RNS Number:0064G
AGA Foodservice Group PLC
19 October 2007
Not for release, publication or distribution, in whole or in part, in, into, or
from the United States, Australia, Canada or Japan or any other jurisdiction
where to do so would constitute a violation of the relevant laws of such
jurisdiction
FOR IMMEDIATE RELEASE
19 October 2007
AGA FOODSERVICE GROUP PLC
PROPOSED SALE OF AGA FOODSERVICE EQUIPMENT
* Aga Foodservice Group plc ("Aga" or the "Company") announces that it has
entered into a conditional agreement to sell Aga Foodservice Equipment
("AFE"), its commercial foodservice and bakery equipment business, to Ali
SpA, the major Italian commercial foodservice equipment manufacturer, for a
cash consideration, subject to adjustment, of #260 million (including
assumption or repayment of net debt).
* In the financial year ended 31 December 2006, AFE made an operating
profit of #21.2 million on revenues of #250.3 million.
* The Board of Aga (the "Board") intends to return to shareholders a
significant proportion of the available net proceeds of the proposed sale.
This return will be conditional on the consent of the trustees of the Aga
Foodservice Group Pension Scheme (the "Pension Scheme") and the Pensions
Regulator, a corporate reorganisation to create the necessary reserves and
further shareholder approval. The Board intends that the return will be
effected in the first quarter of 2008.
* In relation to the sale of AFE, Aga has reached agreement with the
trustees of the Pension Scheme in relation to the consequences which would
otherwise arise under section 75 of the Pensions Act 1995. This agreement
has been approved by the Pensions Regulator. Pursuant to this agreement, the
Aga Group has agreed to pay #10 million into the Pension Scheme and to
provide a guarantee of #22.5 million to support an undertaking to make up
any deficit identified by the next two triennial actuarial valuations and/or
to make a payment if there is a material deterioration in the covenant of
the Company.
* The Pension Scheme is well funded on an IAS19 basis. Aga is considering,
in conjunction with the trustees of the Pension Scheme and the respective
specialist pensions advisers, ways in which to accelerate the Pension Scheme
becoming self sufficient with the objective of reducing risk and enhancing
long-term shareholder value.
* The sale of AFE will enable Aga to focus on growing the profitability of
its consumer business, which has market-leading positions in premium kitchen
appliances, underpinned by the Aga, Rangemaster and Marvel brands. The Board
intends to focus on organic growth rather than acquisitions.
* Following the achievement of this important strategic milestone, Victor
Cocker has decided to stand down from the Board at Aga's next Annual General
Meeting after seven years' service, including nearly four as Chairman.
* The Board will continue to consider all options for maximising and
delivering best value for shareholders.
William McGrath, Chief Executive of Aga, commented:
"It is pleasing to agree this sale at a good price to a group which is already
driving change in the foodservice equipment sector. We will now focus on
developing our consumer operations and on the best way of delivering value to
shareholders."
This summary should be read in conjunction with the full announcement which is
contained in the following pages.
A circular containing further details of the proposed sale of AFE, including
notice of an extraordinary general meeting and the Board's recommendation to
shareholders to vote in favour of the sale, will be posted to Aga shareholders
as soon as possible.
Contacts
Aga Foodservice Group plc
William McGrath - Chief Executive 0121 711 6000
Shaun Smith - Finance Director 0121 711 6000
Dresdner Kleinwort
Rosalind Hedley-Miller 020 7623 8000
Alex Reynolds 020 7623 8000
Citi
Christopher Daniels 020 7986 7459
Simon Alexander 020 7986 0963
Brunswick
Simon Sporborg 020 7404 5959
Charlotte Kenyon 020 7404 5959
This announcement is for information purposes only and does not constitute an
offer or invitation to acquire or dispose of any securities or investment advice
in any jurisdiction.
This announcement contains a number of forward-looking statements relating to
Aga with respect to, amongst other things, the following: financial condition;
results of operations; economic conditions in which Aga operates; the business
of Aga; future benefits of the transaction; and management plans and objectives.
Aga considers any statements which are not historical facts to be
"forward-looking statements". They relate to events and trends which are subject
to risks and uncertainties which could cause the actual results and financial
position of Aga to differ materially from the information presented in the
relevant forward-looking statement. When used in this announcement, the words
"estimate", "project", "intend", "aim", "anticipate", "believe", "expect",
"should" and similar expressions, as they relate to Aga or the management of
Aga, are intended to identify such forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements which
speak only as at the date of this announcement. Aga does not undertake to update
publicly or to revise any of the forward-looking statements, whether as a result
of new information, future events or otherwise, save in respect of any
requirement under applicable laws and regulations.
Dresdner Kleinwort Limited ("Dresdner Kleinwort") and Citigroup Global Markets
Limited ("Citi"), which are authorised and regulated in the United Kingdom by
the Financial Services Authority, are acting for Aga Foodservice Group plc and
for no-one else in connection with the contents of this announcement and will
not be responsible to anyone other than Aga Foodservice Group plc for providing
the protections afforded to customers of Dresdner Kleinwort Limited and/or
Citigroup Global Markets Limited or for providing advice in relation to the
contents of this announcement or any other matters referred to herein.
FOR IMMEDIATE RELEASE
Not for release, publication or distribution, in whole or in part, in, into, or
from the United States, Australia, Canada or Japan or any other jurisdiction
where to do so would constitute a violation of the relevant laws of such
jurisdiction
19 October 2007
AGA FOODSERVICE GROUP PLC
PROPOSED SALE OF AGA FOODSERVICE EQUIPMENT
Introduction
Aga Foodservice Group plc ("Aga" or the "Company") announces that it has entered
into a conditional agreement to sell Aga Foodservice Equipment ("AFE"), its
commercial foodservice and bakery equipment business, to Ali SpA, the major
Italian commercial foodservice equipment manufacturer, for a cash consideration
of #260 million (including assumption or repayment of net debt) subject to
adjustment for movements in net assets between 30 June 2007 and the date of
completion of the transaction.
Completion of the transaction is conditional on the approval of Aga shareholders
and on the receipt of certain regulatory approvals and is targeted for the end
of 2007. Aga has agreed to pay Ali SpA a break fee of one per cent. of the sale
consideration if shareholders do not approve the transaction.
The Board of Aga (the "Board") intends that a significant proportion of the
available net proceeds of the proposed sale will be returned to shareholders.
Background to and reasons for the proposed sale
Since 2001, when it sold its Pipe Systems businesses, Aga has grown its consumer
and commercial foodservice equipment activities organically and by acquisition.
Over this period, Aga has achieved a significant position in the foodservice
equipment sector, based on its strong product portfolio and the investments
which it has made in new and upgraded manufacturing facilities and its
distribution network. Aga has also returned approximately #400 million to
shareholders, in addition to ordinary dividends, over the same period.
In order to drive the pace of change, Aga sought a more substantial corporate
transaction for its foodservice equipment division to create a market-leading
group with greater scale. To this end, it proposed a combination with the
US-focused, UK-listed foodservice equipment group, Enodis plc, in late 2006. It
did not prove possible to agree a transaction with Enodis plc. The Board
remained committed to its analysis of the desirability of structural change in
the foodservice equipment sector and, on 6 July 2007, announced that it was
working with its advisers to unlock the value of the foodservice equipment
businesses.
Following that announcement, Aga undertook a process whereby it provided
information to, and received proposals from, a number of parties, including
companies with a presence in the foodservice sector and financial sponsors. The
Board has now reached agreement to sell AFE to Ali SpA, a private company
headquartered in Milan, Italy. The Ali group's activities comprise the design,
manufacture, marketing and servicing of commercial foodservice equipment and it
has 32 manufacturing sites located in 12 countries. The Ali group has annual
revenues of approximately Euro850 million.
The Board believes that the price being paid by Ali SpA fairly reflects the high
quality and prospects of AFE and also believes that the business will thrive as
part of the Ali group, which is a major group focused on the foodservice
equipment sector and which has been successful in its expansion in recent years.
Aga Foodservice Equipment
AFE has three segments: European Foodservice; European Bakery; and North
American Foodservice and Bakery.
European Foodservice comprises: Falcon and Williams, which provide hot-side and
cold-side commercial foodservice equipment; and Eloma, which is a German company
acquired by AFE in February 2006 and which supplies combi-ovens.
European Bakery comprises: Bongard and Pavailler, which are France-based
suppliers of bakery equipment to artisan bakers and supermarket chains; Mono,
which is based in Wales and which supplies in-store bakery equipment; and
Miller's, which is based in England and which specialises in contract
maintenance and cleaning of bakery and other foodservice equipment.
North American Foodservice and Bakery comprises: Victory, which produces
refrigeration equipment and steaming ovens; Amana, which was acquired in
September 2006 and which supplies commercial microwave ovens and accelerated
cooking ovens; and Adamatic/Belshaw, which supply roll-lines for major bread
producers and doughnut-making equipment.
In the financial year ended 31 December 2006, AFE made an operating profit of
#21.2 million on revenues of #250.3 million. Net tangible assets and gross
assets as at 31 December 2006 were #92.9 million and #211.3 million
respectively. In the six months ended 30 June 2007, AFE made an operating profit
of #8.9 million on revenues of #131.5 million.
Management
Subject to completion of the proposed sale of AFE, Stephen Rennie, who is
currently Chief Operating Officer of Aga, will join the Ali group and will
resign from the Aga Board.
The Chairman of Aga, Victor Cocker, has also indicated that, following the sale
of AFE, an important strategic milestone, he will stand down at the next Annual
General Meeting of Aga after seven years' service, including nearly four as
Chairman.
The Board is grateful to Victor Cocker and to Stephen Rennie and his senior team
at AFE, Iain Whyte, Tim Smith and Alain Peru, for their contribution to the
development of the Aga Group in recent years.
Pension Scheme
As at 30 June 2007, the Pension Scheme had a surplus of #75.6 million on an
IAS19 basis, based on assets of #767.6 million and liabilities of #692.0
million.
In relation to the sale of AFE, Aga has reached agreement with the trustees of
the Pension Scheme in relation to the consequences which would otherwise arise
under section 75 of the Pensions Act 1995 as a result of AFE ceasing to be a
participating employer under the Pension Scheme. This agreement has been
approved by the Pensions Regulator. The main terms of this agreement are that:
the Aga Group will make a payment of #10 million to the Pension Scheme and the
ongoing funding rate will fall generally to 8.5 per cent. from 16.9 per cent.
from 2008; and the Aga Group will provide a cash-collateralised guarantee to the
Pension Scheme of #22.5 million (in addition to the #10 million payment) which
will support an undertaking by the Company to make up any deficit in the Pension
Scheme identified by the next two triennial actuarial valuations and/or to make
a payment to the Pension Scheme if there is a material deterioration in the
covenant of the Company.
Further, if, before completion of the proposed sale of AFE, a third party
acquires or, having made an announcement under rule 2.5 of the City Code on
Takeovers and Mergers, makes a formal offer to acquire, more than 50 per cent.
of the issued ordinary share capital of the Company, the Aga Group will provide
for the #22.5 million (in addition to the #10 million payment) to be paid into
the Pension Scheme on completion of the sale of AFE.
Use of proceeds of proposed sale of AFE
The Board estimates that the net proceeds of the sale after costs will be
approximately #250 million. As described above, there will be payments and
guarantees of #32.5 million in relation to the Pension Scheme. The existing
borrowings of the Aga Group, which are approximately #80 million, will also be
repaid out of the net proceeds of the sale.
The Board intends to return to shareholders a significant proportion of the
available net proceeds from the sale. Such a return will be conditional on the
consent of the trustees of the Pension Scheme and the Pensions Regulator, a
corporate reorganisation to create the necessary reserves and further
shareholder approval. The amount of the return will also take into account the
level of borrowing facilities available to the Aga Group following the return.
The Board intends that the return will be effected in the first quarter of 2008.
The effect of the sale of AFE on Aga's earnings per share in the year ending 31
December 2008 is expected to be dilutive but this effect is expected to be
mitigated by the intended return of cash to shareholders. This statement does
not constitute a profit forecast and should not be interpreted to mean that the
Aga Group's earnings per share for the current or future financial years will
necessarily match or be greater than historical published earnings per share.
The Board continues to consider all ways in which shareholder value can be
maximised. One aspect of this is consideration of ways to accelerate the
achievement of self sufficiency by the Pension Scheme with the objective of
reducing risk and enhancing long-term shareholder value. The Board is working
with the trustees of the Pension Scheme and the respective specialist pensions
advisers to achieve this end. Any significant changes to the Pension Scheme's
funding will be made after completion of the work currently underway and in the
light of discussions between Aga and a number of leading investment institutions
which are putting forward proposals in relation to the long-term funding of the
Pension Scheme.
Continuing Group
The sale of AFE will enable Aga to focus on its consumer business, where it has
leading positions in premium kitchen appliances in the UK and Ireland.
Aga's range of consumer brands is spearheaded by Aga, Rangemaster and Marvel and
also includes Divertimenti, Falcon, Fired Earth, Grange, Heartland, La Cornue,
Rayburn and Waterford Stanley. These products are sold primarily in the United
Kingdom, Ireland, France and North America and also in a further 47 countries.
In the year to 31 December 2006, on a pro forma basis, the continuing Aga
group's revenues were #278.6 million, EBITDA was #34.9 million and operating
profit was #26.5 million. Net operating assets as at 30 June 2007 were #155.5
million.
The Board aims to accelerate growth through:
International growth - Aga will increase its investment in growing its premium
kitchens business internationally and expects that it will achieve strong
growth, particularly in France and Ireland, with North America remaining a key
target market.
Increasing revenues from existing customers - Aga has a database of over 700,000
customers and will focus not only on increasing spend on Agas and Rangemasters
but marketing the other strong brands through this identified customer base.
Innovation - Over recent years, Aga has benefited from leading innovation and
technology to drive product development and will continue to invest
substantially in these areas to drive growth in its key markets.
Higher overall returns - Aga will make it a priority to achieve a substantial
improvement in the profitability of the Fired Earth and Grange businesses.
The Board believes that the continuing Aga group will be able to deliver higher
returns than the overall group as currently constituted. Once the sale of AFE
has been completed, the management team will outline a detailed strategy with
higher operational targets for the continuing business.
Current trading
The Aga Group has continued to trade satisfactorily since the announcement of
the interim results. There have been sound performances across the foodservice
operations. AFE is implementing certain reorganisations in order to achieve
greater efficiency in its bakery operations. Following the sale of AFE, the
continuing business will have two segments led by the Aga and Rangemaster
brands. The level of sales of cast-iron cookers have been satisfactory.
Rangemaster continues to perform particularly well and, in addition to a strong
performance in the UK, there has been good growth in export sales. Fired Earth
has progressed well in the second half to date. In the USA, sales of Marvel's
premium refrigeration equipment are likely to be affected by the slowdown in
consumer spending.
Further details of the proposed sale
A circular containing further details of the proposed sale of the AFE, including
notice of an extraordinary general meeting to seek shareholders' approval for
the proposed sale and the Board's recommendation to shareholders to vote in
favour of the resolution to approve the sale to be proposed at the extraordinary
general meeting, will be posted to shareholders as soon as possible.
Contacts
Aga Foodservice Group plc
William McGrath - Chief Executive 0121 711 6000
Shaun Smith - Finance Director 0121 711 6000
Dresdner Kleinwort
Rosalind Hedley-Miller 020 7623 8000
Alex Reynolds 020 7623 8000
Citi
Christopher Daniels 020 7986 7459
Simon Alexander 020 7986 0963
Brunswick
Simon Sporborg 020 7404 5959
Charlotte Kenyon 020 7404 5959
This announcement is for information purposes only and does not constitute an
offer or invitation to acquire or dispose of any securities or investment advice
in any jurisdiction.
This announcement contains a number of forward-looking statements relating to
Aga with respect to, amongst other things, the following: financial condition;
results of operations; economic conditions in which Aga operates; the business
of Aga; future benefits of the transaction; and management plans and objectives.
Aga considers any statements which are not historical facts to be
"forward-looking statements". They relate to events and trends which are subject
to risks and uncertainties which could cause the actual results and financial
position of Aga to differ materially from the information presented in the
relevant forward-looking statement. When used in this announcement, the words
"estimate", "project", "intend", "aim", "anticipate", "believe", "expect",
"should" and similar expressions, as they relate to Aga or the management of
Aga, are intended to identify such forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements which
speak only as at the date of this announcement. Aga does not undertake to update
publicly or to revise any of the forward-looking statements, whether as a result
of new information, future events or otherwise, save in respect of any
requirement under applicable laws and regulations.
Dresdner Kleinwort Limited ("Dresdner Kleinwort") and Citigroup Global Markets
Limited ("Citi"), which are authorised and regulated in the United Kingdom by
the Financial Services Authority, are acting for Aga Foodservice Group plc and
for no-one else in connection with the contents of this announcement and will
not be responsible to anyone other than Aga Foodservice Group plc for providing
the protections afforded to customers of Dresdner Kleinwort Limited and/or
Citigroup Global Markets Limited or for providing advice in relation to the
contents of this announcement or any other matters referred to herein.
This information is provided by RNS
The company news service from the London Stock Exchange
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