Wesfarmers says Coles spin-off will be done by November

(Getty/ Ian Waldi)
  • Following the announcement in March, Wesfarmers now says the Coles spinoff is scheduled for completion in November.
  • Wesfarmers will retain a 15% interest in the separate listed entity, after initially flagging it would own up to 20%.

The de-merger of Coles from the Wesfarmers conglomerate is scheduled for completion in November, pending shareholder and regulatory approvals.

In an update posted on the ASX this morning, Wesfarmers said it would retain a 15% interest in Coles, with 50% ownership of the Flybuys program.

“Maintaining a strategic stake in Coles provides an important connection for Wesfarmers to reinforce opportunities to collaborate in the data, digital and loyalty areas,” Wesfarmers said.

Wesfarmers said Coles intends to operate with a dividend payout ratio of 80-90% of net profit after tax, which is in line with the dividend policy of Wesfarmers.

Coles will list on the ASX with net debt of around $2 billion and total debt facilities of $4 billion, which will provide ample capacity to meet liquidity requirements, Wesfarmers said.

“The proposed capital structure is considered conservative and is expected to support a strong Baa1 and/or BBB+ rating”, from credit ratings agencies, the statement said.

The announcement of the Coles de-merger was initially made in March. Wesfarmers said a Coles spin-off would allow it to be more nimble in pursuing growth opportunities.

Wesfarmers said that James Graham will be appointed as Chairman as Coles if the de-merger proceeds. Graham stepped down from his role as a non-executive director at Wesfarmers this morning, pending his appointment to the new role.

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