Chipping away at heavy debt the Australian ingredients firm Burns Philp & Co will spin off its US herbs and spices unit - Tones North American - following 'expressions of interest' for the division, the company said yesterday.
Currently Australia's largest food group, after acquiring Goodman Fielder last year for A$2.6 billion (€1.6bn), Burns Philp has appointed Credit Suisse First Boston to handle the sale, expected to be completed by June 2004.
Falling in second place behind McCormick & Co as North America's largest maker of herbs and spices, the business posted lower revenue and profit at the end of last year with earnings from the North American herbs and spices business falling 44 per cent to A$24.1 million.
Burns Philp claimed the fall was largely due to high vanilla prices, the loss of two major customers and strike activity at retail clients.
As the Australian ingredients firm continues to feel the weight of debt, largely incurred with the - mainly debt-funded - hostile purchase of Goodman Fielder, earnings from a sale of the US herbs and spices business could shave away at the negative figures.
In a statement yesterday Burns Philp said that under financing arrangements, 25 per cent of the sale proceeds would go to reducing its senior debt.
Figures released to the Australian stock exchange in December showed Burns Philp's debt had risen to A$2.72 billion by the end of the year.