Business
Disposal of Eleco Bauprodukte
Disposal of Eleco Bauprodukte.
About this update from Eleco Plc
[{"type":"text","content":"\n RNS Number : 6202O Eleco PLC 01 July 2010 \n \n\n \n \nEleco plc\n(\"Eleco\" or \"the Group\")\n \nDisposal of Eleco Bauprodukte GmbH\n \nEleco announces the sale of the entire issued share capital of Eleco Bauprodukte GmbH (\"EBP\"), its wholly-owned German connector plate business, to MiTek Industries GmbH (\"MiTek\"), a subsidiary of MiTek Holdings, Inc., a Delaware U.S. corporation, for a total consideration of £3.9 million on 30 June 2010. \n \nThe consideration has been satisfied by the issue of £3.9m of Loan Notes of MiTek, redeemable in full on 30 June 2010. There are no conditions attaching to the redemption thereof. \n \nThe agreed consideration reflects what both parties consider to be the maintainable profits of EBP in normal market conditions together with the potential to be realised from the integration of EBP's business into the MiTek group. As a consequence of difficult trading conditions and other issues in the year to 30 June 2010, EBP is expected to make a loss before tax of £369,000; however, its average contribution profit before interest and tax to Eleco in the three years ended 30 June 2009 was £1,003,000. \n \nEBP's assets were depleted during the year by losses and exceptional costs, as a result of which it will have net assets of approx £112,000 at completion of the disposal. In addition to the net assets of EBP as reflected in its books and records, MiTek will receive significant intellectual property assets as part of the transaction. During the current financial year, EBP purchased connector plates valued at £317,000 from GangNail Systems a fellow Eleco subsidiary; such purchases will cease following completion.\n \nEleco also announces the cessation of the EBP-related legal dispute noted in the interim results for the Group as announced on 5 March 2010. Legal costs related to the resolution of this dispute amounted to £554,000 at 31 December 2009. Since then additional legal costs of £417,000 have been incurred, resulting in total legal costs incurred and expensed in the year of £971,000. \n \nThe proceeds of the sale of EBP will strengthen the Group's balance sheet and the cessation of the EBP related legal dispute will result in the cessation of the significant legal costs incurred in connection with the dispute. Theref...