British Polythene Sells its Flexibles
13 Sep 2000
British Polythene Industries PLC (BPI) has exchanged contracts for the sale of its Flexibles Business to Inhoco, a company formed by a Management Buy Out team headed by Mr Geoffrey Stewart, Managing Director of the Flexibles Business.
The initial consideration payable in cash (including the repayment of Inter Group loans) will be £5.3 million with a further Deferred Consideration of £1.3 million payable as to £0.65 million 30 days after completion and £0.65 million payable 60 days after completion.
The sale comprises the business, fixed assets and stocks of Britannia Packaging at Stoke on Trent and the shares in Parkside Flexible Packaging Ltd at Normanton, Leeds, its holding company. BPI will be retaining ownership of the Promopack business, which provides origination services to the Flexible division and other parts of BPI.
BPI and Inhoco will enter into agreements for the services of Promopack and the supply of polythene lamination film from BPI's Film business on completion of the sale. Completion is subject to employee consultation at Britannia Packaging (among other things).
In the year ended 31 December 1999 the Flexibles Business had sales of £30.6 million and an operating loss of £2.4 million. In the six months to 30 June 2000 sales were £15.3 million and the operating loss was £1.8 million. At 30 June 2000 the net assets of the Flexible Business being sold was £8.9 million.
The sale will result in a loss on disposal of £2.4 million before release of deferred tax of £0.5 million and will be shown as an exceptional item in the 2000 annual accounts. An additional exceptional charge of just under £14 million for the write off of goodwill will be charged to the profit and loss account under current accounting requirements. This charge will have no effect on shareholders' funds as this goodwill was written off against reserves in 1995.
The proceeds of the disposal will be utilised to reduce borrowings.
Commenting on the disposal Cameron McLatchie the chairman said
' This disposal continues the strategy of eliminating loss making activities and follows the sale of Pacena Ltd, a loss making retail bag manufacturer in March and the sale of the loss making Welton Polythene business in June. The Group will continue to focus on its profitable core activities in the polythene film and bag markets'.
British Polythene Industries plc are on the web at www.britpoly.co.uk
