Multifoods Distribution Group sold; includes Rice facility

International Multifoods Corporation announced on July 30 that it had entered into an agreement with the newly formed affiliate of Wellspring Capital Management LLC, a private equity investment firm based in New York City, to sell the stock of its food service distribution business for approximately $180 million in cash. The sale is subject to closing adjustments, such as the level of working capital. The purchase price assumes a working capital level at closing of about $135 million.

The sale includes the distribution and cheese processing plant in Rice.

When asked what the employees at the plant in Rice could expect, George Holm, a partner with Wellpring, said, “We are excited about that facility and are looking forward to expanding and growing. It is Wellspring’s intent to continue to grow in Central Minnesota. We purchased with the intent to retain all employees, and to create additional employment by generating new and profitable sales growth. There will be no changes to the employment or the business.”

The facility in Rice was sold to Multifoods in 1987 by owner Doug Pueringer. At the present time there are approximately 200 employees.

The transaction is dependent upon the completion of Wellsprings financing and customary closing conditions, including regulatory and Multifoods’ lender approvals. Wellspring and its affiliate have received financing commitments for the entire purchase price, subject to customary conditions. The transaction is expected to be completed before the end of September.

“The decision to sell the company’s food service distribution business represents another important step forward in Multifoods’ transformation to a branded food products company.” said Gary E. Costley, International Multifoods chairman and chief executive officer. “By divesting the food service distribution business, we can now focus our full attention on food manufacturing and build on our expertise in grain-based foods. Furthermore, the cash generated from this sale will allow us to significantly reduce our debt and improve our financial position.

“The management team of Wellspring, led by George Holm, has significant experience in food service distribution.” Costley said. “We are pleased to have found a buyer that understands this business. Multifoods Distribution Group employees, customers and suppliers will have the opportunity to continue to build on the existing platform and grow as part of a team focused on the food service and vending distribution industries.”

“We are privileged to take on Multifoods food service distribution business and its 2,500 associates, “ said Holm. “We will be driven to please our customers and suppliers in the vending and food service distribution industries.”

Multifoods Distribution Group, headquartered in Denver, is a leading distributor to vending operators and food service customers in targeted segments of the food service industry. The business unit is the nation’s number one distributor to vending operators, and is a leading supplier to independent pizza restaurants and sandwich shops. It employs approximately 2,500 people and operates 27 distribution centers throughout the United States. The distribution business accounts for approximately 70 percent of International Multifoods’ sales, and 20 percent of its total operating earnings.

Jill Schmidt, International Multifoods spokesperson, told the Record, “Multifoods began as a miller in 1892 in New Prague.” International Multifoods is a manufacturer and marketer of branded consumer foods and food service products in North America. The company’s food manufacturing businesses have a combined net sales of approximately $1 billion.

Schmidt did acknowledge that when the sale ofthe Multifoods Distribution Group was announced, International Multifoods stock took a drop.

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