The arbitrator ruled on the various items on average in the middle of the positions taken by each of the parties. For Wessanen, this will result in a cash payment to Kehe of US$8m in the fourth quarter.
The purchase price of Tree of Life Inc amounted to $190m. An additional $12m was received by Wessanen in January 2010 for working capital and cash adjustments. Therefore, the repayment of $8m will result in net proceeds from Kehe of $194m for the divestment of Tree of Life Inc.
The cash payment to be made following arbitration is covered for $2.5m by a provision. Therefore, this will result in a book loss of around $5.5m to be reported under ‘Profit/(loss) from discontinued operations, net of income tax’ in the fourth quarter 2010.
This arbitration relates to the sale of Wessanen’s North American distribution business Tree of Life Inc in January 2010. The purchase agreement provided that the purchase price was subject to adjustment for available cash and debt, a working capital adjustment and a potential downward adjustment on the basis of normalised 2009 Ebitda of Tree of Life Inc.
Based on the initial closing statement submitted by Kehe in accordance with the agreement, Kehe was claiming compensation for downward adjustments for normalised Ebitda and for working capital. Wessanen disputed Kehe’s claim.
Source: Royal Wessanen NV
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