2 January 2009
St Ives plc ("St Ives" or "the Group") - Disposal of US Division
The Board of St Ives is pleased to announce that it has today entered into a
conditional agreement to dispose of its US division, St. Ives (USA), Inc. and
its subsidiary undertakings (the "US Division"), to a management buyout
vehicle, St Ives (USA) Acquisition Inc. (the "Disposal"). The management buyout
team is being led by Wayne Angstrom, a director of St Ives and Chief Executive
Officer and Chairman of the US Division. Wayne Angstrom will resign from his
position as a director of St Ives following completion of the Disposal.
The total consideration receivable by St Ives for the Disposal will be US$39.0
million, comprising US$34.0 million in cash payable on completion (the
"Completion Proceeds") and a US$5.0 million secured promissory note. US$3.9
million of the Completion Proceeds may be retained in escrow on completion
pending approval of a United States Internal Revenue Service ("IRS") real
property transaction tax withholding exemption application. In the event the
tax withholding exemption is approved by completion, the Completion Proceeds
will be received in full on completion, however the IRS has up to 90 days to
consider the application. The secured promissory note is repayable in
instalments with US$1.0 million due on 1 February 2012, US$1.0 million due on 1
February 2013 and the balance due on 1 February 2014. The Disposal is subject
to shareholder approval and is expected to be completed by 21 January 2009.
The US Division is focused on magazine printing, general commercial printing
and the supply of point-of-sale marketing materials to the North American
market. The US Division currently employs 564 people and its operations are
located in Hollywood, Florida and Cleveland, Ohio. As at 1 August 2008, the US
Division had gross assets of £41.7 million (US$82.4 million) and, in the
financial year ended 1 August 2008, generated a profit before tax of £1.7
million (US$3.4 million). Since the financial year end the US Division has
repaid £6.3 million (US$11.0 million) of inter-company debt.
Due to the size of the Disposal relative to the Group and the directorship held
by Wayne Angstrom on the Board of St Ives and his ownership of St Ives (USA)
Acquisition Inc., the Disposal is deemed a class 1 related party transaction
under the Listing Rules. The Disposal is therefore conditional upon the
approval of independent St Ives shareholders at an Extraordinary General
Meeting and accordingly a circular containing further details of the Disposal
and the Extraordinary General Meeting will be sent to shareholders shortly.
The Disposal is consistent with the Group's strategy of focusing on its core
operations. As set out in the Interim Management Statement released on 1
December 2008, the US Division continues to face significant challenges due to
volatile demand in an oversupplied market. The Disposal will realise
significant value for St Ives and the net proceeds will be used to reduce Group
indebtedness.
Commenting on the Disposal, Miles Emley, Chairman of St Ives, said:
"I am very pleased to announce the disposal of the US Division. The Group
currently faces a challenging trading outlook with increasing pressure on
margins resulting from prevailing volatility in demand and rising input costs.
The Disposal will allow a significant reduction in Group borrowings and enable
the Board to focus on ensuring the continued success of St Ives's core UK
businesses."
Enquiries:
St Ives plc 020 7928 8844
Brian Edwards, Chief Executive
Matt Armitage, Group Finance Director
Smithfield 020 7360 4900
John Antcliffe
Rupert Trefgarne
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