Royal Group to sell recycling unit

Royal Ecoproducts lost $5.2 million last year Parent company mired in criminal probe

Royal Group Technologies Ltd., restructuring amid a criminal probe by the RCMP, says it plans to sell Royal Ecoproducts Co., a producer of recycled polypropylene compounds. The police investigation into possible fraud resulted in the resignation of Ontario finance minister Greg Sorbara last week. Sorbara is a former director of Royal Group. The Toronto- based plastic products firm said yesterday “ the decision to divest Royal Ecoproducts recognizes its continuing financial underperformance, as well as the fact that the compounds it manufactures are available from other companies.”

Royal Ecoproducts lost $ 5.2 million before income tax, depreciation and amortization during the 12 months ended Dec. 31, 2004.

Royal Ecoproducts primarily supplies Royal Dynamics Ltd., another subsidiary of Royal Group engaged in injection moulding of various building products. In February, police, lawyers and forensic accountants searched the head offices of the Bank of Nova Scotia in a high- profile probe of Royal Group. At that time, investigators were looking for documents and data, some dating back as far as 1996, linked to the business dealings of the plastics maker, as well as founder Vic De Zen and former employees Domenic D’Amico and Fortunato Bordin.

Last week, police raided the offices of real estate developer the Sorbara Group, looking for more information. News of the raids at his family- owned company prompted Sorbara’s resignation as provincial finance minister.

Sorbara was a director of Royal Group and a member of its board audit committee until he became a cabinet minister in October 2003.

Shares in Royal Group rose 31 cents to close at $ 10.86 on the Toronto Stock Exchange.