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January 25, 2007

CANADA: CoolBrands sells assets to Nestlé unit

Troubled frozen foods group CoolBrands has sold its Eskimo Pie, Chipwich and Real Fruit brands, along with Eskimo Pie soft serve product brands and related foodservice business operations, to Dreyer's Grand Ice Cream, an indirect subsidiary of Nestlé, for around US$18.93m.

Troubled frozen foods group CoolBrands has sold its Eskimo Pie, Chipwich and Real Fruit brands, along with Eskimo Pie soft serve product brands and related foodservice business operations, to Dreyer’s Grand Ice Cream, an indirect subsidiary of Nestlé, for around US$18.93m.


The purchase prices includes approximately $4m for accounts receivables and inventory associated with this transaction, which is subject to adjustments based on the final determination of the accounts receivable and inventory at the time of closing, CoolBrands said.


As part of the deal, Dreyer’s is also to assume related liabilities of around $1m.


Sugar Creek Foods, an indirect wholly-owned subsidiary of CoolBrands, has also entered into an agreement with Dreyer’s to manufacture soft-serve yogurt and ice cream for a period of up to nine months.


Net proceeds from the sale are to be used to repay the balance of debt owed by CoolBrands to JP Morgan Chase of approximately $5m, with the balance to be used for working capital purposes.


In a regulatory filing earlier this month, CoolBrands International said it was actively pursuing sources of working capital liquidity, which might include the sale of certain of its ice cream assets.


CoolBrands has been hit by a series of setbacks over the past year or so, including the negative impact on its business resulting from the declining popularity of low-carb diets and the loss of a major contract with the Weight Watchers brand.


The company reported a loss of C$24.2m (US$20.73m) for the first nine months of the 2006 fiscal year, including an $11.8m loss in the third quarter.

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