3 Oct 2008 15:04
For immediate release: 3 October 2008
Creon Corporation Plc ("Creon" or the "Company") Pinnacle Disposal
Following the announcement of 1 July 2008 regarding the acquisition of Pinnacle Plus Limited ("Pinnacle"), the provider of services to ground support equipment businesses, the Directors of Creon Corporation (AIM: CRO) announce that they have agreed to sell their shareholding in Pinnacle to Felbright Limited, a vehicle principally owned by Pinnacle's management, and restructure financing already provided to Pinnacle by Creon ("Transaction").
The net consideration will be ‚£1 and Creon will convert funding already provided to Pinnacle by Creon, totalling ‚£400,000, into preference shares in Pinnacle earning interest at 7% per annum and redeemable by Pinnacle within 5 years.
It was envisaged at the time of the acquisition that Creon would provide sufficient working capital in order for Pinnacle to continue with its sustained growth plans. The working capital requirement was expected to be financed from the repayment of certain of Creon's existing property mezzanine loans. However, the significant deterioration in the UK property market has meant that the mezzanine loans have not been repaid as expected and as a result Creon is not in a position to continue to provide Pinnacle with the working capital as envisaged. Pinnacle reported audited losses of approximately ‚£1.4 million in the year to 30 April 2007 and had net liabilities of ‚£0.6 million on the same date.
As a result of preparing Creon's interim accounts, it has become apparent that significant provisions will need to be taken against the carrying value of the Company's property mezzanine loan portfolio. The extent of the provisions will be finalised for the interim accounts to be issued by the end of October.
Jonathan Freeman of Creon commented,
"I anticipate that the Transaction announced today will allow Pinnacle to be properly funded as it continues to grow and will also allow Creon to focus on trying to realise value from its mezzanine loans whilst remaining as a shareholder in Pinnacle. I believe that this Transaction is in the best interests of our shareholders."
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For further information please contact:
Creon Corporation Plc Jonathan Freeman +44 (0)20 7752 0215
Daniel Stewart & Company Plc Oliver Rigby +44 (0)20 7776 6550
GTH Media Relations Toby Hall +44 (0)20 7153 8039
Christian Pickel +44 (0)20 7153 8036
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