The State forestry company Coillte could pay in the region of €33 million (£26 million) for the majority shareholding in Louisiana Pacific Coillte Ireland Ltd, the Waterford-based panel board manufacturer, in which it already has a 35 per cent stake.

It could assume total ownership of the plant by the end of March if the proposal is approved under mergers and takeover regulations. The company, which manufactures oriented strand board, the newest timber product used in construction, furniture-making and packaging, employs 170 people in the Bellview plant in Waterford, and 330 people in harvesting and haulage.

It is understood Coillte, which has an option to buy out Louisiana Pacific as part of its joint-venture agreement, is the only bidder. Because of its own financial problems in the US, Louisiana Pacific has decided to consolidate its operations in North America and divest itself of its only European interest.

The original investment in the project was £55 million (€70 million), of which Coillte put up around £10 million, as well as pulp wood supplies. However, there would have been depreciation over the years, so the book value of the company may now be around €51 million.

Waterford lost money in the early years and was operating at around 70 per cent of capacity last year, but is expected to be operating at full capacity during this year.

When it opened in 1996, Waterford was the biggest producer of oriented strand board in Europe. In the past two years, six other plants have opened, but Waterford is still one of the biggest. The engineered board has been used in mainstream construction in the US for around 20 years but only became popular in Europe in recent years.