Royal Group announces further portfolio restructuring progress and financial details
January 16 2006 - 8:17AM
PR Newswire (US)
TORONTO, Jan. 16 /PRNewswire-FirstCall/ -- Royal Group Technologies
Limited (RYG: TSX, NYSE) today announced that it has successfully
completed divestiture of its 60% interest in Royal Alliance. Royal
Alliance produces injection moulded housewares, indoor storage
products, pet care products and garden furniture, branded with the
Gracious Living(TM) trade name. Royal Group's interest was sold to
the minority partners in Royal Alliance, who have been operating
and managing the business since 1990. Royal Group stated that the
proceeds of the divestiture of Royal Alliance were in line with its
expectations. On December 21, 2005, Royal Group publicly outlined
business unit portfolio restructuring initiatives embedded in its
Management Improvement Plan, stating that total proceeds from
planned divestitures were expected to be in the range of $170 to
$200 million during 2006. Today, Royal Group noted that
divestitures of a number of business units are nearing completion,
reiterating that it expects proceeds from divestitures to be $60 to
$80 million during the first quarter of 2006. In January of 2006
Royal Group expects to close the sale of excess real estate
referenced in its December 27th news release, which should result
in further cash proceeds of $40 million. Royal Group is pursing
divestiture and restructuring of several business units to enhance
its financial performance through greater focus on core business
units. The other business units Royal Group is actively seeking
divestiture of include Baron Metal Industries, Roadex Transport,
Royal Ecoproducts, its Italian-based machinery manufacturing
companies, a distribution company, as well as its foreign
subsidiaries in Poland, Colombia, Mexico, the South Pacific and
Argentina. Royal Group provided the following details surrounding
intended divestitures and restructuring: - The combined sales of
the business units to be divested of and restructured was
approximately $240 million during the first nine months of 2005,
net of eliminations - The combined EBITDA of the business units to
be divested of and restructured was approximately break-even during
the first nine months of 2005; and, - The combined depreciation and
amortization expense related to the business units to be divested
of and restructured was approximately $17 million during the first
nine months of 2005. "These divestitures will have no significant
impact on Royal Group's EBITDA. They will serve to strengthen our
balance sheet, as proceeds will be applied to debt reduction. "Most
importantly, these divestitures will help make Royal Group a
stronger company, by focusing our financial and management
resources on our core businesses, where we generally earn the
highest margins", noted Lawrence J. Blanford, Royal Group's
President and CEO. He concluded noting that divestitures "will help
improve returns on invested capital, as non-core businesses have
typically consumed higher levels of working capital than core
business units". Royal Group Technologies is a leading producer of
innovative, attractive, durable and low-maintenance home
improvement and building products, which are primarily utilized in
both the renovation and new construction sectors of the North
American construction industry. Royal Group is the recipient of
several industry awards for product innovation. The company has
manufacturing operations located throughout North America in order
to provide industry- leading service to its extensive customer
network. 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 December 31,
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 January 16, 2006 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
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