KIK Acquires Accra Pac Group

KIK Acquires Accra Pac Group

TORONTO, Sept. 19 /CNW/ - KCP Income Fund ("KCP" or the "Fund") announced today that it has entered into a definitive agreement to acquire APG Group ("APG"). APG is a leading full service contract manufacturer in a variety of categories including household, personal care and both over-the-counter and prescription pharmaceutical products.
KCP is acquiring APG for a purchase price of approximately US$73 million payable in cash at closing. The transaction, which has been approved by the Board of KCP, is immediately accretive to KCP's distributable cash per Unit. On a pro forma basis, the combined company (including the Custom business acquired in May 2005) would have had revenues and EBITDA of approximately US$937 million and US$72 million, respectively, for the twelve months ended June 30, 2005. The transaction is expected to close on October 20, 2005, subject to regulatory approval and other customary closing conditions.
APG was founded in 1967 and is headquartered in Elkhart, Indiana. The company operates from four facilities with over 1,300,000 square feet of manufacturing and distribution capacity. Its customers include many leading
branded consumer product companies. "The acquisition of APG allows us to expand both our contract manufacturing and retailer branded capabilities. APG allows KCP to further diversify through new branded consumer product customers and new product categories, particularly pharmaceutical," said David Cynamon, CEO of KCP. "This acquisition builds on our successful acquisition of the North American business of the Custom Manufacturing Division ("Custom") from CCL Industries Inc. which we completed in May 2005, and strengthens our platform to become a global leader in contract manufacturing for both National Brand and Retailer Brand consumer products."
"APG's aerosol capabilities strengthen our product offering and will enable KCP to better utilize capacity and better serve both APG's and our customers" said Paul Richardson, President of KCP.

The acquisition of APG has the following highlights: 
  • Immediately accretive to the Fund's cash available for distribution,based on the number of Units being issued in connection with the acquisition
  • Conservative funding structure with reduced leverage
  • Growth in KCP's contract manufacturing and retailer branded capabilities
  • Enhanced presence in the expanding aerosol category, strengthening
  • KCP's position as a supplier of aerosol packaged products
  • Existing management team at APG to remain with KCP post-acquisitionand convert a portion of their current stake in APG into KCP units

In connection with the acquisition, the Fund has entered into an agreement to sell, on a bought deal private placement basis, to TD Securities Inc. and a syndicate of underwriters, approximately C$80 million of Units priced at $11.00 per Unit. In addition, KCP will draw approximately US$15 million under its existing credit facilities for the remainder of the purchase price and associated transaction fees. Included in the financing described above is approximately US$10 million to be used by KCP to fund certain expansion capital projects.

In addition to KCP's existing currency hedge arrangements, the Fund intends to enter into certain additional currency hedge contracts, consistent with its current strategy, designed to significantly protect the Fund's distributions from currency fluctuations and further enhance the Fund's ability to meet unitholder expectations.

With 15 vertically integrated manufacturing facilities strategically located throughout North America, KCP (operating as KIK Custom Products) is one of North America's largest custom manufacturers of both National Brand and Retailer Brand consumer products. KCP's product lines include Laundry, Household Cleaners, OTC Medicated and Health and Beauty Care, all supported by KCP's in-house technical expertise and value-added services.

KCP produces leading National Brand products for Fortune 500 companies including Gillette, Johnson & Johnson, L'Oreal, Procter & Gamble, Unilever, Dial, Colgate-Palmolive, SC Johnson and 3M, and Retailer Brand products for top retailers including Albertson's, Kroger, Loblaws, Safeway, Target, Wal-Mart, Walgreens, and food service leader Sysco.

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