Graeme Hart considers $5b sale of SIG – report

Graeme Hart

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Graeme Hart is said to be exploring a $5 billion sale of SIG Combibloc Group, the world’s second largest maker of drink cartons.

Mr Hart's packaging conglomerate, Reynolds Group Holdings, has hired Goldman Sachs Group to explore options for SIG, including a potential sale, Reuters is reporting, citing people familiar with the matter.

SIG, which Mr Hart acquired for $2.3 billion in 2007, is in the early stages of preparing a sale process and is expected to attract interest mainly from private equity firms, the article said.

SIG manufactures aseptic carton packaging that allows juices, milk, soups and sauces to be stored for a long period of time without refrigeration. The company has around 5,100 employees in 40 countries.

A potential sale of the Swiss-based SIG fits with Mr Hart's efforts to trim the $18 billion debt load his packaging empire has accumulated through leveraged buyouts. 

Those deals include the $6 billion acquisition of hefty bag maker Pactiv Corp in 2010, and the $4.5 billion takeover of plastic container producer Graham Packaging Co in 2011.

In February Reynolds chief financial officer Allen Hugli told analysts on a conference call that Mr Hart wanted to reduce the group’s leverage having accumulated about $US18 billion of debt in recent years.

Debt amounted to 6.2 times adjusted earnings before interest, tax, depreciation and amortisation at Dec. 31.

"The owner has charged us with getting to five-and-a-half," chief financial officer Allen Hugli told analysts on a conference in late February. "He wanted to be there by the end of 2014. I'm not sure if we will get there. We have done a number of things to work on the cost base."

Reynolds has almost tripled its total assets since the end of 2009 to $US22.38 billion as at December 31, while total liabilities soared to $US22.61 billion, a gap of $US231 million. 

In April it emerged that Mr Hart was selling Carter Holt Harvey's pulp and paper and packaging businesses for $1.037 billion.

Mr Hart is this country’s richest individual with a net worth of $6.4 billion, according to the 2013 NBR Rich List.

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