Australian courts have thrown CSR's plans to demerge its sugar division into doubt by blocking the proposal, warning that the spin off may damage the conglomerate's ability to meet asbestos liabilities.

CSR, which last week rejected a Aus$1.4bn offer from Bright Foods for the division, said the judgment "appears to have broad implications".

 Justice Margaret Stone, explaining her decision, said: "The critical issue that emerges from a review of the reports is that there is considerable uncertainty as to the conclusions about new CSR's provisions for asbestos claimants after demerger."

CSR, which ran blue asbestos mine in Western Australia until the 1960s, has set aside Aus$455m to cover known and future claims from asbestos victims.

Potential bidders 

The group, whose operations range from supplying building products to smelting aluminium, said it would review the ruling, and all its "legal and commercial aspects", before making a further announcement on the future of its sugar unit, Australia's biggest raw sugar producer.

A change of plan would appear to leave the door open to an acquisition by China-based Bright Foods, which restated that it was interested in the business, to be named Sucrogen.

However, analysts have cited a series of other names that could be interested, including Brazil's Cosan, the world's biggest producer of ethanol from sugarcane, America's Bunge, which has raised cash from the sale of Brazilian fertilizer assets, and the UK's Associated British Foods.

CSR shares closed up 0.5% at Aus$1.845 in Sydney.