Company Sells Interests in Central, East & South Africa and
Closes Four U.S. and Three European Plants
PHILADELPHIA, Feb. 8 /PRNewswire-FirstCall/ -- Crown Cork & Seal Company, Inc. (NYSE: CCK) today announced a series of actions consistent with the Company's strategy of streamlining operations to improve efficiencies and financial performance.
Divestiture of African Interests
The Company has reached an agreement with Nampak Ltd. to sell its 15% shareholding in Crown Nampak (Pty) Limited for 275 million South African Rand (approximately U.S. $24 million). The sale is expected to close in the first quarter of 2002. Additionally, Crown has reached an agreement in principle with Nampak Ltd. to sell its packaging interests in Ethiopia, Kenya, Nigeria, Tanzania, Zambia and Zimbabwe for U.S. $25 million, subject to the conclusion of satisfactory due diligence and execution of a definitive agreement, which is expected to close in the second quarter of 2002. Net proceeds will be used to reduce outstanding short-term indebtedness.
In connection with the sale of these African interests, the Company will record a non-cash pre-tax charge of $211 million ($207 million after taxes or $1.65 per share) in the fourth quarter of 2001 to write-down the investment in these businesses, including the reclassification of cumulative currency translation adjustment to income from a separate component of shareholders' equity.
The Company has announced the closure of U.S. food can plants in Modesto and Antioch, California; Fruitland, Maryland; and Walla Walla, Washington. Crown also announced its intention to close two European crown (bottle cap) operations in Belgium and Denmark and has closed a PET bottle plant in Hungary. Additionally, the Company has notified the employees of its Lakeville, Minnesota, beverage can plant that it plans to temporarily suspend operations in March 2002. Approximately 600 employees are affected by the plant closures and temporary suspension. The Company also implemented a salaried workforce reduction program in the U.S. affecting approximately 100 employees.
As a result of the plant closures and workforce reductions, the Company expects to post a pre-tax charge of approximately $50 million ($35 million after taxes or $0.28 per share) in the fourth quarter of 2001 and a pre-tax charge of approximately $3 million ($3 million after taxes or $0.02 per share) in the first quarter of 2002. These actions will be cash flow positive in 2002 and thereafter even before considering expected tax recoveries and proceeds from the sale of property and equipment. As a result of the plant closures and salaried workforce reductions, the Company anticipates approximately $22 million in annual pre-tax savings.
As a result of the closures and temporary suspension, Crown's production capacity will be permanently reduced by 1.6 billion food cans in the U.S. and 8.0 billion crowns in Europe and temporarily reduced by 1.3 billion beverage cans in the U.S.
John W. Conway, Chairman and Chief Executive Officer commented, "the divestiture of assets in Africa reflects a decision to concentrate future investment of resources in areas which exhibit better near-term opportunities for Crown and at the same time produce cash to delever the Company and reduce future capital demands. The plant closures became necessary to better match our capacity to market demand."
Cautionary Note Regarding Forward-Looking Statements
Except for historical information, all other information in this press release consists of forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve a number of risks, uncertainties and other factors, which may cause the actual results to be materially different from those expressed or implied in the forward-looking statements. Important factors that could cause the actual results of operations or financial condition of the Company to differ are discussed under the caption "Forward-Looking Statements" in the Company's Form 10-K Annual Report for the year ended December 31, 2000 and in subsequent filings. The Company does not intend to review or revise any particular forward-looking statement in light of future events.
Crown Cork & Seal is a leading supplier of packaging products to consumer marketing companies around the world. World headquarters are located in Philadelphia, Pennsylvania.
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SOURCE Crown Cork & Seal Company, Inc.
Web site: http: //www.crowncork.com
CONTACT: Timothy J. Donahue, Senior Vice President - Finance, Crown Cork & Seal Company, +1-215-698-5100, or Ed Bisno, Edelman Financial, +1-212-704-8212, for Crown Cork & Seal Company