Moscow, Nov 29 - Russian baby-food and dairy products company Nutritek is selling its dairy business to RussAgroProm holding for $350 million, a newspaper reported on Thursday.
Vedomosti business daily quoted Nutritek's board chairman Georgy Sazhinov as saying the proceeds from the sale would be used to redeem credit linked notes (CLNs) worth $100 million, upgrade facilities and fund investments into southeast Asia.
Nutritek, a subsidiary of Nutrinvestholding , which floated its shares in April this year, is currently building dairy and baby food plants in China, Singapore and New Zealand.
The New Zealand Dairies plant was launched in October 2007, Vedomosti reported.
Sazhinov said RussAgroProm holding would immediately pay $250 million in cash. Nutritek will get the remaining $100 million if decides not to exercise an option to buy back 30 percent of the assets within the next five years.
Sazhinov also told Vedomosti the company would not face interruptions in raw milk supply, as it can be easily purchased from global producers. Besides, RussAgroPromholding has agreed to supply Nutritek with raw milk for the next 10 years.
In the first half of 2007, the dairy business generated $141 million, or 61.4 percent of Nutritek's total revenues, while sales of baby food amounted for $89 million, accounting for 38.6 percent, according to Vedomosti. But gross profit in the baby food segment was higher at $22 million versus $16 million in the dairy business.
"We are retaining the most profitable part of business," Sazhinov was quoted as saying.
Nutritek is 53.3 percent controlled by Marshall Milk Investments (MMI). The company's free float amounts to 46.7 percent, according to Vedomosti.
Nutrinvestholding raised around $200 million by placing 27.4 percent of its shares in a domestic offering in April 2007.