Retail and educational facilities fit out services provider Havelock Europa is selling its point of sale print and display equipment supplier Showcard Print to its management for £15.25m in cash.
There is further potential consideration of £1.25m depending on adjustments. Havelock is keeping a long leasehold property leased to Showcard for 10 years at an annual rental of £150,000, which starts at the beginning of 2013.
In 2010, Showcard made a pre-tax profit of £2.9m on revenues of £21m. The business is running near to capacity and requires additional investment but Havelock wants to focus on its core business.
The disposal will wipe out the profitability of Havelock. In 2010, the remaining businesses lost money and in the first half of 2011 they lost £1.33m. Market conditions remain tough.
However, the interest charge will fall. Havelock had net debt of £17.2m at the end of June 2011. New bank facilities have been negotiated and £12.9m of the disposal proceeds will be used to reduce debt. Thee will be a revolving credit facility of £6.25m and an initial overdraft limit of £3.25m.
At 15.25p a share, up 1.75p on the day, Havelock is valued at £5.88m.
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