Stock Symbol: TSX - CCL.A and CCL.NV.B
TORONTO, April 20 /CNW/ - CCL Industries Inc., a world leader in
developing manufacturing, packaging and labelling solutions for the consumer
products industry, announced today that it has agreed to sell its North
American CCL Custom Manufacturing Division to KCP Income Fund for
approximately Cdn $265 million in cash. The proceeds from the sale will fund
the continued growth of CCL's higher growth Label and Container businesses
through further acquisitions and technology improvements. The Company may also
repay debt, and repurchase stock.
CCL Custom Manufacturing operates one plant in Canada and three in the
U.S. These facilities, their customer base and product capabilities will
provide a strategic enhancement to KCP's contract manufacturing business,
which is focused on the retail branded household cleaner market. CCL Custom
Manufacturing's 2,200 employees will continue with the business.
The North American Custom Manufacturing Division generated sales of
Cdn $604.6 million in 2004 and accounted for Cdn $26.6 million of CCL's
consolidated operating income. Once the sale is completed, CCL's annualized
revenues will still be in excess of Cdn $1.0 billion.
Mr. Donald Lang, President and CEO stated, "CCL Industries started as a
small custom manufacturer in Toronto 54 years ago and we have enjoyed a long
and successful history with CCL Custom Manufacturing. The quality of the
business and its people has enabled us to derive significant value for the
business, making this transaction possible."
Mr. Lang continued, "This completes the dramatic transformation of CCL
that we started five years ago, with CCL now emerging as a pure specialty
packaging company focusing on our high growth Label and Container businesses.
The divestitures of non-core businesses and the focus on cash flow have
enabled us to invest in new technology, upgrade facilities and pursue
international growth, creating the largest label converting network in North
America, Europe and Asia, and the most innovative aluminum container business.
The sale of our North American Custom Manufacturing business is consistent
with our objective of redeploying our resources to shareholder value-
maximizing initiatives and also reduces our risk profile by diversifying our
exposure to the U.S. currency. This divestiture will significantly improve
CCL's balance sheet to support the continuation of the Company's growth
strategy."
Management believes that this initiative will also help position CCL to
achieve valuations for its common shares that are more comparable with its
publicly traded Canadian and U.S. specialty packaging peers. CCL anticipates
recording an after tax gain on this disposition of approximately
Cdn $100 million or Cdn $3.00 a share.
Donald Lang added, "We anticipate that our first quarter results will
significantly out pace the record results reported for the previous 4th
quarter. First quarter results will be issued on May 5, 2005 prior to our
Annual Meeting, which is being held the same day. Operational improvements in
all divisions, including those created by our newly installed container
capacity, the positive contributions of ColepCCL and the recently completed
Steinbeis Label acquisition, combined with the continued strength of the
personal care market, bode well for continued success in 2005. Based on these
positive factors, it appears that earnings before unusual items will exceed
the Company's 2004 performance".
CCL Custom Manufacturing has also achieved a strong start to the year.
The North American Custom Manufacturing Division's preliminary unaudited
results for the First Quarter of 2005 indicated sales of approximately
Cdn $163.8 million and operating income of approximately Cdn $6.3 million.
This compares favourably to the Cdn $149.5 million of sales and
Cdn $5.9 million of operating income recorded in the First Quarter of 2004 for
this business.
The Company is also pleased to announce that in conjunction with the sale
of CCL Custom Manufacturing, Geoffrey Martin, President, CCL Label and Plastic
Packaging is being promoted to President and Chief Operating Officer,
expanding his responsibilities to include all operations of the new CCL
including CCL Container. Donald Lang will retain his responsibilities as Chief
Executive Officer and assume the new role of Vice Chairman of the Board.
Mr. Lang said, "Over the last four years, Geoff Martin has demonstrated
his strong operating expertise through the international expansion of the
Label Division to support our customers around the world while doubling the
Division's income at the same time. Last year, he assumed responsibility for
CCL Plastic Packaging and has positively impacted the business through
significant restructuring and cost reduction and by improving its printing
technology. In his new role, Geoff will also assist CCL Container as it
continues to expand to meet increasing customer demands."
The Company anticipates that the sale of the North American Custom
Manufacturing Division will be completed by the end of May subject to
regulatory approval. KCP has entered into an agreement to sell to a syndicate
of underwriters, KCP Income Fund Units and Exchangeable Unsecured Subordinated
Debentures on a bought deal basis to finance this acquisition. KCP has also
entered into a fully committed credit facility to finance the remainder of the
purchase price.
CCL Industries Inc. (TSX CCL.A and CCL.NV.B) provides state-of-the-art
packaging solutions, including specialty aluminum and plastic packaging and
innovative product labelling, to some of the world's largest producers of
consumer brands, helping them to get their products to market quickly and
cost-effectively. CCL develops solutions for producers of leading consumer
brands in personal care, cosmetic, pharmaceutical, household and specialty
food and beverage products. Container is North America's leading manufacturer
of recyclable aluminum packaging for the beverage, food, personal care,
pharmaceutical and household markets. With headquarters in Toronto, Canada,
CCL directly employs 6,100 people and directly operates 42 production
facilities in North America, Europe and Asia.
Note: CCL will hold a conference call at 10:00 a.m. EST on Wednesday,
----- April 20, 2005 to discuss this transaction.
To access this call, please dial - Toll Free - North America -
1-800-381-7839 or Domestic and International - 416-641-6679
Post-View service will be available from Wednesday, April 20, 2005
at 12:00 p.m. EST until Friday, May 20, 2005 at 11:59 p.m. EST
Dial: Toll Free - North America - 1-800-558-5253; Access Code:
21245062 or Domestic and International - 416-626-4100; Access
Code: 21245062.
"Statements contained in this Press Release, other than statements of
historical facts, are forward-looking statements subject to a number of risks
and uncertainties that could cause actual events or results to differ
materially from statements made. These risks and uncertainties are detailed
from time to time in CCL's public disclosure documents or other filings with
securities regulatory bodies. These forward-looking statements are made as of
the date hereof and CCL disclaims any intention and has no obligation or
responsibility, except as required by law, to update or revise any forward-
looking statements, whether as a result of new information, future events or
otherwise."
For more details on CCL, visit our web site - www.cclind.com
