Kraft Canada to sell certain Canadian grocery assets

28/12/05 Kraft Canada Inc. has announced that it has reached an agreement to sell certain Canadian grocery assets to a new company, owned by affiliates of Sun Capital Partners, Inc. and EG Capital Group, LLC, expected to be named CanGro Foods. The proposed sale includes Aylmer tomatoes, vegetables, fruits, soup and beans; Primo pasta, sauce, soup, tomatoes, beans and other products; Ideal vegetables; Il Migliore and Roma foodservice pasta; and the Canadian licensing rights for a number of Del Monte products, including canned fruits and vegetables. Kraft will retain the rights to the Del Monte line of beverages in Canada. The Company estimates that the products included in the transaction will generate net revenues of approximately $300 million Cdn in 2005.

The sale includes five manufacturing facilities -- four in Ontario in St. David's, Dresden, Exeter and Toronto, and one in Chambly, Quebec - as well as product inventories and other related manufacturing assets.

Approximately 800 Kraft Canada employees, most in manufacturing positions, are expected to transfer to CanGro as part of the sale. Kraft will also continue to provide information technology, procurement and other support services during a transition period.

Kraft Foods Inc., US-based parent of Kraft Canada, will recognize an impairment charge of approximately $.05 per share in Q4 for this agreement. The sale of these businesses, which is expected to be completed by the end of the first quarter of 2006, will not materially affect the operating income of Kraft Canada in the future.

Kraft Foods markets many of the world's leading food brands, including Kraft cheese, Maxwell House and Jacobs coffees, Nabisco cookies and crackers, Philadelphia cream cheese, Oscar Mayer meats, Post cereals and Milka chocolates, in more than 155 countries.

Sun Capital Partners, Inc. is a leading private investment firm focused on leveraged buyouts, equity, debt, and other investments in market-leading companies that can benefit from its in-house operating professionals and experience. Sun Capital affiliates have invested in and managed more than 100 companies worldwide since Sun Capital's inception in 1995 with combined sales in excess of $23.0 billion. Sun Capital has offices in Boca Raton, Los Angeles, New York, and London.

EG Capital Group, LLC is a New York based private equity firm focused on buy-outs of, and growth capital for, established businesses in Canada and the United States. EG Capital is actively pursuing opportunities in the consumer products and retail sectors. Recently, EG Capital acquired Laura Secord, the largest boxed chocolate retailer in Canada. EG Capital takes an active, hands-on investment approach, leveraging its strategic relationships with customers, potential partners and operating professionals to add significant value to its companies.

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