Deal near as SPC value cut to zero

COCA-COLA Amatil expects to wrap up a sale of the SPC cannery by August as it gets ready to open the books to a number of prospective buyers from Australia and overseas.

Chief executive Alison Watkins said the nation’s biggest beverage bottler had received strong interest in the loss-making SPC business with due diligence to begin in the next couple of weeks.

The comments came as Coca-Cola Amatil slashed the value of Shepparton-based SPC to zero having acquired the 101-year old business in 2005 in a deal worth $700 million.

“The business is currently losing money and from an accounting point of view the prudent and straightforward thing is to write it down to nil,” Ms Watkins said.

“That is not how we see the value of the business and we have been very encouraged by the excitement from a number of interested parties who have been looking over the facility in the last few weeks.”

SPC is expected to make a loss of $10 million for the 2017-18 financial year.

Coca-Cola Amatil yesterday said it would recognise a non-cash impairment of $146.9 million against the value of SPC when it releases its fullyear results tomorrow.

The writedown extinguishes the value of SPC in Coca-Cola Amatil’s accounts.

The beverages giant paid $500 million for SPC in 2005 and took over the fruit processor’s $200 million debt pile.

Coca-Cola Amatil has consistently slashed SPC’s book value since then, writing it down by $172 million in 2016, $404 million in 2014 and $146 million in 2013.

Ms Watkins said writing down SPC to zero would not have any impact on SPC’s operations or its workers.

She also said the business, which has had $100 million invested in it over the past five years, had a clear path to profitability as it focused on a new generation of premium products and sold into China.

“SPC has some exciting growth prospects ahead of it and we are seeing a lot of traction in the areas that we have been investing in over the past couple of years,” Ms Watkins said.

The company sold its IXL jam business in September last year for an undisclosed sum.