Melbourne / AU. (khf / beu) The South Australian Balfours Pty Ltd baking business has been sold to a company associated with San Remo Macaroni Group. It follows a 30,5 million AUD loss last year by Balfours´ parent company KH Foods. KH Foods has also sold its Betabake Pty Ltd (New South Wales) to pasta maker San Remo.
Though the price has not been revealed, the sale of the businesses will result in a write-off to KH Foods of approximately ten million AUD, including the severance pay and leave entitlements to be paid to the employees of the Betabake business. KH Food´s chairman Richard England said the Crotti family approached KH Foods to buy the business. «The more we talked to them, the more we realised they would be an excellent owner. They are a family business and bring to the business the right passion».
Another 2,3 million AUD of proceeds may be realised from the sale, depending on the extent San Remo exercises options over the plant and equipment, inventory and a property lease. The proceeds from the sale will be used to retire KH Foods debt, the company announced in a statement. A meeting of KH Food´s shareholders to approve the divestment is expected to be convened by March.
Last September, the pie and cake maker reported a huge before tax loss of 58,2 million AUD. The board moved to cut costs in its operations, including closing its Melbourne head office. The company also said it was prepared to sell off some of its assets. Its major shareholder is Washington H Soul Pattinson and Company Ltd., Sydney.
Under the agreement with San Remo, all 270 Balfours staff will be offered employment on the same terms and conditions as their current employment. KH Foods will continue to operate the Betabake business under licence from San Remo until the end of April when all 170 employees will be made redundant and will receive their full entitlements. While proceeds from the final sell-off will be used to retire debt, KH Foods will still be 15 million AUD to 20 million AUD in the red, Richard England said.
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