RNS Number:2563H
CSR Ld
10 February 2003

CSR RELEASES EXPLANATORY BOOKLET FOR SHAREHOLDERS ON DEMERGER PROPOSAL





CSR Limited (CSR) today lodged the explanatory booklet on its demerger proposal
with the Australian Stock Exchange.



The booklet is expected to be distributed to CSR's 112,000 shareholders after
printing, in approximately two weeks.  Shareholders will be asked to vote on the
demerger at a meeting to be held in Sydney on 25 March.



The demerger is in line with the CSR strategy over the past five years and
involves spinning off the group's heavy building materials assets (primarily
aggregates, premix concrete, cement and concrete pipe & products) from the other
CSR group businesses.



The demerger would result in two separate Australian companies, both listed on
the Australian Stock Exchange:



*          Rinker Group Limited (RGL) - a focused, heavy building materials
group, comprising Rinker Materials Corporation in the US and the Readymix and
Humes businesses in Australia and Asia.  RGL is expected to be one of the top 10
heavy building materials stocks in the world, based on a number of measures,
including cash flow.  It is expected to continue its growth strategy of building
strong regional market positions for its key products.   As a separately listed
company, with a strong financial position, substantial cash flows and expected
investment grade credit ratings, RGL should be better positioned to participate
in the ongoing consolidation of the international heavy building materials
industry.  With around 85% of earnings* from Rinker Materials in the US, it is
expected that over time, investors will value RGL more in line with its US
peers.



*          CSR Limited, after the demerger, will be a diversified, Australian
company, holding some of the best known household brands in the country.  The
group will comprise three businesses  - CSR Building Products, Aluminium and CSR
Sugar.  Combined, CSR's three businesses have a stable earnings history,
generating returns well above their cost of capital.  CSR is expected to focus
more effectively on the respective strengths of these businesses and to pursue
value-adding, low risk growth options, which have previously ranked as a lesser
priority for the current CSR group.  CSR is expected to retain investment grade
credit ratings, reflecting its strong financial position and significant cash
flows.  CSR, after the demerger, is expected to distribute 60-70% of available
operating profit as dividends.  A high level of franking is generally expected..



Based on historical performance, the businesses within both the RGL and CSR
groups generate substantial cash flows.  RGL and CSR are expected to be included
in the ASX Top 50 and Top 100 stocks respectively.



Credit ratings agencies Standard & Poors, Moody's and Fitch have each provided
indicative credit ratings for CSR and RGL, all confirming CSR's expectation of
investment grade credit ratings for both stocks. All three ratings agencies have
the current CSR group on review as a result of the demerger proposal.  The
indicative credit ratings, while lower than those currently assigned to the CSR
group, are investment grade ratings which should allow sufficient access to
domestic and international debt funding, as required.



THE DEMERGER PROCESS



If the demerger is approved by shareholders:

*          Eligible CSR shareholders will receive one RGL share for each CSR
share they hold

*          The demerger will be achieved by way of CSR declaring a special
dividend (69 cents per ordinary share), and undertaking a capital reduction (84
cents per share).  CSR shareholders will not receive these amounts in cash.
Instead, the amounts will be compulsorily used as payment for the RGL shares to
be issued to eligible CSR shareholders.  The Australian Tax Office has indicated
that it will grant demerger tax relief to this process.



Shareholders will vote on the demerger proposal and the capital reduction and
related matters at consecutive meetings on 25 March, commencing at 10am in the
Sydney Convention Centre, Darling Harbour, Sydney.



Once the demerger is approved by shareholders, it will be subject to final
approval from the Federal Court, expected to be 28 March.  RGL shares are
expected to commence trading on the ASX on a deferred settlement basis on 31
March.  Simultaneously, CSR shares would begin trading ex-entitlement to RGL
shares. RGL shares are expected to be issued to eligible shareholders on 11
April. RGL and CSR will prepare separate accounts on a demerged basis from 1
April 2003.



CSR Chief Executive Officer and Managing Director Peter Kirby said the demerger
was the best way to add further value to shareholders over time.



"Directors unanimously support this proposal and are confident that it is in the
best interests of our shareholders.



"A demerger will facilitate choice for the different types of shareholders -
those who prefer RGL's growth focus and those who prefer CSR's higher, franked
yields.   We have spoken to many investors since we first announced our plans in
November last year, and indications are that both companies will be
well-regarded and prove attractive to these respective shareholders.



"We do not expect the additional value to emerge overnight, but we expect to see
it over time," said Mr Kirby.



"Since 1998 we have worked hard to generate significant shareholder value,
investing A$2.8 billion in 25 acquisitions in the US heavy building materials
sector - whilst simultaneously separating the other assets, via 22 divestments
generating around A$1.5 billion.



"This demerger will continue that process, enabling both the RGL and CSR groups
to focus more effectively on their respective strengths, and further improve
their performance against their peers.  The delivery of shareholder value,
through the cycle, will remain the number one objective of both companies."





*  Business earning before corporate costs, interest & tax for the year ended 30
September 2002

#  The explanatory booklet is available on the CSR website at www.csr.com.au.





10 FEBRUARY 2003
                                                                  CA&IR 06/03


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