C&D News

KAFUS PRESIDENT DEFENDS COMPANY’S STATUS

Inquiries from shareholders regarding company stock value have prompted Mike McCabe, president of Kafus Industries Ltd., Boston, to issue a statement on the company’s status and strategy. Kafus owns CanFibre, a Toronto-based division that is constructing several facilities that turn waste wood into medium-density fiberboard (MDF), a building product.

In his April statement, McCabe notes that the company has experienced a number of achievements in the past year, including about $3 billion in sales contracts. But, he faults several delays for causing a shortfall in projected revenues.

Kafus was anticipating the start-up of its CanFibre facility in Riverside, Calif., much earlier than it eventually occurred. McCabe blamed delays in construction of the plant on the contractor, who was ultimately replaced by Kafus before construction of the building was completed. Claims in excess of $45 million are currently being pursued by CanFibre against the contractor. McCabe says the company plans to pursue the claims in an aggressive manor.

Since Kafus assumed control of the project, CanFibre has made progress in completing the facility, according to McCabe. Initial shipments of CanFibre’s AllGreen™ MDF—a 100% recycled content fire-retardant board—have begun. AllGreen shipments have been made “to Home Depot for sale in about 204 stores in the nine-state western region,” according to McCabe.

McCabe is optimistic that the second CanFibre plant, located near Buffalo, New York, will open on time and begin production in the third quarter of this year.

“The significant losses incurred by Kafus over the past year are directly attributable to the major financial burden placed on Kafus through the delays in the Riverside MDF plant start-up,” says McCabe. “I believe the losses are not an accurate reflection of the progress that Kafus has made in meeting its corporate goals.”

The company lost $38 million dollars in 1999.

BRITISH BUSINESS LOOKING TO BUY

The CEO of Aggregate Industries Plc, London, England, says his company may be looking toward North America for possible acquisition targets.

Noting that a merger of two other British firms—Anglo American Plc’s purchase of Tarmac Plc—will cause the sale of some assets, Aggregate Industries Plc CEO Peter Tom has told Reuters that “there are assets we would be interested in. They are divesting the whole business in the U.S. and there are parts we would be interested in.”

Analysts believe the assets to be shed will attract interest due to the TEA-21 program’s ability to generate substantial aggregates business during the next five years.