Asset Acquisition & Subscription

RNS Number : 0717R

Coral Products PLC

24 June 2015

 

24 June 2015

CORAL PRODUCTS PLC

("Coral" or the "Company")

Asset Acquisition & Subscription

Coral Products plc, a specialist in the design, manufacture and supply of injection moulded plastic products based in Haydock, Merseyside, is pleased to announce that it has acquired certain injection moulding, extrusion blow moulding and injection blow moulding plant and machinery ("Assets") from Neiman Packaging Limited ("Neiman") for a total consideration of up to £500,000 in cash, comprising an initial consideration of £300,000 and an earn-out consideration of up to £200,000, details of which are set out below ("Acquisition").

Neiman has used these Assets to manufacture a range of packaging products for non-group customers principally in the health, hygiene and personal care markets. The Assets will be installed as two new production lines at Coral's manufacturing plant at Haydock and will result in a significant increase in utilisation of the Haydock facility.

Under the terms of the Acquisition, the earn-out consideration will be calculated on a pro-rata basis on revenues generated by the Assets between £2 million and £3.5 million in months 4 to 15 from the date on which the Assets are introduced to Coral's business.

The Acquisition and the associated working capital facility, estimated to be in the order of £100,000, will be funded by a combination of existing bank facilities and funds raised via a subscription for 1,750,000 new ordinary shares ("Subscription Shares") at a price of 13.5 pence per share raising gross proceeds of £236,250 (the "Subscription").  The Subscription was conducted by Daniel Stewart & Company plc.

Application will be made to the London Stock Exchange to admit the Subscription Shares to trading on AIM and admission is expected to occur on 8 July 2015. The Placing Shares will rank pari passu with the Company's existing ordinary shares.

Following the issue of the Subscription Shares, the enlarged issued share capital of the Company will comprise 59,611,535 ordinary shares of 1 penny each. 

Chairman Joe Grimmond commented on the Acquisition:

"We are delighted to have the opportunity to acquire such quality assets, with which we have acquired the capacity for producing a range of proprietary packaging products that are currently sold to a substantial number of customers that will be new to Coral across a number of growth sectors.

"Historical sales of around £3 million per annum associated with the Assets provide a firm foundation from which to expand our sales in these new sectors. The machinery purchased, which will be moved to our Haydock site, improves and increases our injection moulding capacity. It also introduces two new manufacturing processes, injection blow moulding and extrusion blow moulding, enhancing our range of manufacturing capability.

"The Acquisition is in line with the Company's new 5 year plan aimed at substantially increasing group revenue and profitability from our specialist plastic products manufacturing and distribution activities.

"We expect that the Acquisition will make a significant contribution to sales and profitability in the current financial year."

Enquiries

Coral Products plc Joe Grimmond, Executive Chairman	Tel: [phone]
Nominated Adviser Cairn Financial Advisers LLP Tony Rawlinson / Avi Robinson	Tel: [phone]
Broker Daniel Stewart & Company plc David Lawman / David Coffman	Tel: [phone]
PR Capital Markets Consultants Limited Richard Pearson	Tel: [phone]

 

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