AIREA Regulatory News (AIEA)

9 Jul 2007 07:01

Sirdar PLC09 July 2007 Sirdar PLC ("Sirdar" or "the Company") 9 July 2007 DISPOSAL OF PROPERTY Sirdar today announces the disposal by its wholly owned subsidiaries, SirdarSpinning Limited ("Sirdar Spinning") and Ryalux Carpets Limited ("RyaluxCarpets"), of the freehold properties at Bective Mills and Ensor Millrespectively, to Stirling Investments (Sheffield) LLP ("Stirling Investments")for a total cash consideration of £16.25m ("the Property Sale"). As set out in the Interim Report for the six months ended 31 December 2006, andother recent announcements, the Company and its subsidiaries ("the Group") hasbeen undergoing a period of change and rationalisation which, amongst otherchanges, has resulted in a reduction of the number of sites from which the Groupis operating. The recent adverse market conditions in the residential floor coverings sectorhave resulted in the Directors implementing a number of changes within theGroup's residential floor coverings business. One of the changes initiated bythe Directors has been the closure of a number of manufacturing sites and theconsolidation of these sites into centres of excellence. Once the process iscompleted, currently expected to be by December 2007, the residential floorcoverings business will have been reconfigured from seven sites into threecentres of excellence. As a result of the restructuring, occupancy of Ensor Mill(owned by Ryalux Carpets) will be gradually reduced over the six months fromcompletion, during which period Stirling Investments will allow Ryalux Carpetsto remain in occupancy under a short-term lease. As stated previously, the Directors are exploring options to sell SirdarSpinning, the specialist yarns division of the Group. The Bective Mills site iswholly owned and partly occupied by Sirdar Spinning, with other areas of thesite being occupied by the Company, the residential floor coverings business andthird party tenants. As part of the Property Sale process, the Directors havemade arrangements to lease back the areas of Bective Mills that are still beingused by the Group. These arrangements are set out in detail below. The Directors consider that the Group should continue to focus on its corebusiness and accordingly have decided to sell the two properties and to use theproceeds of the sale to repay debt, address the Group's pension deficit andreinvest in the Group's operations. This is set out in detail below. The completion of the Property Sale is conditional on the consent of theCompany's shareholders being given in a general meeting. Accordingly a circularwill be posted shortly to all of Sirdar's shareholders convening anExtraordinary General Meeting at which shareholders will be asked to vote toapprove the Property Sale. Further information on the Property Sale is set out below: Bective Mills Description of Bective Mills, Flanshaw Lane, Alverthorpe, Wakefield.the propertybeing sold Current use of This site is currently being used by the Company, the specialistthe property yarns division, the floor coverings division and externalbeing sold tenants. Consideration £13,250,000 payable upon completion. Seller Sirdar Spinning. Purchaser Stirling Investments. Principal Terms The sale is conditional upon shareholder approval.& Conditions On 29 June the Company entered into an agreement with Sirdar Spinning to lease approximately 135,000 square feet of the premises at Bective Mills for a period of ten years from 29 June 2007. The annual rent payable is £420,160. Upon completion of the sale, Sirdar Spinning will enter into an agreement with Stirling Investments to lease approximately 150,000 square feet of the premises at Bective Mills for a period of ten years. The annual rent payable is £555,574. Ensor Mill Description of The property on the north side of Queensway, Rochdale known asthe property Ensor Mill.sold being Current use of The site is currently occupied by the floorthe property coverings division.being sold Consideration £3,000,000 (plus VAT) payable upon Completion. Seller Ryalux Carpets. Purchaser Stirling Investments. Principal Terms The sale is conditional upon shareholder approval.& Conditions Use of the Property Sale proceeds The total net debt of the Group as at 31 December 2006 was approximately £4.9million. The Directors intend to use some of the proceeds of the Property Saleto reduce the level of debt and are currently in discussions with the debtproviders to determine the most appropriate way to restructure or repay thisdebt. The Group operates a defined benefit, final salary, pension scheme for certainemployees. The scheme is now closed to new entrants and accrual of salaryrelated benefits for current members has ceased. As set out in the InterimReport, dated 29 March 2007, the net pension deficit of the Company at 31December 2006 was £9.1 million. The Directors will consider using part of theproceeds of the Property Sale to address this pension deficit and are indiscussions with the Trustees to determine how this is to be effected. Further to recent investments in people, products and processes within the floorcoverings business, it is the intention of the Board to continue to grow thisarea of the Group. An amount of the proceeds from the Property Sale will bereinvested into modernising operating methods, rationalisation and upgrading ofthe product range, re-branding and an increased focus on customer needs. Current trading continues to be in line with the Directors expectations. Further details of the Disposal will be set out in the circular that is shortlyto be posted to Sirdar's shareholders. For further information please contact: Sirdar PLC 01924 371501Kevin Henry - Finance and Planning Director Brewin Dolphin Securities 0113 241 0130Andrew KitchingmanSean Wyndham-Quin ENDS This information is provided by RNS The company news service from the London Stock Exchange