Cott Announces Agreement to Sell Its Traditional Beverage Manufacturing Business to Refresco in All-Cash Transaction

TORONTO and TAMPA, FL, July 25, 2017 /PRNewswire/ - Cott Corporation (NYSE:COT; TSX:BCB) today announced that it has entered into a definitive agreement to sell its traditional beverage manufacturing business ("Cott Beverages") to Refresco (Euronext: RFRG) for USD $1.25 billion. The transaction includes Cott's North America, U.K., and Mexico businesses (excluding the RCI International division and its associated concentrate facility as well as the Aimia Foods division).

For over 60 years Cott Beverages has been a leading manufacturer of a diverse mix of beverages for the retail trade and branded manufacturers and is one of the world's largest producers of beverages on behalf of retailers, brand owners and distributors, producing multiple types of beverages in a variety of packaging formats and sizes, including carbonated soft drinks, 100% shelf stable juice and juice-based products, energy drinks, clear, still and sparkling flavored waters, sports drinks, new age beverages, ready-to-drink teas, freezables and ready-to-drink alcoholic beverages. Cott Beverages has been known for its excellent customer service and superb quality standards as demonstrated by the many retail and product performance awards received over the years, and has consistently offered its customers a strong value-added proposition of low cost, high quality products while generating strong free cash flows. 

"After a thorough strategic review in 2013, we developed an accelerated diversification and acquisition strategy in order to transform our company and create a business weighted towards better for you products in categories with topline growth, a more diverse channel and customer base, higher margins, and strong free cash flow generation. This transaction is very much in line with this strategy, and enables our traditional business to become an integral part of a larger global beverage manufacturing company that pursues the same high customer service and quality standards Cott has been known for throughout its history", commented Jerry Fowden Cott's Chief Executive Officer. 

Cott Beverages generates approximately $1.7 billion in revenues and has a strong and experienced management team with longstanding customer relationships in North America and the United Kingdom. Subsequent to the closing of the transaction, Cott Beverages' leadership team will report to the Executive Board of Refresco.

"We are excited to welcome Cott Beverages to the Refresco family. We have been focused on growing our platform in both North America and Europe and this transaction is a significant enhancement to our buy and build strategy which will provide Refresco with enlarged scale, synergies, and savings alongside Refresco's manufacturing footprint, geographic diversity, product range and customer service," commented Hans Roelofs, Refresco's Chief Executive Officer. "We will now have a well-balanced portfolio with exposure to all categories for retailers in North America and Europe in addition to a scale contract manufacturing footprint throughout these geographies from which to continue to grow both organically and by pursuing our buy and build strategy," continued Mr. Roelofs.

STRATEGIC RATIONALE   

"The sale of Cott's traditional business substantially accelerates our ability to deleverage the business and positions us well to grow our water, coffee, tea and filtration businesses both organically and through value accretive tuck-in acquisitions while also giving us the optionality to expand our platforms through larger scale acquisitions if and when the right value enhancing opportunities present themselves," continued Mr. Fowden.

The transaction is expected to:

• Improve top-line growth and stability
• Enhance overall gross profit and EBITDA margins
• Significantly reduce net leverage
• Reduce customer concentration
• Reduce commodity exposure
• Shift Cott's core focus to the growing categories of water, coffee, tea and filtration

The transaction is expected to reduce Cott's leverage to below 3.5x net debt to 2017 pro forma adjusted EBITDA (excluding Cott Beverages) after sale proceeds are used for the redemption of the remaining $250 million of our 10% DS senior secured notes, $525 million of our 5.375% notes, and paying off our asset-based lending facility.  As a result of the redemption of our 5.375% notes, we expect to commence asset sale proceed offers on or about the closing date of the transaction pursuant to the indentures governing our then remaining unsecured notes, pursuant to which we will offer to repurchase such notes at 100% of the principal amount thereof.

The acquisition, which is expected to close in the second half of 2017, is subject to certain closing conditions including regulatory approval, Refresco shareholder approval, and working capital adjustments. 

Barclays acted as financial advisor to Cott while Drinker Biddle & Reath LLP acted as legal advisor. In addition, Cott turned to CMS for advice on Dutch law matters relating to the transaction.

TRANSACTION CONFERENCE CALL

Cott Corporation will host a conference call today, July 25, 2017, at 8 a.m. EST, to discuss the sale, which can be accessed as follows:

North America: (888) 231-8191
United Kingdom: 0-800-051-7107
International: (647) 427-7450
Conference ID: 58688747

A copy of the slide presentation that will be used on the call will be available through Cott's website at www.cott.com. The conference call will be a live audio webcast available via the above referenced link and it will be recorded and archived for playback for a period of two weeks following the call.

ABOUT COTT CORPORATION

Cott is a diversified beverage company with a leading volume-based national presence in the North America and European home and office bottled water delivery industry, a leader in custom coffee roasting and blending of iced tea for the U.S. foodservice industry, and one of the world's largest producers of beverages on behalf of retailers, brand owners, and distributors.  Our platform reaches over 2.3 million customers or delivery points across North America and Europe supported by strategically located sales and distribution facilities and fleets, as well as wholesalers and distributors.  This enables us to efficiently service residences, businesses, restaurant chains, hotels and motels, small and large retailers, and healthcare facilities.

ABOUT REFRESCO CORPORATION

Refresco (Euronext:RFRG) is the leading independent bottler of soft drinks and fruit juices for retailers and A-brands with production in Benelux, Finland, France, Germany, Italy, Poland, Spain, the UK and the US.  The company realized in 2016 full year volumes and revenues of circa 6.5 billion liters and circa €2.1 billion, respectively.  Refresco offers an extensive range of product and packaging combinations from 100% fruit juices to carbonated soft drinks and mineral waters in carton, PET, Aseptic PET, cans and glass.  Focused on innovation, Refresco continuously searches for new and alternative ways to improve the quality of its products and packaging combinations in line with consumer and customer demand, environmental responsibilities and market demand.  Refresco is headquartered in Rotterdam, the Netherlands and has about 5,500 employees.

Non-GAAP Measures
To supplement its reporting of financial measures determined in accordance with GAAP, Cott utilizes certain non-GAAP financial measures, including EBITDA, adjusted EBITDA and net debt (and certain ratios utilizing these measures) to separate the impact of certain items from the underlying business.  Because Cott uses these adjusted financial results in the management of its business, management believes this supplemental information is useful to investors for their independent evaluation and understanding of Cott's underlying business performance and the performance of its management.  The non-GAAP financial measures described above are in addition to, and not meant to be considered superior to, or a substitute for, Cott's financial statements prepared in accordance with GAAP. In addition, the non-GAAP financial measures included in this earnings announcement reflect management's judgment of particular items, and may be different from, and therefore may not be comparable to, similarly titled measures reported by other companies.

Safe Harbor Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 conveying management's expectations as to the future based on plans, estimates and projections at the time Cott makes the statements. Forward-looking statements involve inherent risks and uncertainties and Cott cautions you that a number of important factors could cause actual results to differ materially from those contained in any such forward-looking statement. The forward-looking statements contained in this press release include, but are not limited to, statements related to the use of proceeds, the completion of the transaction on the terms proposed, the anticipated timing of the transaction, the potential impact the acquisition will have on Cott and related matters, and the execution of our strategic priorities. The forward-looking statements are based on assumptions regarding management's current plans and estimates. Management believes these assumptions to be reasonable but there is no assurance that they will prove to be accurate.

Factors that could cause actual results to differ materially from those described in this press release include, among others: the satisfaction of the conditions to the transaction and other risks related to the completion of the transaction and actions related thereto; Cott's and Refresco's ability to complete the transaction on the anticipated terms and schedule, including the ability to obtain shareholder and regulatory approvals; risks relating to any unforeseen changes to or effects on liabilities, future capital expenditures, revenues, expenses, earnings, synergies, indebtedness, financial condition, losses and future prospects; the risk that disruptions from the transaction will harm Cott's business; and the effect of economic, competitive, legal, governmental and technological factors on Cott's business.

The foregoing list of factors is not exhaustive. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. Readers are urged to carefully review and consider the various disclosures, including but not limited to risk factors contained in Cott's Annual Report on Form 10-K and its quarterly reports on Form 10-Q, as well as other filings with the securities commissions. Cott does not undertake to update or revise any of these statements in light of new information or future events, except as expressly required by applicable law. 

Website: www.cott.com

SOURCE Cott Corporation