Cake sale: Buy more Sara Lee, administrator urges as creditors owed $55m

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The administrator of collapsed cheesecake maker Sara Lee is encouraging Australians to buy more frozen desserts as he fields interest from about 60 parties that are considering taking on the iconic brand and the $55 million sum owed to creditors.

FTI Consulting voluntary administrator Vaughan Strawbridge said there had been an “initial response” from the public after news broke of Sara Lee’s collapse three weeks ago.

Sara Lee is fielding interest from dozens of parties from Australia and around the world.Credit: Getty

“We would love to see an uptick in sales because obviously that makes our job a lot easier in the sales process. The more Australians support us by buying Sara Lee, the better … given it’s such an iconic Australian frozen dessert business,” said Strawbridge.

The total sum owed to creditors, including employees, unpaid suppliers and secured lenders is around $50 million to $55 million, he confirmed.

About $2.7 million of this figure is owed to employees in the form of holiday pay, long service leave, superannuation, redundancy pay or payment in lieu, according to a report on company activities prepared by the administrators.

The new buyer is not expected to be announced until next year. Interested parties are invited to submit their non-binding indicative offers by December 1. Strawbridge and his team would then begin shortlisting the parties that will be invited to conduct the due diligence process, which includes site visits, management presentations and access to the data room.

Final binding offers are expected to be submitted by January 19.

“It wouldn’t be unusual for [the process] to be run and try to get an outcome by Christmas. The difference here is, we do have time,” said Strawbridge, adding that there has been a high volume of interest from overseas companies and “large trade and financial buyers”.

“We’re trying to accommodate everyone,” he said.

The administrators will be looking to select a buyer that can give the “best outcome for creditors” and will be in the best interests of employees and retaining jobs.

“Our preference is to keep the business as a whole and not to look at breaking it up, and that generally gets us better value for all the creditor groups.”

Several creditors are owed six-figure sums, including $131,400 to refrigerated transport business Blenners Transport and $895,000 to Confoil Containers. Food suppliers and manufacturers Frutex Australia and Eatwell Foods are owed $229,400 and $226,500 respectively, while Graphic Packaging International is yet to receive $703,500.

Retail property service provider RETPRO is owed $891,000, while Mondelez – which owns Cadbury, Ritz and Toblerone – is owed more than $1 million in total. Auditor BDO is also among the list of creditors and is owed over $40,000.

However, Sara Lee itself is also owed a significant sum, with nearly $12 million in outstanding monies owed to the company.

Vaughan Strawbridge was also the administrator of Virgin when it collapsed in 2020.Credit: Attila Csaszar

A cocktail of factors pushed Sara Lee over the brink, including higher business input costs such as rent, raw materials, energy prices; supply chain disruption caused by last year’s floods; industrial action at major packaging suppliers; and a “slight reduction in sales” after a price rise was passed through.

On top of selling frozen cakes, pies, crumbles and ice creams in supermarkets, Sara Lee also has a private-label, foodservice and catering business.

Vaughan said Sara Lee had a strong brand but noted there was extra capacity in the production facility. “They’ve done a lot of work around revitalising the brand and some of the products have moved into more premium frozen dessert products,” he said.

“When we’re looking at the business going forward, there is a great opportunity for someone to come in and realise that there is spare capacity here, so that’s definitely a big opportunity [in] category growth and more into foodservice.

“But it will require some investment as well.”

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