Petra Foods reaches settlement in legal dispute

Chocolate maker Petra Foods Limited said it has entered into a settlement agreement with Barry Callebaut on their outstanding dispute and arbitration.

The dispute concerned the sale of Petra's cocoa ingredients business to Barry Callebaut - a deal that was completed on June 30 and for which Barry Callebaut had sought an adjustment of US$103 million.

Under the settlement, Petra and Barry Callebaut have agreed, among other things, to fully and finally settle the dispute and discontinue the arbitration, without any admission of liability by Petra Foods or Barry Callebaut.

Both parties have mutually agreed that Petra Foods will pay a sum of US$38 million plus interest of US$0.8 million as an adjustment to the closing price and in consideration of full and final settlement of all claims.

After taking into account this settlement, Petra's overall pre-tax gain on the sale of the cocoa ingredients business amounts to US$46.1 million, and Petra Foods will have cash in excess of US$100 million, the majority of which comprises the proceeds from selling the cocoa ingredients business.

But the group said it will recognise a one-time exceptional charge of US$19.4 million. Although this is a non-operational item, this one-time charge is likely to result in a net loss for the third quarter of 2015 and a drag on the full year performance, "notwithstanding that the core business is likely to remain profitable".