CONAGRA FOODS
FOR IMMEDIATE RELEASE
CONAGRA FOODS ANNOUNCES AGREEMENT FOR SIGNIFICANT CHANGE TO PORTFOLIO;
FRESH BEEF AND PORK PROCESSING BUSINESS TO VENTURE WITH HICKS, MUSE,
TATE & FURST
OMAHA, Neb., May 21, 2002 - ConAgra Foods, Inc., (NYSE: CAG), one of
America's leading food companies, announced today that it has entered
into an agreement to transfer its fresh beef and pork processing
business to a new venture led by Hicks, Muse, Tate & Furst
Incorporated ("HMTF"). Under the arrangement, ConAgra Foods will own a
minority stake and substantially reduce its equity interest in the
fresh beef and pork business to $150 million from over $1 billion
currently. The HMTF group, in conjunction with Booth Creek Management
Inc. and George Gillett, will own 54% of the venture, leaving ConAgra
Foods with 46%.
As a result of the transaction, HMTF and George Gillett will be
acquiring control of one of the largest fresh beef and pork operations
in the U.S., headquartered in Greeley, Colo., and the premier beef
processing company in the Pacific Rim, headquartered in Brisbane,
Australia. Bruce Rohde, chairman and chief executive officer of
ConAgra Foods, commented, "This is an important step in sharpening our
strategic focus while ensuring continued access to our principal
supplier of top-quality meat and pork products. We are pleased that
the significant operational and financial progress made by John Simons
and his team at our fresh beef and pork operations has made this
transaction possible, and we look forward to maintaining a strong
vendor relationship with that team for many years to come."
The new joint venture will be operated under the name Swift & Company
and headquartered in Greeley, Colo. The operating management will be
led by John Simons, the current president and chief operating officer
of the enterprise. All operating management will remain in place under
this structure.
Transaction Details
o ConAgra Foods will transfer its fresh beef and pork processing
business to the venture in a book value transaction. As of the
end of ConAgra Foods' fiscal third quarter, the book value of the
fresh beef and pork operation was in excess of $1.4 billion. The
transferred operations will include ConAgra Foods fresh beef,
pork and lamb businesses, all based in Greeley, Colo., together
with ConAgra Foods Australian beef operations, based in Brisbane,
Australia.
o As a result of the transaction, ConAgra Foods will receive a
combination of cash, equity, and debt reflecting the book value
of the business, which should approximate $1.4 billion on the
closing date. ConAgra Foods will receive approximately $800
million in cash and an equity interest valued at $150 million at
closing. The joint venture will owe ConAgra Foods $150 million of
subordinated debt, $30 million of secured debt, and approximately
$250 million of line of credit amounts assumed by the venture.
o ConAgra Foods' equity interest will constitute approximately 46%
of the venture's equity. ConAgra Foods will report its portion of
the joint venture operations under the equity method of
accounting.
o The HMTF / Gillett group will appoint 5 directors and ConAgra
Foods will appoint 2 directors.
o The investor group, led by affiliates of HMTF and George Gillett,
will have an equity interest of $175 million, representing 54% of
the venture, and the investor group has received commitments for
the requisite debt financing.
o During a 24-month transition period, ConAgra Foods will provide a
secured line of credit of up to $350 million to the
cattle-feeding subsidiary of the joint venture for cattle feeding
operations. The line of credit will be secured by all cattle
feeding assets. As of the close of business today, approximately
$250 million of this line would be outstanding. Due to the nature
of the financing of the cattle feeding operations, financial
results for the separate cattle feeding operations will be
consolidated into ConAgra Foods' financial results until ConAgra
Foods no longer provides such financing.
o The transaction is scheduled to close in August 2002.
Fiscal 2003 Earnings Outlook & Financial Impact of the Transaction
Following the transaction, the company expects fiscal 2003 EPS in the
range of $1.60, reflecting solid growth over EPS for fiscal 2002. Even
though the company will have fewer businesses in its portfolio in fiscal
2003 due to this transaction, fiscal 2003 EPS are expected to show solid
growth over fiscal 2002 EPS due to the net impact of :
1) A high single-digit rate of earnings growth for the company's
remaining operations due to growth and efficiency initiatives
underway,
2) The removal of approximately $0.12 - $0.15 of EPS in fiscal 2003
due to the dilutive nature of the meat transaction and the costs
associated with the deal, and
3) An estimated $0.15 favorable impact of SFAS 142 on EPS.
The company has posted question-and-answer information relating to
this release at http://www.conagrafoods.com/investors.
ConAgra Foods, Inc. (NYSE: CAG) is one of North America's largest
packaged food companies, with a strong presence in consumer grocery as
well as restaurant and foodservice establishments. ConAgra Foods'
consumer brands include: Hunt's tomato products, Healthy Choice,
Banquet meals, Armour meats, Bumble Bee tuna, Louis Kemp seafood, La
Choy, Chun King, Lunch Makers, Knott's Berry Farm, Wesson, Country
Pride, Blue Bonnet, Kid Cuisine, Parkay, Reddi-wip, Marie Callender's,
Cook's ham, Butterball, Act II, Slim Jim, Eckrich, Chef Boyardee,
Orville Redenbacher's, PAM cooking spray, Snack Pack puddings, Van
Camp's, Peter Pan, Hebrew National, Gulden's mustard, Pemmican jerky,
Swift Brown 'N Serve Sausages, Swiss Miss, and many others. For more
information, please visit us at http://www.conagrafoods.com.
Note on Forward-Looking Statements:
This news release contains "forward-looking" statements within the Private
Securities Litigation Reform Act of 1995. These statements are based on
management's current expectations and are subject to uncertainty and
changes in circumstances. Actual results may vary materially from the
expectations contained in the forward-looking statements. Future economic
circumstances, industry conditions, company performance and financial
results, availability and prices of raw materials, product pricing,
competitive environment and related market conditions, operating
efficiencies, access to capital, actions of governments and regulatory
factors affecting the company's businesses are examples of factors, among
others, that could cause actual results to differ materially from those
described in the company's reports filed with the Securities and Exchange
Commission. The company is under no obligation to (and expressly disclaims
any such obligation to) update or alter its forward-looking statements
whether as a result of new information, future events, or otherwise.