Wesfarmers resumed trading after the release of pending announcement on demerger of Coles Group Limited and the associated disclosures.
The consumer sector company Wesfarmers Limited underway to shrug off its supermarket unit Coles. The company announced that it intends to hold a shareholders meeting on the order of Supreme Court of Western Australia to obtain vote on the proposed demerger of Coles.
If the demerger goes through, the eligible shareholders are said to receive one share of Coles for every Wesfarmers share held at the demerger record date, which are also expected to be eligible for tax relief. Both the Scheme Meeting and General Meeting of Wesfarmers are scheduled to be held on 15 November 2018, with demerger expected to be completed in November this year.
The Board of Directors of Wesfarmers Limited have placed their unanimous recommendation that shareholders should vote in favor of the proposed demerger resolutions as independent expert, Grant Samuel & Associates, concluded that the demerger is in the best interest of the Wesfarmers shareholders.
On the separation from Wesfarmers after 11 years, Coles will become an independent listed company on Australian Securities Exchange. It will be new in a row to top-30 ASX listed supermarket retailer with leading positions in fresh food, liquor, groceries, and convenience. Coles has secured committed bank facilities of approximately $4.0 billion, to fund support net debt of circa $2.0 billion at demerger.
“Coles will be demerged with a strong balance sheet, including a net debt level that supports strong investment grade credit ratings,” Wesfarmers Managing Director Robert Scott said.
The demerger is said to be affected by way of a scheme of arrangement and a reduction of Wesfarmers’ share capital. It should be noted that post demerger minority ownership of Coles is expected to be retained by Wesfarmers which includes the interest of 15% in Coles and 50% in the flybuys joint venture with Coles.
Mr. Scott stated that the demerger of Coles represents a significant repositioning of the Group’s portfolio which would position Wesfarmers for success over the next decade.
Robert Scott led company Wesfarmers Limited also announced today that Coles has entered into a Head of Agreement with the Australian subsidiary of Witron Logistik + Informatik GmbH, Witron Australia to develop two new automated ambient distribution centres for Coles over a five-year period.
Coles expects to deliver a dividend payout ratio ranging between 80% and 90% regarding franking credits, current cash flows and earnings, and future cash flow requirements.
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