Milling & Baking News - November 21, 2017 - 12

Business

Canadian Competition Bureau looking
into possible bread price fixing
TORONTO - The Competition Bureau, an independent law enforcement agency that works to ensure
that Canadian businesses operate in a
competitive manner, is conducting an
investigation related to the price fixing
of bread in the grocery industry.
"The Ontario Superior Court of
Justice in Ottawa granted search warrants based on evidence that there are
reasonable grounds to believe that
certain individuals and companies
have engaged in activities contrary to
the Competition Act," the Competition Bureau said. "Bureau officers are
conducting searches and are gathering evidence to determine the facts.
There is no conclusion of wrongdoing at this time and no charges have
been laid."
While details of the investigation

are thin, Canada Bread, George
Weston Ltd., Loblaw Companies Ltd.
and Metro Inc. confirmed they were
aware of the investigation.
"Canada Bread Co., Ltd. has been
informed it is included in an industrywide investigation by the Competition Bureau into pricing conduct dating back to 2001," said Canada Bread,
which is a subsidiary of Grupo Bimbo
S.A.B. de C.V. "The company is cooperating fully. Canada Bread operates
with the highest ethical standards and
complies with all legal and regulatory
standards. The company has not been
charged with any offenses."
In their statement, George Weston
and Loblaw said they are "cooperating
fully" and "will provide further comment when they can do so."
Metro Inc., which operates more

Aunt Millie's to close Fort Wayne
baking plant by spring 2018
FORT WAYNE, IND. - Aunt Millie's
Bakeries, a family-owned company
that makes bread and bakery products, will cease operations at its baking plant in Fort Wayne. The closing
will take place in phases, beginning
this month with complete shuttering
expected by April 2018.
The plant closing is expected to affect
91 bakery employees. Aunt Millie's said
it will continue to operate six other bakeries in the Midwest, and its headquarters will remain in Fort Wayne, with

about 120 administrative employees.
"Due to the current business environment and after undertaking
a capacity and logistical analysis, we determined we need to
close our Fort Wayne bakery,"
said John F. Popp, president
of Aunt Millie's. "This is
a critical step in reducing excess capacity and
costs, to allow ourselves
to maintain our leadership
position in the baking industry. We

Moody's projects Bimbo debt load
to gradually decrease in 2018
NEW YORK - Financing of the
company's East Balt Bakeries acquisition will not materially change the
debt-to-earnings ratio of Grupo Bimbo S.A.B. de C.V., said Moody's Investors Service Inc. Over the course
of the next year, Bimbo's debt load
is likely to decline to about 3 times
EBITDA from about 3.5 times in
September 2017, Moody's said.
Moody's offered the balance sheet
outlook in connection with its Baa2
rating issued for $650 million of senior unsecured notes to be offered
by Bimbo. Bimbo's credit outlook
is stable, the agency said.
12 / November 21, 2017

Milling & Baking News

Proceeds from the $650 million
debt offering will be used to repay
debt assumed for the East Balt acquisition, which closed in October, and
for general corporate purposes.
The East Balt acquisition was financed through the sale of 10-year
local notes and the company's credit
facility. Moody's said it expects higher EBITDA generation to lower the
debt-to-EBITDA ratio to about 3 by
the end of 2018.
"The Baa2 rating is supported
by Bimbo's position as the largest baked-goods company in the
world, with an ample distribution

than 600 stores under the banners
Metro, Metro Plus, Super C and Food
Basics, also confirmed that an investigation is under way into supply of
commercial bread.
"This investigation concerns certain
suppliers and Canadian retailers,"
Metro said. "Metro fully cooperates
with the authorities."
Under terms of its Competition Act,
the Competition Bureau prohibits
agreements between competitors in
respect of a product "to fix, maintain,
increase or control the price for the
supply of the product." According to
the Competition Bureau, this includes
agreements to fix prices at a predetermined level, to eliminate or reduce
discounts, to increase prices, to reduce
the rate or amount by which prices are
lowered, to eliminate or reduce promotional allowances and to eliminate
or reduce price concessions or other
price-related advantages provided to
customers. MBN
reached this extremely difficult but
necessary decision after thoroughly
exploring other options."
Jay Miller, chief financial officer, added, "Aunt Millie's and Sunbeam highquality products will continue to be
baked at our other six bakeries. Our
customers will still be able to find
their favorite bread at grocery
stores throughout the Midwest."
Founded in 1901, Aunt Millie's operates baking plants
in Indiana, Michigan and
Ohio, and has more than 50
branch depots and 35 outlet
stores in those states, plus
Kentucky, Illinois and Wisconsin. MBN
infrastructure in its key markets;
sustained free cash flow generation;
and ample geographic diversification," said Alonso Sanchez, a vicepresident at Moody's. "On the other
hand, the rating reflects Bimbo's
strategy to grow through acquisitions, which increases its leverage
and execution risk."
Moody's said execution risk is diminished by Bimbo's management
team's strong track record integrating acquisitions and capturing synergies. Bimbo's credit rating could
be raised from Baa2 if the company
were to lower its debt to EBITDA
ratio to 2 or below on a sustainable
basis, Moody's said. Conversely, the
rating could be downgraded it the
ratio climbs and holds above 3.5. MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - November 21, 2017

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