LONDON (Alliance News) - IPSA Group PLC said Thursday it has agreed to sell Blazeway Engineering Ltd to Sloane Corp Ltd for GBP1.9 million.
Blazeway is IPSA's UK holding company, which owns Newcastle Cogeneration Proprietary Ltd, IPSA's operating subsidiary in South Africa.
Sloane will pay GBP50,000 in cash and non-cash consideration with includes the assumption by Sloane of "the liability to discharge certain of the company's creditors subject to the consent of those creditors."
Additionally Sloane has paid GBP50,000 to satisfy some of Newcastle Cogeneration's outstanding liabilities, and has agreed to set aside the sum of GBP280,000 to be drawn down and used to settle creditors and obligations of Newcastle Cogeneration up to this amount.
The sale is subject to shareholder approval. Sloane is owned and operated by Peter Earl, a former director of IPSA, who left the board last July.
IPSA plans to use the GBP50,000 cash as working capital whilst it works to realise its remaining assets.
IPSA had previously warned that its working capital was extremely tight, and there was a change it may be put into administration. Following the mechanical failure of one of Newcastle Cogeneration's gas turbines last November, the company's working capital and creditor pressure has deteriorated further.
In the absence of other funding solutions in the available timeframe, IPSA has concluded that the sale of Blazeway is the only way to avoid putting Newcastle Cogeneration into business rescue.
Shares in the company remain suspended pending the release of its accounts for its year to end-March 2015 and half year to end-September 2015.
"The transaction, if completed, will release IPSA from a significant portion of its outstanding liabilities. This will in turn place the company in a stronger position to meet all of its remaining obligations to creditors - most notably Ethos Energy Italia - out of other asset disposals with any residual balance for shareholders as IPSA turns itself into a cash shell that will seek a reverse takeover," said Chairman Richard Linnell in a statement.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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