Alliance One International announced today it has reached a contractual agreement to sell the two companies which own its production facilities in Spain after the completion of the 2005 crop processing season, with the sale expected to close on or near 1 August.

The company had previously announced the intention to close those factories after the season. The acquirer is Agrosalga, a Spanish company led by Manuel Bermejo Hernandez, a former president of Agroexpansion, one of the two companies being sold.
The Company now estimates that it will incur one time costs between US$ 13 to US$ 15 million, including immediate asset impairment charges of US$ 4.8 million. The remaining amounts are cash charges which will be recognised to complete this transaction; including severance and other cash costs and potential future charges. The Company has recognised restructuring, asset impairment and other costs of US$ 3.2 million and an adjustment of US$ 7.3 million related to the former Standard operations, as an adjustment to the purchase price of the merger at 31 December in connection with the pending transactions. As previously disclosed, these actions are expected to generate additional annual savings of between US$ 5 and US$ 6 million per year after the sales have been completed.
Robert E. Harrison, president and chief operating officer, stated, "Alliance One has made the appropriate decision to exit the Spanish market based on the continued decline in the Spanish leaf tobacco market, combined with the decoupling of farm support under the European Union Common Agricultural Policy. As we stated previously, these actions are necessary as we focus on those markets which will produce appropriate returns in the future and are in line with the strategic rationale for our merger." (ci)