Disposal

RNS Number : 0216B

Begbies Traynor Group PLC

10 April 2012

 



10 April 2012

Begbies Traynor Group plc

Disposal of Red Flag Business

Begbies Traynor Group plc (the "Group"), the specialist professional services consultancy, today announces it has completed the sale of Red Flag A!ert LLP, which operates the Red Flag Alert credit risk database that enables subscribers to target, assess and monitor the performance of customers, suppliers and competitors.

Ric Traynor, the Group's Executive Chairman, has acquired the controlling interest in the LLP, with the Group retaining a minority interest in the partnership. This follows a disposal process, during which feedback from third parties was that the business was not yet sufficiently established for consideration as a standalone acquisition opportunity.

Ric Traynor has committed to inject up to £1m of new capital into the LLP to fund ongoing losses and its future development. The agreement allows for a return of up to £1.5m of the investment made by the Group in the business to date, together with a future share of any trading profits of the LLP, with a de-minimis obligation for future investment. Ric Traynor will act as chairman of the Red Flag business, which will be managed by the current management team who transfer with the business.

The Red Flag business employs 24 staff who have transferred to the LLP. The Group has agreed to continue to provide shared accommodation, IT, HR, marketing, administrative and accounting services to Red Flag on a similar basis to current intra-group arrangements. The Group has negotiated an agreement to retain full access to the database and joint marketing rights for the publication of Red Flag Alert quarterly statistics.

As this is a related party transaction, the directors (with the exception of Ric Traynor) consider, having consulted with its nominated advisor (NOMAD) Canaccord Genuity Limited, that the terms of the transaction are fair and reasonable insofar as the shareholders are concerned.

For the year ended 30 April 2011, the business generated revenue of £0.2m (2010: nil) and an operating loss of £0.7m (2010: loss of £0.6m), reflecting the on-going investment requirements of the division. Net liabilities at 30 April 2011 were £0.03m. The division was reported as a discontinued operation in the Group's half year results announcement issued in December 2011.

As previously announced, following a strategic review the Board decided to focus on the core businesses of UK insolvency and restructuring and the BTG Global Risk Partners forensic, investigation and risk management business and divest its loss making non-core operations.

In line with this strategy, in addition to the sale announced today, the Group closed its Cayman Islands business in September 2011, disposed of its tax business in November 2011 and sold its Channel Islands restructuring business in January 2012.

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Enquiries please contact:

Begbies Traynor Group PLC                                                                            0161 837 1700

Ric Traynor - Executive Chairman

Nick Taylor - Group Finance Director

Canaccord Genuity Limited                                                                             020 7523 8350

(Nominated Adviser and Joint Broker)

Mark Dickenson / Bruce Garrow

Shore Capital                                                                                                  020 7408 4090

(Joint Broker)

Pascal Keane

MHP Communications                                                                                     020 3128 8100

Reg Hoare / Katie Hunt / Giles Robinson

Information on Begbies Traynor Group can be accessed via the Group's website at www.begbies-traynorgroup.com

 

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