Pact Group will pay down a substantial chunk of its half a billion dollar debt by selling half of its Crate Pooling business to global infrastructure manager Morrison & Co.
Morrison will pay Pact $160m, plus up to $20m in add-ons, for a 50 per cent stake in the business, which will now be structured as a separate joint entity. Pact’s debt currently stands at $528m, up by $25m compared to a year ago.
The deal comes just weeks after Pact Group extended its existing seven-year-old contract to own, operate, wash and store a crate pool for Woolworths Group by another 10 years. The contract with Woolies, which is worth more than $50m a year, has been running since 2016. It will now extend beyond the end of the decade, to 2033. Pact has also just secured a long-term contract with Aldi.
The Crate Pooling business, which is currently part of Pact’s Reuse division, manages an asset pool of reusable and recyclable plastic crates and folding produce bins used by retailers in Australia and New Zealand in their fresh produce supply chains.
Pact began looking for buyers in March, seeking the funds for growth opportunities, and to shore up its balance sheet. Crate Pooling is one of Pact’s best earners, it is cash generative, with an EBITDA that typically runs at higher levels than its core packaging business or its contract manufacturing operation.
Sanjay Dayal, Pact CEO and managing director said, “This new strategic partnership with Morrison & Co is a great outcome for our customers as it will accelerate the growth of the business and offer and expanded range of products and services, with Pact sharing in the upside.”
