re: IPSU - another Asset sale $115m !!
WOW - IPSU really doing well. Another asset sale nearly wiping away the entire logterm debt. Company selling DCB Brands (I guess their brands) to Hormel foods. Firm seems to retain packaged foods manufacturing expertise.
This gave IPSU shareholders a whopping $10 in cash per share liquidity. If mostly brands that were sold then this would be a fine special EPS because brands are off-balance sheet...
Imperial Sugar Company to Sell Subsidiary and Consolidate Refining Operations
Tuesday December 3, 8:45 am ET
SUGAR LAND, Texas--Dec. 3, 2002--Imperial Sugar Company (OTCBB:IPSU - News) announced today it has signed a non-binding letter of intent with Hormel Foods Corporation to sell its subsidiary, Diamond Crystal Brands ("DCB"), and that it will consolidate its cane sugar refining operations to its Gramercy, La., and Savannah, Ga., facilities, discontinuing sugar refining operations at its Sugar Land, Texas plant by the end of the year. The company will continue to run distribution and packaging operations at the Sugar Land facility and will continue to operate its headquarters activities in Sugar Land.
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According to company officials, these actions are necessary to create a strong balance sheet and to adapt to the current industry environment by helping to reduce costs and increase the company's efficiency overall. The expected purchase price for the DCB subsidiary is $115 million and the proposed transaction is expected to close by Dec. 31, 2002, subject to negotiation and execution of definitive documentation, government clearance and other conditions. Proceeds from the sale are to be used to pay down debt.
Imperial President and CEO Robert Peiser stated that Imperial Sugar will focus its business activities on marketing sugar products nationwide to industrial customers and retail chains. In addition to Sugar Land and the sugar refineries in Louisiana and Georgia, the company will continue to operate its two beet factories in Mendota and Brawley, Calif., and its packaging facility in Tracy, Calif.
Diamond Crystal Brands, based in Savannah, Ga., packages and sells various sugar, sugar substitute and salt and pepper products, savory products, drink mixes and dessert mixes to the foodservice and retail marketplace. It operates four packaging facilities and employs approximately 600 people. Under the terms being negotiated, Imperial will continue to sell certain items to the retail trade that had previously been marketed by DCB as well as bagged sugar to foodservice distributors and large foodservice accounts. The retail items will be packed under a multi-year co-pack agreement with DCB; in turn, DCB will buy the major portion of its sugar requirement from Imperial under a multi-year supply agreement.
"DCB is a very fine company with a very good management team and good people throughout," said Peiser. "We would have been pleased to continue our association, but its sale allows us to achieve our primary financial objectives."
After the consolidation of its refinery operations is complete, the workforce at the Sugar Land facility will be reduced from 426 to about 100. The final number will be dependent on pending negotiations between the company and representatives of the Machinist Union that will begin this week.
"These have been extremely difficult decisions to make because of the people involved and the strong heritage that Imperial has in Sugar Land," added Peiser. "Nevertheless, the industry dynamics dictate that we rationalize our capacity and strengthen our balance sheet. I am deeply appreciative of the significant contributions our employees have made to the company over the years and I am committed to ensuring that those affected are treated fairly and compassionately."
Imperial will provide Sugar Land area employees with outplacement counseling and assistance. Details of the separation package will be announced when negotiations between Imperial Sugar and union representatives are completed, and union members have ratified the agreement.
"Our long-term plans for Imperial Sugar are to build upon its strong relationships with industrial and supermarket accounts," said Peiser. "Our two primary retail brands, Imperial and Dixie Crystals, are by far the most recognized brands in the Southwest and Southeast, respectively, and we will continue to build on their customer loyalty. As importantly, we have made tremendous strides in the past few months restructuring the company's financial position. I am excited and encouraged about the prospects for this company going forward."
With 2,210 full-time employees across the country before these actions, Imperial Sugar is one of the largest processors and marketers of refined sugar in the United States. The company emerged from bankruptcy in August 2001 and since then has realized proceeds over $235 million from the sale of assets, including the expected proceeds from the DCB divestiture. In fiscal 2002, Imperial marketed 28 percent of the refined sugar consumed in the United States.
About Imperial Sugar
The Imperial Sugar Company is one of the largest processors and marketers of refined sugar in the United States and a major distributor to the foodservice market. Imperial Sugar is a name recognized and trusted in the food industry for more than 150 years, as the company's history dates back to the mid-1800s. With packaging and refining facilities across the nation, the company markets products nationally under the Imperial®, Dixie Crystals®, Spreckels®, Pioneer®, Holly®, Diamond Crystal® and Wholesome Sweeteners(TM) brands. Additional information about Imperial Sugar may be found on its Web site at www.imperialsugar.com.
Statements regarding future market prices and margins, future operating results, sugarbeet acreage, future operating efficiencies, future government and legislative action, cost savings, the future status of financing arrangements, liquidity and ability to finance our operations, proposed sales of assets or businesses and other statements which are not historical facts contained in this release are forward-looking statements that involve certain risks, uncertainties and assumptions. These include, but are not limited to, market factors, energy costs, the effect of weather and economic conditions, farm and trade policy, the ability of the company to realize planned cost savings, the available supply of sugar, available quantity and quality of sugarbeets, court decisions and actions, the results of negotiations, actual or threatened acts of terrorism or armed hostilities, legislative and administrative actions and other factors detailed in the company's Securities and Exchange Commission filings. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual outcomes may vary materially from those indicated. |
