The proposal, which involves the creation of a new operational company to be partly floated and listed in New York, has been designed to address structural imbalances flowing from the group's success in the US fibre cement market.

About 70 per cent of Hardie's earnings are expected to be generated in United States in the year to March 1999, following the sale of non-core businesses in recent years and its focus on fibre cement and gypsum wallboard.

But Hardie managing director Keith Barton said management and shareholders remained in Australia, creating operational and financial inefficiences such as US Earnings being taxed at three levels before dividends reached share-holders.

"It is largely a strategic move that was brought about by numerousimbalances in this company," Barton told reporters.

"We think the solution we have solves not all of the problems we face in the future, but we are going to be set up perfectly for an international organisation."

Under the proposal, Hardie's operating businesses will be sold into a new subsidiary James Hardie NV, which will be incorporated in the Netherlands and which will seek a listing on the New York Stock Exchange.

About 15 per cent of the new group will be sold in an initial public offering (IPO), raising about A$200-A$300 million. A similar amount, or 50 to 75 cents a share, will be returned to James Hardie Industries shareholders.

James Hardie Industries would retain 85 per cent of James Hardie NV, as well as the group's non-core operations.

Hardie said it would restructure its debt, raising US$330 million of debt at 10-12 year maturities to replace existing debt with 2-3 year maturities.

The new international structure also offered financial efficiencies. "Both Australian and USshareholders would do substantially better because of reduced US corporate tax and reduced withholding tax," Barton said.

Barton, who will remain as chief executive until at least October 1999, said the board had not made any decision about further sell downs, which would be considered within 12-24 months.

He said no asset sales, plant closures or job cuts were planned with the restructure, but warned the proposal carried some downside.

The cost of running two corporate offices would add about US$4 million a year to group expenses and reporting requirements would be doubled, while the restructure itself would cost about A$6 million.

The share market welcomed the move, pushing the stock up 41 cents or 8.5 per cent at one stage to A$5.21, before it slipped back in afternoon trade to A$4.98.

The share price has run sharply in recent days, up from Friday's close at A$4.13.

James Hardie expected to release its US IPO registration statement in August and then release an explanatory memorandum toshareholders in the third week of August.

The final price of the IPO would be decided shortly after the plan was voted on by shareholders and after a road show and book-building process, expected in September. The proposal requires the approval of shareholders, but had the backing of 28 per cent shareholder Brierley Investments Ltd, Barton said.