Management at Reynolds Group Holdings should decide by the year’s end if they will sell off three of its units, Evergreen, Closures and SIG, which could realise up to $11.44bn from asset sales.
The units form part of Graeme Hart’s global packaging empire. Tom Degnan, chief executive at Reynolds, made a conference call this month and said that none of the three reviews have reached a stage where they can make a decision but that by the end of the year, they should have clear idea of where they are headed.
The company has repeatedly denied that it has plans for an IPO. It published its September quarterly earnings report this month and stated that the review of the Evergreen and Closures units was to look at the possible reallocation of capital and resources of its portfolio. However the SIG review came after the company received an offer to buy the unit.
The group reported a net loss of $286.6m in the nine months ended September 30, compared to a loss of $99m in the same period a year earlier. Evergreen, Closures and SIG accounted for 39 per cent of Reynolds’ adjusted earnings in the nine-month period. Reynolds had total debt of $22.96bn as at September 30, about 6.3 times adjusted earnings. Hart has tasked management with reducing that multiple to 5.5 times by the end of the year.
Hart, New Zealand’s richest man, came to notice when he began building his packaging giant in earnest in 2006, with the takeover of Carter Holt Harvey. He went on to purchase International Paper’s beverage packing unit and Swiss company SIG the following year, and added Alcoa’s packaging business in 2008. In 2010, he completed a leveraged buyout of Pactiv and, in 2011, he acquired Graham Packaging.
