The former EU Commissioner and Minister for Finance, Mr Ray MacSharry, is to be appointed as the new chairman of Coillte, the State-owned forestry company, The Irish Times has learned.

The board of the company is due to meet at the end of the month and an announcement of Mr MacSharry's appointment is expected some time before that. The Government will also be appointing two new directors to the Coillte board shortly.

The appointment is highly significant as the future of company is currently being examined by consultants appointed by the Minister for Marine and Natural Resources, Dr Woods. Among the options being considered are flotation, privatisation and strategic alliance.

According to sources last night, the appointment of indicates the Government anticipates the consultants will either recommend flotation or privatisation. The strategic alliance option is seen as the least likely outcome. If the company is floated a major shake up of the current board would be expected.

Coillte has more than £1 billion in land assets around the Republic, but only managed to make pre-tax profits of £18.1 million last year. It has been trying in recent years to gain more commercial freedom, but the blocking of its bid for the Northern Ireland saw milling company Balcas last year was a major set back.

Mr MacSharry replaces the outgoing chairman, Mr Patrick Cooney, the managing director of the Gleeson Group, who has served in the position for the last ten years.

Mr MacSharry holds several directorships in State and public companies. Among them are directorships in the Jefferson Smurfit Group, Green Property, Bank of Ireland, Ryanair Holdings and Telecom Eireann. He is also chairman of London City Airport, in which financier Mr Dermot Desmond has a large stake.