Royal Group Technologies Ltd. plans to take a massive write-down as it jettisons more businesses than previously announced.
The Woodbridge, Ontario, company said Dec. 21 that it will take a charge of C$210 million (US$180.6 million ) to C$250 million (US$215 million) for its fourth quarter, ended Dec. 31. It expects the charge to be partially offset by a gain of C$30 million (US$25.8 million) to $40 million (US$34.4 million) when asset sales are finalized.
To trim its portfolio of companies, Royal Group is looking for buyers for its Amut SpA and Ariostea SpA machinery manufacturers in Italy, and Royal Group subsidiaries in Argentina, Colombia, Mexico, the Pacific region, the Netherlands and Brazil. The company also wants to sell a toolmaking facility and distribution company in North America.
In a move to improve manufacturing efficiency, Royal said it is negotiating to sell about 540,000 square feet of excess space in the Woodbridge area, where it operates a cluster of plants.
``We expect to complete a series of divestitures early in the new year, importantly giving us additional cash and liquidity to take advantage of opportunities as we approach the busy construction season next year,'' said Royal Group President and Chief Executive Officer Lawrence Blanford in a news release.
He said the sales will boost shareholder value whether Royal Group is sold or remains a public company.
The announcement goes well beyond Royal Group's earlier disclosure that it wants to sell Royal Alliance, Baron Metal Industries, Roadex Transport, Royal EcoProducts and a subsidiary in Poland.
The plastics extrusion giant expects divestitures to bring in C$110 million (US$94.6 million) to C$120 million (US$103.2 million) in the first quarter of 2006. Additional cash proceeds worth C$60 million (US$51.6 million) to C$80 million (US$68.8 million) should accrue the rest of the year, according to the company.
In other news, Royal Group appointed Helmut Hock as president of its pipe division. He replaces Stephen Kleynhans, who the firm said is resigning to focus on private business interests. Hock was president of interior auto parts molder Progressive Moulded Products Ltd. of Concord, Ontario.