O-I Glass has announced that it has entered into a definitive agreement to sell its Australia and New Zealand (ANZ) business unit to Visy Industries, one of the largest privately-held packaging and resource recovery companies in the world. Gross proceeds from the sale and associated sale-leaseback deal will be approximately AUD 947 million with Charter Hall, a leading property management company.
“The sale of our ANZ operations is in line with our plan to align our company better with our global customer base desires, increase financial stability and optimize shareholder value. O-I will continue to grow its leading market positions throughout Europe and America, and the interests of the group in Asia. ANZ ‘s sale follows a comprehensive strategic analysis of our global portfolio of companies and operational structure that is now significantly complete following this deal. We have earned a complete and equal price for ANZ, and this transaction marks a significant step in our corporate transformation as we simplify our structure and prioritize debt reduction, “said CEO Andres López.
After evaluating alternatives for the ANZ business, the company determined the best choice was to sell the project to a buyer who could expand on the solid business O-I built and brings decades of experience and expertise in closed-loop packaging and recycling solutions, aligned with consumer and industry needs.
“O-I’s ANZ business is known to deliver the highest quality glass containers which enhance the brands of its customers. After a rigorous selling process, we believe that Visy is the best fit for our ANZ business, for our customers and for our staff. Visy is a well-established pioneer in providing high-quality, creative, and closed-loop packaging solutions that have been working in Australia for over 70 years, “Lopez said.
O-I ANZ is Australia and New Zealand’s largest producer of glass bottles and containers, with five production facilities based in Adelaide, Brisbane, Melbourne, Sydney and Auckland, and a recycled glass processing plant in Brisbane. The company, headquartered in Melbourne, generated sales in 2019 of around AUD 754 million and EBITDA of around AUD 124 million.O-I and Visy agreed to finalize the sale of the O-I ANZ business unit in two separate transactions.
O-I has entered into a sale-leaseback arrangement with Charter Hall for some assets valued at approximately AUD 214 million and an agreement to sell the O-I ANZ business to Visy for approximately AUD 733 million, respectively. The disposal proceeds are expected to exceed the net carrying amount of the pertinent assets and liabilities. Visy ‘s sale is subject to customary closing conditions. One can do a company search for Nz here.
Both transactions have already received the appropriate regulatory approvals and are expected to close by 31 Aug. 2020. Based on recent currency exchange rates, overall gross proceeds amount to approximately $652 million and the firm currently expects final net proceeds amounting to approximately $620 million which will be used to minimize debts.
O-I ‘s success in the second quarter of 2020 ended on a positive note after the organization experienced the brunt of the pandemic in April and May. When markets started to reopen, O-I ‘s June revenue volumes dropped by around 3 percent compared to last year’s June. June patterns reflected a major improvement from April and May ‘s 18 percent decline in daily shipping rates previously recorded.
Overall, overall volumes of sales in the second quarter were down around 15 percent from the previous year. Operating performance was very strong as the company’s restructuring plans continued to advance well including significant cost reduction measures to partially offset COVID-19 ‘s effect. Based on the preliminary view of the company, O-I expects the adjusted earnings1 to be about breakeven in the second quarter of 2020.
Reflecting O-I’s focus on cash and capital management, cash flows have been solidly positive despite the typical seasonal use of cash for the business during the second quarter. As a result, the total liquidity of O-I improved over the second quarter and compared favorably with levels in the first quarter.