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Linpac sells non-core units to cut debt

By Rory Harrington , 06-Jan-2011

Linpac has sold off a raft of non-core speciality businesses to cut its debt and concentrate on its packaging operations.

The UK-based company announced it had off-loaded the five units for an undisclosed sum to funds managed by Chamonix Private Equity. The deal was completed on 31 December 2010.

The speciality business units were Linpac Storage Systems, Linpac Environmental, Linpac Recycling Intellident and Linpac Metal Decorating. All were UK based, although Intellident also has a small presence in France and the Netherlands. In 2010 the businesses had combined sales of over £70m, and employed approximately 450 people.

Debt reduction

Linpac was bought last year by a consortium of its former lenders, including Deutsche Bank and Lloyds Banking Group, in a deal that saw the company’s ₤600m debt halved. The syndicate immediately commissioned Bank of America Merrill Lynch to evaluate strategic options for the firm – one of which was the splitting and selling off of its four segments.

The five-unit divestment is likely to be the result of that review. The company confirmed that all the cash raised from the transaction would be used to cut its debt but declined to specify on its post-disposal debt position.

“We have sold five non-core business units, and are using the funds to pay-down debt,” said company executive chairman John Darlington. “Even operations that are non-core require management attention, however, and the disposals have therefore released senior management time for use elsewhere in the business.”

He added the transaction would also free up the firm to concentrate investment on its core packaging activities in future. The company expects that over 90 per cent of future sales would come from manufacture, marketing and support of plastic packaging products and returnable transit containers (RTP).

Divested business

The units sold were Linpac Storage Systems, which manufactures pallet racking and shelving equipment; Linpac Environmental, which makes plastic litter, recycling and street furniture products; Linpac Recycling, which recycles post-use rigid plastic into specified recycled compounds; Intellident, which manufactures systems integration of RFID technology and barcode solutions for libraries, the supply chain and document management and Linpac Metal Decorating, involved in the printing in full colour on tinplate and aluminium sheet.

Chamonix partner Jane Crawford said: “We see opportunities to develop these businesses and intend to commit substantial resources to drive growth and strategic and operational improvement, as we have done successfully in our current portfolio.”

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