MONTREAL (News release) -- TC Transcontinental announced that it has reached a definitive agreement to sell its paper and woven polypropylene packaging operations to Hood Packaging Corporation for a price of US$180 million (about C$239 million) subject to working capital adjustments. These operations generated approximately US$215 million (about C$286 million) in revenues for fiscal 2019 ended October 27, 2019. The Corporation anticipates using the net proceeds from this transaction to reduce debt in line with its goal to bring its net indebtedness ratio below 2.0x, as well as to continue its transformation through targeted acquisitions. The transaction is subject to regulatory approvals and is expected to close in the first quarter of fiscal 2020.
Hood Packaging is a leading North American manufacturer of plastic film and bags, woven polypropylene bags, coated and laminated materials, and paper packaging, with head offices in Madison, Mississippi, United States, and Burlington, Ontario, Canada. Hood Packaging employs almost 2,000 employees and is a wholly owned subsidiary of Hood Companies, Inc.
"When we acquired Coveris Americas, we welcomed all of their assets and broad portfolio of products," said François Olivier, President and Chief Executive Officer of TC Transcontinental. "After operating the paper business for almost 18 months, we concluded that it is less core to our Packaging Sector's growth strategy. As such, our decision to sell these assets is aligned with our plan to continue building our flexible packaging platform where we see good growth potential. In addition, this transaction will enable us to deleverage our balance sheet faster than expected and give us the flexibility to continue acquiring businesses that are more complementary to our existing flexible packaging portfolio."
Hood Packaging is acquiring the following paper packaging operations and buildings of TC Transcontinental: Transcontinental Sibley, Iowa; Transcontinental Hanford, California; Transcontinental Hazleton, Pennsylvania; and Transcontinental Tifton, Georgia. In addition, Hood Packaging is acquiring the paper and woven polypropylene packaging operations at the Transcontinental Spartanburg, South Carolina plant; TC Transcontinental will retain ownership of this building and continue operating from this location, which also manufactures plastic flexible packaging.
About 415 employees will transfer to Hood Packaging after the closing of the transaction. Thomas Morin, President of TC Transcontinental Packaging, added: "We sincerely thank all of these talented employees for their contribution and commitment. We know we can count on their professionalism to continue supporting our customers with dedication through this transition period, until the transaction is completed."
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