Brambles to Demerge Recall Document Management Business

   By Ross Kelly 
 

SYDNEY--Brambles Ltd. (BXB.AU) said it plans to spin off its Recall document-management business into a separately-listed company after failing to find a buyer last year.

Brambles, which also makes wooden pallets and plastic containers used for carting goods, said it expected the new company, Recall Holdings Ltd., to be listed as a new entity on the Australian Securities Exchange in December.

Brambles had been hoping to raise as much as US$2 billion from a trade sale of the business but scrapped the process last June, blaming challenging market conditions for offers it decided were too low.

On Tuesday, the company forecast the unit to post underlying profit, which strips out recurring items, for the year to June 30 ranging between US$138 million and US$142 million, down from US$174 million in the previous year.

The fall in earnings is related to "reduced transactional customer activity" in the document-management business and weaker selling prices for destroyed paper. The demerged company will have about US$450 million net debt, Brambles said.

"Recall generates strong, recurring operating cash flow capable of servicing this debt comfortably as well as funding the payment of future dividends," Brambles said.

Write to Ross Kelly at [e-mail]

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