Information  X 
Enter a valid email address

Foster(John) & Son (FTJ)


Monday 22 April, 2002

Foster(John) & Son


Foster(John) & Son PLC
22 April 2002

                             JOHN FOSTER & SON PLC

                 Disposal of properties in Galashiels, Scotland

John Foster & Son plc announces that today it has entered into a conditional
contract with a property development company for the sale of its property at
Beechbank Works, Galashiels, Scotland for a purchase price of £1,300,000,
payable in cash. The payment of the purchase price will be progressively in
accordance with the terms of the contract, with completion resolving principally
on the obtaining by the purchaser of a full planning and highways consent
together with the acquisition of the superiority interest in the site. Given the
importance of the disposal to the Group and its crucial timing, the UK Listing
Authority has granted a waiver from having to obtain prior shareholder approval
for this transaction.

In applying to the UK Listing Authority for this waiver, the Directors wrote
explaining that time limits imposed by the purchaser did not allow time for
shareholders to be circulated and a general meeting convened, that there were no
other alternative methods of finance available and that, should this deal fail,
the Company's bankers have indicated that they intend to withdraw the facilities
upon which its relies for its continuing existence.

The Company's financial advisers and brokers, Keith, Bayley, Rogers & Co.
Limited, have confirmed to the UK Listing Authority the seriousness of its
current financial position and that by entering into this contract to dispose of
the Galashiels property, by the deadline date of 22 April 2002 set by the
purchaser, the Company is continuing its ongoing restructuring programme. They
have also confirmed that, in the absence of continuing support from its bankers,
the Company would not be in a position to meet its obligations as they fell due.

The Company's bankers have similarly written to the UK Listing Authority setting
out their intention which would be to withdraw facilities with immediate effect
should the contract not be entered into.

At the last published balance sheet date the net book values of the assets being
sold were £381,000. The sale, when completed, will result in a profit of
approximately £870,000 after the costs of the transaction have been taken into
account. Arrangements are in place to utilise existing tax losses available
within the Group to mitigate any potential tax liabilities that may arise. As
the property is held in a subsidiary company, Gladstone's KB Limited, which is
75% owned by John Foster & Son plc, the net proceeds available to the Group of
approximately £950,000 will be used to reduce Group bank debt as indicated in
the financial statement issued on 21 January 2002. For the last three financial
years the property being sold has remained empty and generated no income.

The Directors are of the opinion that the timely completion of the sale is in
the best interests of the Company and its shareholders as a whole and any delay
would put the transaction at risk and prejudice essential continuing bank
support, as outlined above.

As detailed in the financial statements issued on 21 January 2002 and in the
Auditors report therein, this continued support of the banks is critical to the
operational existence of the Group in its present form for the foreseeable
future. The Directors are of the opinion that, should the transaction not be
completed and the banks withdraw their continuing support for the Group, then it
would be unable to continue to trade resulting in them looking to appoint a
receiver to the business.

In the financial statements for the year ended 28 February 2000, released on 21
January 2002, the Directors informed the shareholders that these accounts had
not been prepared on a going concern basis as, after making appropriate
enquiries and having regard to the cash flow forecast for the coming twelve
months, and in the absence of an injection of a new business and refinancing,
the going concern presumption in SSAP 2 was not applicable. They went on to
state that, whilst the Group was realizing its remaining property assets and
progressing its plans for the future to inject a new business and refinance the
Group, its ability to do so was dependant upon the:

  • continuing support of the existing shareholders and unsecured creditors;

  • disposal of the remaining property assets in line with its forecasts;

  • continuation of the bank facilities which are due to for renewal in
    September 2002; and

  • successful completion of the negotiations which are ongoing with third
    parties to inject certain assets and trading operations into the business
    and the subscription, at the same time, by those third parties for new
    ordinary shares in John Foster & Son plc.

The disposal itself does not provide a solution to the working capital
requirements of the Company. The funds resulting from the sale will be utilised
to repay the banks the majority of their secured borrowings within the Company
and its subsidiaries. However, coupled with continuing bank support, it will
allow the Directors the time actively to pursue their announced policy of
seeking new avenues to re-create shareholder value and restore the working
capital position of the Group.

Negotiations are currently underway which, the Directors believe, will lead to a
restructuring and refinancing (including a possible equity issue) which should
generate adequate working capital to enable the Group to move forward. The
Directors expect to be in a position shortly to make a further announcement
concerning these negotiations.

Finally, there can be no certainty that the Directors will be successful in
concluding the disposal of the remaining property assets held within the Group
following this disposal and the reorganisation of the Group through the
injection of certain assets together with a capital raising and reconstruction.
However, any funds raised will be utilised as follows:

  • funds from the sale of the Group's remaining property assets in
    Queensbury, Bradford will be used in the first instance to repay to the
    National Westminster Bank plc and Royal Bank of Scotland plc their secured
    borrowings within John Foster & Son plc and its operating subsidiaries. If
    there are any surpluses following the repayment in full of these outstanding
    bank debts these will become available for use within the Group;

  • cash generated by way of a capital raising will be used to pay to the two
    banks £100,000 in total in order that the cross guarantees between the
    parent company and its subsidiaries can be removed; and

  • future working capital.

22 April 2002

Further Information:     John Waites - Director

               Telephone: 0208 659 1525 or 07715 609306

                      This information is provided by RNS
            The company news service from the London Stock Exchange

a d v e r t i s e m e n t