Disposal of Malt
11 2월 2010 - 4:00PM
UK Regulatory
TIDMGNC
RNS Number : 0017H
Greencore Group PLC
11 February 2010
Greencore Group PLC
11 February 2010
GREENCORE GROUP PLC - PROPOSED DISPOSAL OF MALT BUSINESS
Greencore Group plc ("Greencore" or "the Group") announces that it has agreed to
sell its malt business ("Greencore Malt" or the "Business") to AxéréalUnion De
Coopératives Agricoles ("Axéréal") for consideration of up to EUR116.25 million
(the "Disposal"). By virtue of the size of the Disposal relative to the Group,
completion is, inter alia, conditional upon approval by Greencore shareholders.
A circular containing further details relating to the Disposal and convening an
Extraordinary General Meeting will be posted to shareholders shortly.
Greencore Malt principally comprises three Greencore owned malting businesses
based in the United Kingdom (trading as Pauls Malt), Ireland (trading as Minch
Malt) and Belgium (trading as Belgomalt). It is a leading European malting
business with seven malting plants which have a combined annual output capacity
of approximately 520,000 tonnes. In addition, Greencore Malt also operates a
consultancy arm, Global Malting Services.
The table below summarises the trading results of Greencore Malt for the years
ended 28 September 2007, 26 September 2008 and 25 September 2009:
+----------------------+-----------+-----------+-----------+
| Financial year ended | 28 | 26 | 25 |
| | September | September | September |
| | 2007 | 2008 | 2009 |
| | EUR million | EUR million | EUR million |
+----------------------+-----------+-----------+-----------+
| Revenue | 196.3 | 250.3 | 217.2 |
+----------------------+-----------+-----------+-----------+
| Operating profit | 13.0 | 23.9 | 20.5 |
| before interest and | | | |
| taxation | | | |
+----------------------+-----------+-----------+-----------+
Under the terms of the Disposal, upon completion EUR112.0 million will be payable
to Greencore less a deduction for estimated net debt in the Business at
completion of circa EUR5.0 million and a contribution of EUR5.6 million (which will
be used to fund the estimated pension deficit relating to active members of the
Greencore Malt UK pension scheme). Additional deferred cash consideration of
EUR1.25 million will be payable on the first anniversary of completion. Further
cash consideration of up to EUR3.0 million may become payable by reference to the
earnings performance of Pauls Malt and Global Malting Services in the year
ending 24 September 2010. The cash consideration payable to Greencore on
completion under the Disposal will be subject to adjustment, upward or downward,
to reflect the estimated level of working capital in the Business on completion
compared with the average level of working capital in the Business. A post
completion statement will be prepared to account for actual levels of working
capital, net debt and the pension deficit relating to active members of the UK
pension scheme as at the completion date. Upon completion, the Group will be
released from all of its obligations in relation to funding the working capital
requirements of the Business, including any amounts outstanding under trading
arrangements related to the purchase of barley stocks.
Certain of the Group's property assets (circa 50 acres including lands at Athy,
Co Kildare) which were formerly held within Minch Malt will not form part of the
Business to be disposed. In addition, the Group will be entitled to retain
insurance proceeds of EUR6.4 million, received in the current financial year, in
respect of the estimated reconstruction costs arising out of an incident at
Greencore Malt's malting facility at Ghlin, Belgium in 2008.
Liability in respect of the active members of the Greencore Malt UK pension
scheme will transfer with the Business upon completion. Post completion, the
Group will remain liable for the pension deficit related to the Greencore Malt
Irish pension schemes and the pension deficit related to pensioner and deferred
members of the Greencore Malt UK pension scheme. As at 25 September 2009, the
pension deficit net of related deferred tax (on an IAS 19 basis) in respect of
the Irish pension schemes and the UK pension scheme relating to pensioner and
deferred members amounted to EUR9.9 million.
Net proceeds from the Disposal will be applied to reduce Group borrowings. The
directors of Greencore (the "Directors") believe that this material reduction in
Group borrowings, a reduction of approximately 32% by reference to the Group's
comparable net debt position of EUR283.8 million at 25 September 2009, will
provide the Group with additional balance sheet strength. This will enhance the
Group's financial capacity to pursue future growth opportunities in line with
its strategy in the UK and US convenience foods sectors.
As at 25 September 2009, Greencore Malt had gross assets of EUR144.7 million. The
Disposal will give rise to a profit on disposal of approximately EUR20 million
which will be included in Greencore's results for the year ending 24 September
2010. Following the Disposal, the Group will no longer benefit from operating
profits generated by the Business. The Directors expect that the Disposal in
isolation would be earnings dilutive for the Group, before the impact of the
exceptional gain on the transaction or potential earnings progression in
Convenience Foods, in the current financial year by approximately 2.4 cents per
share (and in the year ending September 2011 by approximately 4.0 cents per
share).
Completion of the Disposal is expected to occur in late March 2010, subject,
inter alia to the approval of Greencore shareholders having been obtained.
Greencore Malt operates primarily as a standalone business within Greencore and
the Directors do not expect the Disposal to give rise to any material separation
issues.
Commenting on the transaction Patrick Coveney, Chief Executive of the Group
said:
"Today's transaction completes Greencore's journey into a focused convenience
foods player, with clear leadership positions in the UK market and a growing
regional presence in North America. While Greencore Malt has had a long and
proud history, and been a significant contributor to Group earnings in recent
years, it operates in a cyclical market now characterised by increasing levels
of brewer and maltster consolidation. Having tested the market with several
potential purchasers, we believe that the transaction announced today represents
an excellent deal for Greencore shareholders, but also one that will provide
enhanced opportunities for Greencore Malt's suppliers, customers and employees.
Looking ahead, this deal will tighten our strategic focus, strengthen our
balance sheet and provide capital to fund future growth over time in both our UK
and US convenience foods markets."
Analyst and investor call
Greencore will hold a conference call for analysts and institutional investors
today at 8.45am to discuss the Disposal. This call may be accessed on:
+---------+--------------+
| UK & | + 44 |
| USA | (0) |
| | 203 037 9148 |
+---------+--------------+
| Ireland | +353 |
| | (0) 1 |
| | 4360959 |
+---------+--------------+
Replay will be available through a conference call replay facility which will be
available for one week:
+---------+-------------+
| UK | + 44 |
| | (0) |
| | 208196 1998 |
+---------+-------------+
| Ireland | +353 |
| | (0) 1 |
| | 4864035 |
+---------+-------------+
| Access | 271009# |
| Code | |
+---------+-------------+
A presentation will be available on: www.greencore.com/investor_relations
For further information, please contact:
+-----------------+-----------------+---------------+
| Geoff Doherty | Group Chief | Tel: +353 (0) |
| | Financial | 1 605 1018 |
| | Officer | |
+-----------------+-----------------+---------------+
| Imelda Hurley | Head of | Tel: +353 (0) |
| | Investor | 1 605 1039 |
| | Relations | |
+-----------------+-----------------+---------------+
| Billy Murphy or | Drury | Tel: +353 (0) |
| Anne Marie | Communications | 1 260 5000 |
| Curran | | |
+-----------------+-----------------+---------------+
| Elizabeth Rous | Powerscourt | Tel: + 44 |
| or Rob Greening | | (0) 207 250 |
| | | 1446 |
+-----------------+-----------------+---------------+
Greencore Group
· A leading international producer of convenience food, as well as an
established ingredients supplier with operations in Ireland, the UK, the US, The
Netherlands and Belgium.
· Strong market leadership positions in the UK convenience food market
across sandwiches, chilled prepared meals, chilled soups and sauces, ambient
sauces & pickles, cakes & desserts and Yorkshire puddings.
· Extending presence outside the UK with fast-growing convenience food
businesses in the US.
· An established ingredients supplier with leading market positions in
Malt production for the brewing and distilling industries in Ireland, the UK and
Belgium.
Axéréal
· A French cooperative formed in July 2009 through a merger of Agralys
and Epis Centre.
· A leading player in the grain sector in Europe sourcing over 5 million
tonnes of grain and selling over 8 million tonnes annually.
· Axéréal controls 73 per cent of Ariane which in turn owns 100 per cent
of Boormalt, a large global maltster with annual production capacity of over
620,000 tonnes from its plants located in Belgium, France, Hungary and Croatia.
****
This information is provided by RNS
The company news service from the London Stock Exchange
END
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