Press Release
During an extraordinary meeting held on September 6th. 2006, the Board of Directors of Kimberly-Clark de Mexico, S.A.B. de C.V (Kimberly), approved the execution of an Investment Contract (the “Contract”) with a Trust (the “Trust”) whose settlors are Impulso de Desarrollos Estratégicos, S.A. de C.V. and the Eton Park Fund, an international investment fund.
In accordance with this agreement, all the assets related to the operation of Kimberly’s Industrial Products Division (“PRODIN”) businesses, that include the assets required for the production and sale o writing and printing papers, cigarette paper and notebooks, as well as for the production of wood and bagasse pulp (the “Assets”), will be transferred to a new company, Controladora Celulósico Papelero, S.A.P.I. de C.V. (“CPP”), in which the Trust will acquire 60% of the equity and Kimberly will retain the remaining 40%.
The transaction represents a total value to Kimberly of $434 million U.S. dollars, which will be paid as follows: i) $309 million with funds from financing that CPP will receive; ii) $75 million with funds that the Trust will contribute to subscribe and pay the shares for the equivalent of 60% of CPP’s equity; and, finally, iii) Kimberly will retain 40% share of CCP’s equity with a value of $50 million, that will be amortized in a period not greater than five years.
The Contract is subject to the final approval of a General Extraordinary Shareholder’s Meeting, which will take place on next September 28th. at 12:00 hrs., and of the Mexican Federal Commission of Competition, estimating that the latter will occur during the fourth quarter of this year.
The transaction described herein ends the process to divest PRODIN via the sale of its Assets, in accordance with the strategy adopted by Kimberly’s Board of Directors and communicated to the market since March 15th., 2005. With this, each one of the businesses, Kimberly and CPP, is importantly strengthened by being totally oriented towards satisfying the particular needs of their consumers and clients thus consolidating their leadership and strength in their respective markets.
Kimberly will continue with its strategic emphasis of strengthening its consumer, professional and heath care businesses in which it will make capital expenditures of more than $350 million U.S. dollars in the next two years. These investments will enable to increase tissue and disposable diapers production capacity by more than 20% as well as to increase capacity in other business areas, strengthen the product improvements and innovations plan, reduce costs and increase productivity. In addition to these expenditures, Kimberly will utilize part of the funds to be received in its stock re-purchase program and to pay out dividends.
Kimberly is dedicated to the manufacture, marketing and sale of consumer products for personal use.
P PRODIN Annex
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