LONDON (Alliance News) - Performance materials maker Low & Bonar PLC on Monday said it is selling its artificial grass yarns production business for EUR27.0 million to carpet backing and grass yarn manufacturer Mattex Group.
Low & Bonar said, under the deal, it will sell its Abu Dhabi-based grass yarns production facility Bonar Emirates Technical Yarns LLC, its main production assets and the working capital of its grass yarns business in Europe and the US, as well as the majority of its Sports & Leisure global business unit to Mattex Group. However, Low & Bonar noted that it will not be selling its Dundee factory, which will continue to provide the base for its carpet yarn manufacturing business.
The sale will be on a cash-free, debt-free basis, Low & Bonar said, and is expected to complete no later than August 31.
This follows "extensive restructuring" which has taken place over the last few years, Low & Bonar said, but said, despite these measures, the returns to the group from Sports & Leisure remain low when compared with its other business units and the potential for significant further improvement is limited in the near term. As such, Low & Bonar said the disposal is in line with its intention to achieve at least 10% operating margins in all its global business units.
Proceeds from the sale will be used to reduce net borrowings and "provide flexibility and headroom to fund more profitable and cash-generative opportunities", the company said.
"We are determined to actively manage our portfolio of businesses and products to deliver and sustain high-quality earnings across the group. This disposal shows our commitment to this strategy," said Chief Executive Brett Simpson.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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