NETHERLANDS: Wessanen eyes US sale to cut debts
Wessanen, the Dutch food group, has told just-food that a sale of its North American operations would help the business to pay down rising debts and grow in Europe.
The company, which last month announced it was considering the future of its businesses across the Atlantic, revealed yesterday (5 May) that it exceeded a debt covenant during the first quarter of the year.
Under lending agreements, Wessanen is allowed to exceed the limit for two consecutive quarters but the group has made it a priority to reduce its debt levels this year.
However, Wessanen has yet to make a final decision on the fate of its businesses Stateside although a spokesman for the company hinted the group favours a complete disposal of the businesses.
"We would like to use the proceeds from the North American business to grow here in Europe," the spokesman said.
He added that a sale would lead to a "significant reduction" in Wessanen's net debt. "A full sale [of the North American businesses] is the most obvious option," he said.
Looking to Europe, Wessanen is reorganising its business on the continent. The company has created two divisions - one focusing on natural, organic and "speciality" foods and the other looking after frozen products, including its businesses in the Netherlands, Germany and Italy.
The spokesman said the move would provide Wessanen with greater "focus" but he denied it would lead to job losses. Wessanen remains keen to expand in Europe but appears to have walked away from the race to buy soya business Alpro, which was put on the block earlier this year by Vandemoortele, its Belgian owner.
The Wessanen spokesman said the company had considered whether to bid for Alpro but lacked the "financial flexibility" to table an offer. "We had too much debt," he said.
Yesterday, Wessanen booked operating profit of EUR0.3m (US$0.4m) for the first three months of 2009, down sharply from the EUR12.4m reported a year earlier. Revenue was up 7.1% to EUR412m but that was boosted by the strength of the US dollar.
On an organic basis, sales were "flat", Wessanen said.
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