Australia will not be giving local fruit processing firm SPC Ardmona Ltd a grant worth A$25 million or $21.8 million since its parent firm Coca-Cola Amatil Ltd can restructure the company even without support from the government, Bloomberg reported.
Australian Prime Minister Tony Abbott told media that Coca-Cola Amatil is a very strong company after his Cabinet came to a decision to refuse the fruit processor's request for aid. Abbot said, "This is a business which well and truly has the resources to ensure that SPC Ardmona is in a strong position to restructure."
Abbott's government, which had pledged to reduce taxes and remove red tape for businesses when it took seat in September, had said it does not adhere to "corporate welfare" to help embattled companies. Coca-Cola Amatil had filed an application for temporary tariff protection to halt unloading of imported packaged fruit into the country. It also asked for a government grant to help it restructure the operations of the unit, the report said.
Coca-Cola Amatil had promised to pour A$90 million to the fruit processing company if the grant would be approved. The company said that the decision of the government would also mean that the additional A$25 million in aid from the state of Victoria will not also push through, Bloomberg reported.
Citing a regulatory statement given today by Coca-Cola Amatil, the report said the company will conduct a review of the carrying value of the unit as well as a write down of its assets and will unveil the specifics when it gives its full-year results on next month.
In an update given in November, the firm projected its earnings before interest and tax in the year that will end on December 31 to get reduced by up to 7% compared to the year before. Coca-Cola Amatil's net income had dropped 12% to A$216 million in the first half of the year last year, the report said.
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