Burns Philp on the prowl after $83m terminals sale

It is thought Burns Philp could have up to $US300 million ($559.9 million) at its disposal after the sale and a $US450 million reorganisation of its debt profile in June. The company is also expected to offload its vinegar manufacturing business in the US for an estimated $US55 million.

``You must assume there is something pretty big in the back of their minds," one analyst said.

Any deal would follow the acquisition two months ago of the Kraft Foods yeast and ingredients business in Latin America for $US110 million. Burns Philp is yet to finalise the transaction and, as a result, details on the new business are scarce.

The lack of information on such an important transaction has put some investors in a cautious frame of mind and eroded support for the share price. Burns Philp shares were up 2c to 59c, down from a recent peak of 73c in May.

The Kraft assets, which trade under the Fleischmann's banner, boost Burns Philp's existing operations in Brazil, and give it a presence in Colombia, Ecuador, Venezuela and Peru. It is believed the deal will give Burns Philp up to 65 per cent of the South American market and with that size comes valuable pricing power.

Burns Philp already has four plants and will inherit another four. It is expected to close about half as it rationalises the business in much the same way as it improved the efficiency of its North American assets.

Analysts suggested yesterday's sale of the terminals assets to Kaneb Pipe Line yielded less than the $100 million or so they had expected.

The business is the largest in both the Australian and New Zealand markets in terms of storage capacity. It operates at Coode Island in Melbourne, Port Botany, Geelong and Adelaide and in four New Zealand ports.

Approval from the New Zealand Overseas Investment Commission is required, along with the consent of certain lessors. Burns Philp hopes to complete the sale before the end of the month.