Constar International Inc. announced that it has executed a four year agreement for supply of PET packaging products to Pepsi.
Source Packagingdigest.com
The agreement covers supply of both bottles and preforms for cold fill applications beginning on January 1, 2009.
Constar’s CEO, Michael Hoffman, says Pepsi is a key long term customer of Constar’s.
"We are proud that they have again put their confidence in us as a critical supply chain partner," he says.
"We believe that our negotiations have brought us to a mutually beneficial agreement."
As expected, compared to the existing agreement, the new agreement provides for a reduction in total volumes with a mix shift towards fewer bottles and more preform volume."
In conjunction with the signing of the new supply contract with Pepsi, Constar is undertaking a plan of restructuring to reduce the Company’s overhead cost structure.
The estimated annual cash overhead savings from the restructuring, including the savings from the previously disclosed closure of the Company’s Houston Texas facility, is expected to be approximately $28-32 million.
Based upon the Company’s current estimates, the new Pepsi agreement will result in lower sales but, after taking into account the expected net reduction in costs from the restructuring program, will result in higher cash flows from operating activities, net of investing activities as compared to those realised from the Pepsi cold fill business in 2008.
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