Feb. 5 - KHF Foods Limited announces today that it has agreed to sell its Balfour and Betabake businesses to a company associated with the San Remo Macaroni Group (“San Remo”).
Under the agreements, San Remo will acquire the Balfours business conducted at Dudley Park (in South Australia) and the intellectual property and goodwill associated with the Betabake business at Milperra (in New South Wales). KHF has granted San Remo an option over the plant and equipment, inventory and property lease associated with the Betabake operations. The option expires no later than 30 April 2008.
San Remo will offer to employ the employees of the Balfours business on terms no less favourable than their current employment terms.
KHF will continue to operate the Betabake business under licence from San Remo through to 30 April 2008 (or such earlier date as the option may be exercised), at which time all employees of the Betabake business will be made redundant by KHF and paid their full entitlements.
The sale of the businesses will result in a write-off to KHF of approximately $10.0 million, inclusive of the severance pay and leave entitlements to be paid to the employees of the Betabake business.
Depending on the extent to which the option is exercised by San Remo, a further $2.3 million of proceeds may be realised.
The proceeds from this divestment will be used to retire KHF debt.
The Balfours business provides frozen and fresh savoury products into the national grocery market and fresh savoury and cake products daily into South Australia. The Betabake business provides fresh savoury and cake products daily into the New South Wales route market.
San Remo (based in South Australia) is Australia’s leading manufacturer of pasta products.
A meeting of KHF’s shareholders to approve the divestment is expected to be convened by mid-March 2008.