LONDON (Alliance News) - Collectible postage stamp retailer Stanley Gibbons Group PLC on Monday said its subsidiary, Stanley Gibbons Ltd (SGL), will pay GBP5.2 million to buy a portfolio from Phoenix SG.
The move follows a financing agreement, which was approved by shareholders back in March. Under the agreement, Phoenix UK Fund Ltd acquired the majority of a portfolio of 1,900 items with a GBP3.3 million value from the administrators of Stanley Gibbons Guernsey Ltd.
Phoenix UK then sold the portfolio to its subsidiary Phoenix SG, from whom SGL will buy it.
"SGL has agreed to acquire the majority of the portfolio from Phoenix SG for an initial consideration of GBP5.2 million, which is payable in cash to Phoenix SG over the term of the agreement, as and when sales of the inventory are made to third parties and will be the net proceeds, after deduction of a commission payment to be made to SGL, on completed sales," said Stanley Gibbons.
SGL's commission will be in line with similar commission from "unrelated parties" and the agreement is for 10 years. SGL must get permission from Phoenix SG to sell any item at less than its base cost.
If all inventory is sold and appropriate payments made, SGL will owe no further consideration to Phoenix SG. Likewise, if any inventory remains to be sold, the return of any remaining inventory to Phoenix SG will settle the deal.
Phoenix SG holds a 58% interest in Stanley Gibbons, making the entire agreement a related party transaction under AIM rules.
"As a result of this agreement SGL will have both the opportunity to make commissions from subsequent sales but also to further improve the range of items it is able to offer, which will be exclusively available for sale, from its website and specialist dealers," said Stanley Gibbons.
Shares in Stanley Gibbons closed down 5.9% at 4.00 pence on Monday.