Greencore Group PLC (LSE: GNC) announced it has agreed to sell its bottled water business to Highland Spring Limited in a structured deal for up to £17.5m. Following the sale of the loss making division, the company intends to use the proceeds to reduce overall group borrowings.
Greencore Group plc is an international manufacturer of convenience foods and ingredients. The company has manufacturing sites in four countries of the European Union as well as the US. The group’s bottled water division supplies customer branded water in the UK and operates two facilities located at Campsie Springs in west Scotland and Blaen Twyni in Wales.
In the year ended 25 September 2008, Greencore Water generated a pretax loss of £3.8m. At the end of the period Greencore Water's net assets were valued at £15.9m.
The deal sees Greencore receive £10.0m in initial payments, with £3.0m deferred until the second anniversary of the deal and up to £4.5m in other payments which are contingent upon the future performance of the business.
Greencore expects the deal to be completed on or before 30th April 2010. The company said that the proceeds from the disposal will be used to reduce borrowings.