TIDMPFD
RNS Number : 8202P
Premier Foods plc
30 October 2012
30 October 2012
Premier Foods plc ("the Company")
PREMIER FOODS ANNOUNCES CONDITIONAL SALE OF SWEET PICKLES AND
TABLE SAUCES BUSINESS TO THE MIZKAN GROUP ("MIZKAN") FOR GBP92.5
MILLION
-- Bank Agreed Disposal Target Significantly Exceeded Leading to
30% Reduction in Net Debt since 30 June 2012
Premier Foods today announces it has entered into a conditional
agreement to sell its sweet pickles and table sauces business (the
"Disposal") to Mizkan, for a cash consideration of GBP92.5 million,
subject to approval by Premier Foods' shareholders and consent from
its banking syndicate. Once the Disposal is completed, the Company
will have delivered around GBP370 million in disposal proceeds
since March 2012, significantly exceeding the GBP330 million target
it committed to achieve by June 2014 as part of its new financing
arrangements. This will represent a reduction of approximately 30%
in the Company's net debt since the position reported at the Half
Year(1) .
The Disposal includes Branston sweet pickle, ketchup, relish,
salad cream and mayonnaise, together with the Company's Bury St
Edmunds factory in Suffolk. Completion of the Disposal is expected
to take place early in 2013 and all employees at the site are
expected to transfer to Mizkan following an appropriate
consultation process.
Following completion of the Disposal, the branded sales mix of
the Company's Grocery business will increase to approximately
90%.
Michael Clarke, Chief Executive Officer of Premier Foods,
said:
"I'm delighted to have exceeded our disposal target 20 months
early while at the same time delivering three successive quarters
of sales growth and taking GBP40 million of overhead costs out of
the business this year. We can now focus our attention on driving
further momentum in our Grocery business and unlocking value in
Bread"
"Our disposals since March have achieved a healthy average
EV/EBITDA multiple of 8.9x based on current year trading and
expected overhead cost reductions. This is a good result in the
current market."
Kazuhide Matazaemon Nakano VIII, Chief Executive Officer,
Mizkan, commented:
"Branston Sweet Pickle is an iconic brand that has established a
market leading position. The Branston brand is also an excellent
strategic fit with our global portfolio and adds to our solid
foundation for growth in the UK."
Transaction highlights
-- The transaction includes the production, distribution, sales,
marketing and licensing of the Branston brand, a significant
private label business and the Bury St. Edmunds site.
-- Consideration of GBP92.5 million is payable in cash on
completion of the Disposal and is subject to an adjustment for the
value of inventory transferred at completion.
-- The proceeds of the Disposal will be used to pay down debt.
-- Premier Foods and Mizkan have entered into a co-packing
agreement pursuant to which Mizkan will continue to manufacture
certain cooking sauces and other products at the Bury St Edmunds
site for the next 15 years.
-- Premier Foods and Mizkan have entered into transitional
services arrangements to facilitate the smooth transfer of the
business.
-- The Disposal is conditional on the approval of the Company's
shareholders and consent from its banking syndicate, and is
expected to complete early in 2013.
For the financial year ended 31 December 2011, sales(2) of the
sweet pickles and table sauces business were GBP66.0 million, of
which 54% were branded sales. EBITDA(3) for the year ended 31
December 2011 was GBP11.7 million and Trading Profit(4) was GBP8.5
million. The gross assets of the business being sold were GBP81.8
million as at 30 June 2012. As previously announced, to help
mitigate the impact on the Company of this and other transactions
announced this year, the Company expects to deliver further
overhead cost reductions of GBP20 million in 2013, over and above
the GBP40 million of savings that will be achieved by the end of
2012.
A circular will be sent to shareholders in due course giving
details of the Disposal and containing a notice of a general
meeting at which a resolution to approve the Disposal will be
proposed.
-Ends-
For further information, please contact:
Premier Foods plc 01727 815 850
Richard Johnson, Corporate Affairs Director
Richard Godden, Head of Investor Relations
Maitland 020 7379 5151
Tom Buchanan
Brian Hudspith
Notes to editors:
1. Reported Net debt of the Company at 30 June 2012 was GBP1,269.4m.
2. Sales exclude Beetroot and Piccalilli which are manufactured
at the Bury St Edmunds site under a co-packing agreement.
3. EBITDA is profit before interest, tax, depreciation,
amortisation and selling, general and administrative costs.
4. Trading profit is before selling, general and administrative costs.
5. Mizkan is a 207 year old privately held international
manufacturer, based in Japan. Mizkan has a stable of well-known
international brands under the "mizkan" umbrella brand and is a
leader in the liquid condiment category. Mizkan is one of the
leading vinegar manufacturers in the world with operations in
Japan, the United States, the UK and other Asian countries.
6. In July 2012, Mizkan acquired Premier Foods' vinegar and sour
pickles business for a cash consideration of GBP41 million. That
transaction included the Sarson's, Haywards and Dufrais brands.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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