Coffee distributor Coburg Group is selling its business and becoming a shell.
The share price slumped 35p to 110p, which values Coburg at £450,000.
The business will be sold to a company owned by Coburg director and former chairman Konrad Legg for £208,000. Legg’s family owns 28% of Coburg. The assets acquired were valued in the balance sheet at £439,000, including £147,000 of goodwill.
Coburg will be left with a share portfolio worth £18,000 and deferred consideration for the disposal of £73,000 - £22,000 payable six months after completion and £51,000 six months later.
Coburg will invest in natural resources and agricultural shares. Longer-term, the company will have to raise cash in order to make more significant investments. The likely time scale of investments is five years.
In the six months to October 2011, revenues increased from £815,000 to £990,000 but gross margins fell as coffee commodity prices remain high. A profit of £3,000 was turned into a loss of £46,000. The business is unlikely to return to profit this year.
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