Amcor introduces Orora spin-off

Amcor’s soon-to-be demerged Australasian and packaging distribution business will now be known as Orora, with the company’s leaders announcing the new entity’s identity and branding at the Amcor 2013 annual general meeting in Melbourne.

Chris Roberts, chairman of the Amcor board, says Orora is on track to begin trading in mid-December this year, operating in the glass, beverage can and integrated fibre packaging markets in Australasia and packaging distribution in North America.

He says, “If the resolutions are passed at the shareholder meeting on December 9, the demerger will become effective on Tuesday 17. Orora will then commence trading on the ASX on Wednesday December 18.”

Ken MacKenzie, managing director and CEO with Amcor, says the two businesses will deliver better outcomes for shareholders by becoming more focused separate entities, with streamlined product portfolios and end markets.

Shareholders will receive one share in Orora for each Amcor share they presently own.

After an eight-year transformation, jettisoning a number of non-core product segments and shutting down eight plants, MacKenzie says that Orora is now focused on four operating segments: integrated fibre packaging, beverage cans, glass bottles and packaging distribution.

He adds that more than $1bn has been invested in the business over the past four years to strengthen Orora’s product portfolio and manufacturing platform – including a new recycled paper mill in Sydney, a third glass furnace in South Australia and additional beverage can line in New Zealand.

Amcor also closed its Petrie cartonboard mill and Thomastown metal caps plant in February, and says it completed overhead reduction and manufacturing efficiency programs during the 2013 financial year.

MacKenzie says, “As a result of all these initiatives the business has an $81m cost improvement opportunity that should underpin earnings growth over the next few years and position Orora well for the next phase of its journey as an independent company.

“Orora will have solid financial metrics, broadly equivalent to investment grade. It will be demerged with $700 to $750m of net debt, giving an initial debt to EBITDA leverage of 2.7 times, based on historic earnings.”

If the demerger is approved by the shareholders, Orora and Amcor will have separate management teams and boards, with Graeme Liebelt to become Amcor chairman and Ken MacKenzie to remain as Amcor managing director and CEO.

For Orora, Chris Roberts will step up as chairman, Nigel Garrard (current president of the Orora business) will become CEO and John Pizzey and Jeremy Sutcliffe will join the board. Sutcliffe will also double as director of Amcor.

Amcor shareholders will vote on the demerger in a meeting at 10am on Monday December 9 at the Melbourne Exhibition Centre.

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