AIREA Regulatory News (AIEA)

5 Nov 2007 07:01

Sirdar PLC05 November 2007 Sirdar PLC ("Sirdar" or "the Group") 5 November 2007 Disposal The directors of Sirdar ("the Directors") are pleased to announce the sale ofSirdar Spinning Limited ("Sirdar Spinning") to Sirdar Holdings Limited (the"Purchaser"), a company controlled by Russell Morris and Ian Stead, both of whomare currently directors of Sirdar Spinning (the "Disposal"). Sirdar Spinningcompromises the whole of the Group's Specialist Yarns division. Further detailsof the Disposal are set out below: Activities of Sirdar Spinning Sirdar Spinning is involved in the marketing and distribution of hand knittingand industrial knitting yarns and the manufacturing, marketing and distributionof technical products. Reason for the disposal of Sirdar Spinning In the Interim Report released in March 2007, the Directors stated theirintention to focus on the Group's core activity of floor coverings and torationalise its property portfolio. The disposal of Bective Mills, Wakefield andEnsor Mill, Rochdale was completed in July 2007 for gross proceeds of £16.25million. The Disposal represents a further significant step in theimplementation of that strategy. The performance of Sirdar Spinning has been subject to significant fluctuationsin recent years and in particular, the Directors are of the view that, themarket for hand knitting yarns is subject to changes in fashion. For thesereasons, the Directors believe that the needs of Sirdar Spinning would be betterserved under different ownership and therefore consider that the Disposal is inthe best interests of the Group. Deal structure Sirdar will receive an initial consideration of £2.5 million, a deferredconsideration of £300,000 (to be satisfied by the issue of loan notes by thePurchaser), and an earn-out of up to a maximum of £500,000, for the sale ofSirdar Spinning. The earn-out is dependant upon Sirdar Spinning achieving anagreed level of EBITA in the years to 30 June 2008 and 30 June 2009. The agreement relating to the Disposal contains a requirement for Sirdar tochange its name within three months of the date of the Disposal. This willrequire the convening of an extraordinary general meeting of shareholders andmore details of this will be announced in the near future. Financial information on Sirdar Spinning For the year ended 30 June 2007, Sirdar Spinning had sales of £15 million andachieved an operating profit (adjusted to reflect the increased cost of rent andother items consequent upon the disposal of Bective Mills) of approximately£500,000. The estimated net assets of Sirdar Spinning at the date of theDisposal were approximately £5 million. Use of sale proceeds As indicated in previous announcements, the proceeds of the Disposal and of theproperty transactions will be used to reduce bank debt, to address the Group'spension deficit and for investment in the Group's core activity of floorcoverings. There may also be scope to amend the way that the Group is financedin the future. The Directors (all of whom are independent in the context of the Disposal),having consulted with Brewin Dolphin Limited, consider that the terms of theDisposal are fair and reasonable insofar as its shareholders are concerned. For further information please contact: Sirdar PLC 01924 371501Steve Harrison - Chief operating officerKevin Henry - Finance and planning director Brewin Dolphin Investment Banking 0113 241 0130Andrew KitchingmanSean Wyndham-Quin ENDS This information is provided by RNS The company news service from the London Stock Exchange