Royal Group advances plan for business unit portfolio restructuring
December 21 2005 - 6:00PM
PR Newswire (US)
TORONTO, Dec. 21 /PRNewswire-FirstCall/ -- Royal Group Technologies
Limited (RYG: TSX; NYSE) today announced plans for further business
unit portfolio restructuring to enable greater focus of financial
and management resources on core business units, as well as plans
to divest of excess real estate and obsolete equipment. The Company
expects to record a write-down in its fourth quarter of 2005
related to these decisions, which is anticipated to be in the range
of $210 million to $250 million. This write down is expected to be
partially offset by a gain anticipated to be in the range of $30 to
$40 million, which will be recorded at the time certain asset sales
are finalized. Royal Group is anticipating cash proceeds from
divestitures of $110 to $120 million in Q1 2006, with additional
cash proceeds of $60 to $80 million expected during the remainder
of 2006. The anticipated cash proceeds and the write down are based
upon current expressions of interest in and/or independent
valuations, and/or management assessments of business units and
assets to be disposed of. Today's announcements are pursuant to
Royal Group's July 15, 2005 news release, wherein it advised that
the Company's Board of Directors had approved a four-part
Management Improvement Plan framework aimed at improving the
performance of the Company. Since the July news release, Royal
Group has announced intention to divest of five business units,
including Royal Alliance, Baron Metal Industries, Roadex Transport,
Royal EcoProducts and its Polish subsidiary, pursuant to the first
element of the Management Improvement Plan, which is business unit
portfolio restructuring. Today, Royal Group announced that it is
actively seeking to divest of its Amut and Ariostea machinery
manufacturing operations located in Italy, its subsidiaries located
in Argentina, Colombia, Mexico, the Pacific, Holland and Brazil, as
well as a tool manufacturing facility and distribution firm located
in North America. In addition, the company is engaged in active
negotiations to dispose of approximately 540,000 square feet of
excess real estate located in the Woodbridge, Ontario area, which
will facilitate consolidation of its manufacturing footprint and
improve efficiencies, pursuant to the second pathway in the
Management Improvement Plan, which involves actions to improve its
cost structure and margins. "We will emerge from these
restructuring activities a stronger and more focussed organization,
better equipped to exploit strategic opportunities in our core
businesses which provide the highest potential returns," commented
Lawrence J. Blanford, President & CEO. "We expect to complete a
series of divestitures early in the new year, importantly giving us
additional cash and liquidity to take advantage of opportunities as
we approach the busy construction season next year," added Mr.
Blanford. "Let me underscore that these divestitures are intended
to enhance shareholder value, whether the company is sold or
remains a public entity," concluded Mr. Blanford. Royal Group
Technologies is a manufacturer of innovative, polymer-based home
improvement, consumer, and construction products. The company has
extensive vertical integration, with operations dedicated to
provision of materials, machinery, tooling, real estate, and
transportation services to its plants producing finished products.
Royal Group's manufacturing facilities are primarily located
throughout North America, with international operations in South
America, Europe, and Asia. Additional investment information is
available on Royal Group's web site at
http://www.royalgrouptech.com/ under the "Investor Relations"
section. The information in this document contains certain
forward-looking statements with respect to Royal Group Technologies
Limited, its subsidiaries and affiliates. These statements are
often, but not always made through the use of words or phrases such
as "expect", "should continue", "continue", "believe",
"anticipate", "suggest", "estimate", "contemplate", "target",
"plan", "budget", "may", "will", "schedule" and "intend" or similar
formulations. By their nature, these forward-looking statements are
necessarily based upon a number of estimates and assumptions that,
while considered reasonable by management, are inherently subject
to significant, known and unknown, business, economic, competitive
and other risks, uncertainties and other factors affecting Royal
specifically or its industry generally that could cause actual
performance, achievements and financial results to differ
materially from those contemplated by the forward-looking
statements. These risks and uncertainties include the ongoing
shareholder value maximization process and its outcome; the ongoing
internal review and investigations by the Audit Committee of the
Board of Directors and its outcome; fluctuations in the level of
renovation, remodelling and construction activity; changes in
product costs and pricing; an inability to achieve or delays in
achieving savings related to the cost reductions or increases in
revenues related to sales price increases; the sufficiency of our
restructuring activities, including the potential for higher actual
costs to be incurred in connection with restructuring activities
compared to the estimated costs of such actions; the ability to
recruit and retain qualified employees; the level of outstanding
debt and our current debt ratings; Royal's ability to maintain
adequate liquidity and refinance its debt structure by April 30,
2006, the expiry date of its current bank credit facility; the
ability to meet the financial covenants in our credit facilities;
changes in product mix; the growth rate of the markets into which
Royal's products are sold; market acceptance and demand for Royal's
products; changes in availability or prices for raw materials;
pricing pressures resulting from competition; difficulty in
developing and introducing new products; failure to penetrate new
markets effectively; the effect on foreign operations of currency
fluctuations, tariffs, nationalization, exchange controls,
limitations on foreign investment in local business and other
political, economic and regulatory risks; difficulty in preserving
proprietary technology; adverse resolution of any litigation,
investigations, administrative and regulatory matters, intellectual
property disputes, or similar matters; changes in securities or
environmental laws, rules and regulations; currency risk exposure
and other risks described from time to time in publicly filed
disclosure documents and securities commission reports of Royal
Group Technologies Limited and its subsidiaries and affiliates. In
view of these uncertainties we caution readers not to place undue
reliance on these forward-looking statements. Statements made in
this document are made as of December 21, 2005 and Royal disclaims
any intention or obligation to update or revise any statements made
herein, whether as a result of new information, future events or
otherwise. DATASOURCE: Royal Group Technologies Limited CONTACT:
Mark Badger, Vice President of Marketing and Corporate
Communications, Royal Group Technologies Limited, Phone (905)
264-0701
Copyright