few weeks.
The Bellview, Waterford company manufactures Oriented Strand Board (OSB), a new product used in construction, furniture making and packaging, and is one of the biggest users of pulpwood in Ireland.
Coillte has a 35 per cent shareholding in the company and has an option since it was set up in 1996 to buy out the Portland, Oregan-based company.
Coillte has refused to divulge the cost of the buyout, but Louisiana-Pacific obviously is keen to dispose of the Waterford plant, following its own poor financial performance in the past couple of years and as part of its recently-announced corporate restructuring, which would see it consolidating operations in North America. The benefit for Coillte is that it provides a huge outlet for pulpwood, derived from the poorer parts of trees after harvesting to provide saw logs for saw mills.
In 2000, due to difficult trading conditions and an over-supply on European markets, profits declined to €1.4 million of which Coillte's share was €0.05 million, down from €0.68 million in 1999.
A Coillte spokesman said yesterday: "The most likely outcome is that Coillte would take over 100 per cent ownership. There is an approval process for companies in State ownership. It would also be subject to a Mergers and Takeover application."
Louisiana-Pacific Coillte employs 170 people in Waterford and a further 330 people involved in harvesting and haulage. The plant is supplied from forests within a 100-mile radius of the plant, and has been working at roughly 70 per cent of capacity.
Louisiana-Pacific's own performance has been lack-lustre recently. Its net losses in 2001 totalled $172 million (€197 million). "Weak commodity pricing reduced our operating profits by about $200 million in 2001 compared to the prior year," its chairman and CEO, Mr Mark A Suwyn, reported last month.
He said the company's exit from the pulp business had been very costly, with reported losses of $100 million. They were no longer running any pulp mills and most remaining exit costs had been reserved.
