Dairygold must return €750,000 grant after Welsh plant closure

DAIRYGOLD has had to pay back a €750,000 grant to the Welsh Assembly government, stemming from last year’s closure of its Dairygold Food Products cheese company packing plant in Wales.

Welsh Deputy First Minister Ieuan Wyn Jones has announced that, following the initiation of legal action, £600,000 had been recovered of a £663,528 processing and marketing grant awarded to Dairygold in June 2002 to expand packing lines at the factory in Felinfach, Ceredigion.

The work was completed in 2004, but the cheese-packing facility closed in April last year with the loss of 115 jobs.

Meanwhile, the Munster co-op’s Reox Holdings plc offshoot still awaits results from the Competition Authority’s full investigation of the proposed acquisition by Kerry Group plc of Breeo Foods Limited and Breeo Brands Limited from Reox Finance Limited, a wholly owned subsidiary of Reox Holdings plc.

Following a preliminary investigation, the Competition Authority was unable to conclude if the €165 million transaction would not substantially lessen competition.

The Competition Authority has until August 31 to make a final determination on the transaction, but may conclude its investigation into sale and distribution of consumer foods earlier.

Dairygold Co-Op shareholders are looking forward to resolution of the matter. They own 75% of Reox Holdings, into which the co-op transferred certain businesses, including consumer foods (Breeo), DIY retail (4Home), and property interests (Alchemy Properties) in May 2006. The remaining 25% is owned by Dairygold Co-Op.

The co-op reported improved performance in 2007, with operating profit at €21.5 million, a net assets increase of €14.0 million to €248.6 million, and net debt reduction from €42.1 million to €38.3 million, after investing €30.1 million in capital expenditure during the year.