CTEA.L Regulatory News (CTEA)

21 Aug 2006 07:16

Milestone Group PLC21 August 2006 For Immediate Release 21 August 2006 Milestone Group PLC DISPOSAL AGREEMENT On 4 August 2006, AIM listed Milestone Group PLC ("Milestone" or "the Company")announced it was in negotiation with Letterbronze Limited ("Letterbronze") todispose of the whole of its publishing division, including the Property Weeklyseries of publications ("Property Weekly"), for a total consideration of£1,025,000. Milestone is today announcing it has entered into a different agreement, subjectto Shareholder approval, to dispose of Property Weekly as a stand-alone businessunit to Tindle Newspapers Limited ("Tindle") for a consideration of £1.4million. Letterbronze had originally offered the Company, subject to due diligence andcontract, approximately £775,000 to acquire Courier Newspapers (Oxford) Limited("CNL"), and approximately £250,000 to acquire Basingstoke Observer Limited,with a cash adjustment to reflect the net asset values of the businesses at thetime of completion. In light of the consideration offered by Tindle for Property Weekly, which isaround £375,000 higher than that which had previously been offered byLetterbronze for the whole of Milestone's publishing division, negotiations withLetterbronze have now been terminated by mutual consent. Consequently, theCompany is to adjourn the Extraordinary General Meeting ("EGM"), due to takeplace at 9.00am this morning. The Company intends to convene a new EGM for on or around 11 September 2006 toapprove a new resolution, as required under Section 15 of the AIM Rules, toauthorise the proposed disposal of Property Weekly to Tindle ("the Disposal").Completion of the Disposal is intended to take place on 11 September 2006, or assoon as possible thereafter. A circular setting out further details of theDisposal and notice of the new EGM will be posted to Shareholders in the comingdays. A further Announcement will be made at the time of posting. Milestone Chief Executive, Andy Craig, said: "Throughout the Company's strategic review, we have made clear that we arecommitted to explore all opportunities to maximise Shareholder value at what isa challenging time for the regional newspaper industry. "We are delighted to have been able to reach this new agreement, securing aconsideration that is almost 40 per cent higher than that which had originallybeen offered by Letterbronze for the whole of Milestone's publishing division,thereby enhancing the ongoing cash position of the Company. Furthermore, theCompany has also entered into an agreement with Tindle to share future newspaperdistribution costs in Oxfordshire, which we believe will have a materialpositive impact on the ongoing publishing business. "Milestone is now reopening discussions with a number of third parties regardingthe disposal of the remainder of the Company's publishing division." Property Weekly is a free broadsheet newspaper containing advertisements forhomes to buy and rent with three separate editions covering north Oxfordshire,south Oxfordshire and Newbury, together with an associated website.Approximately 75,000 copies of Property Weekly are currently printed each weekand distributed via a mixture of door-to-door delivery and dispensers located inestate agents and retail outlets. Property Weekly is currently published by CNL, a wholly owned subsidiary of theCompany. No goodwill is directly attributable to Property Weekly in the accountsof CNL. According to CNL's unaudited management accounts, Property Weekly produced aturnover of £856,000 for the ten months ended 31 July 2006. A large proportionof the overheads of Property Weekly have traditionally been absorbed by CNL.Management estimate that Property Weekly would have produced a profit ofapproximately £150,000 during the first ten months of this financial year if ithad been operating as a stand alone business unit, responsible for its owndistribution. Under the terms of the Disposal, CNL has agreed to transfer its newspaperdistribution department to Tindle. This department is responsible for thedistribution of Property Weekly and a number of CNL's ongoing titles inOxfordshire, in particular Courier Journal and Auto Weekly. The Company has entered into a cooperation agreement with Tindle that guaranteescontinued door-to-door delivery for CNL's free newspapers in Oxfordshire,substantially reducing CNL's distribution costs. The agreed rates will apply fora minimum period of two years following completion of the Disposal. Following the Disposal, the Company's main trading units will remain: •Courier Newspapers (Oxford) Limited - publishes Courier Journal series (Oxfordshire), Oxford City Journal, Auto Weekly (Oxfordshire), Oxfordshire Living, West Berkshire News •Basingstoke Observer Limited - publishes Basingstoke Observer (North Hampshire) •Oxford Broadcasting Limited trading as SIX TV - operates "SIX TV" branded local television channels in Oxford and Southampton The consideration for the Disposal of £1.4m is payable in full upon Completion.The Milestone Board intends to use approximately £150,000 of the considerationto meet existing liabilities within the Company's publishing division and toenhance the balance sheet of CNL. The net proceeds from the Disposal will also be used, in part, to meet thegeneral working capital requirements of the Company. However, it is hoped thatthe Company will be in a position to retain a significant proportion of theconsideration, either to distribute to Shareholders or to invest in newventures. Following completion, a review of the best use of the proceeds andMilestone's ongoing business strategy will take place under the direction of theCompany's non executive Chairman, John Sanderson, in consultation with theCompany's nominated adviser, Arden Partners PLC. For further information Milestone Tel: 01235 547 800 Andy Craig/Daniel Cass Arden Partners Tel: 0207 398 1632 Richard Day Buchanan Communications Tel: 0207 466 5000 Bobby Morse/Suzanne Brocks This information is provided by RNS The company news service from the London Stock Exchange