Re Sale and Leaseback Arrange

RNS Number : 1943O

Diageo PLC

24 June 2010

 



24 June 2010

Diageo enters into sale and leaseback arrangement relating to its North American wines business‪‪

Diageo announced today that it has entered into a sale and leaseback arrangement in respect to certain land and facilities located in Napa Valley, California valued at approximately $260 million (£174 million). The land and facilities will be purchased and leased back to Diageo by Realty Income Corporation (NYSE: O) under a 20 year lease, with Diageo holding options to extend the lease for up to 80 years in total. Diageo Chateau and Estate wines (DC&E) remains the operator of the properties under the lease agreement and retains ownership of the brands, vines and grapes, which remain a strategic part of Diageo's wine business.  The purchase and lease agreement is expected to close no later than 30 June.‪

The transaction is part of the previously announced review of the operations of DC&E which resulted in a reduction in the workforce and may also include the sale of non-strategic brands.‪ The impact of the restructuring, including the sale and leaseback, on the income statement for the year ending 30 June 2010 will be broadly neutral as the profit on the sale of land is broadly offset by restructuring costs, inventory impairment and provisions made against the disposal of non-strategic brands. The benefit to free cash flow in the year ending 30 June 2010 is expected to be in the region of $200 million (£134 million).‪‪ The transaction will also improve the return on invested capital of the DC&E business.

ENDS

Investor enquiries:

Nick Temperley

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Kelly Padgett

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Media enquiries:

James Crampton

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Zsoka McDonald

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Forward-looking statements

This document contains 'forward-looking statements'. These statements can be identified by the fact that they do not relate only to historical or current facts. In particular, forward-looking statements include all statements that express forecasts, expectations and plans with respect to future matters, including trends in results of operations, margins, growth rates, anticipated cash flow, overall market trends, the impact of interest or exchange rates, the availability or cost of financing to Diageo, anticipated cost savings or synergies, the completion of Diageo's strategic transactions and general economic conditions. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, including factors that are outside Diageo's control. All oral and written forward-looking statements made on or after the date of this document and attributable to Diageo are expressly qualified in their entirety by the 'risk factors' contained in Diageo's annual report on Form 20-F for the year ended 30 June 2009 filed with the US Securities and Exchange Commission (SEC). Any forward-looking statements made by or on behalf of Diageo speak only as of the date they are made. Diageo does not undertake to update forward-looking statements to reflect any changes in Diageo's expectations or any changes in events, conditions or circumstances on which any such statement is based. The reader should, however, consult any additional disclosures that Diageo may make in documents it publishes and/or files with the SEC. All readers, wherever located, should take note of these disclosures. The information in this document does not constitute an offer to sell or an invitation to buy shares in Diageo plc or any invitation or inducement to engage in any other investment activities. Past performance cannot be relied upon as a guide to future performance.

 

END

 

 

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