18 Oct 2010 07:00
Redstone plc
("Redstone", "the Company" or "the Group")
Sale of legacy telecoms assets for £1.75 million
Redstone plc (AIM:RED.L), the network-based provider of end to end managed services announces that, as part of its ongoing strategic review, the Group has agreed to sell certain assets of Marcom Communications Limited ("Marcom") and other telephone systems maintenance contracts , which form a small part of the Redstone Converged Solutions Limited ("RCS") business, to Maintel Europe Limited (a subsidiary of Maintel plc) for a cash consideration of £1.75 million.
Under the sale agreement 13 employees of RCS and 27 employees of Marcom have, as a result of the transfer, transferred to Maintel Europe Limited in accordance with TUPE regulations.
In the year to 31 March 2010, the Marcom/RCS businesses being sold to Maintel recorded a combined turnover of £3 million and an estimated EBITDA attributable to these businesses and assets of £0.3m. Following the transfer of the assets, Marcom will become a dormant company and the proceeds of the sale will be utilised by the Group in delivering its strategy and to reduce borrowings as required under the terms of the Group's banking facilities.
The sale is in line with the Group's revised strategy of disposing and discontinuing certain non-core assets, delivering cost savings and focusing on higher margin revenue streams.
Going forward Redstone has a framework agreement with Maintel for the provision of maintenance services to its Avaya Customers.
Tony Weaver, Chief Executive of Redstone, commented: "We are pleased to have completed another step in our strategy of refocusing Redstone's operating activities and releasing cash from non-core activities. I look forward to updating shareholders further on our operational review and the implementation of our revised strategy when we publish our Half Year Report to 30 September."
Related Party Transaction
Redstone was advised on the disposal by MXC Capital Limited, the ICT specialist financial advisory boutique controlled by Ian Smith and Tony Weaver (Executive Chairman and Chief Executive Officer respectively of Redstone). The fees charged in connection with the corporate finance advice given were equal to 1.5 per cent of the disposal value (equalling £26,250) and are deemed, under the AiM Rules to constitute a related party transaction. The independent Directors of Redstone (being David Payne and Peter Hallett) consider, having consulted with finnCap Limited, that the terms of the transaction are fair and reasonable insofar as shareholders of Redstone are concerned.
ENQUIRIES:
| Redstone plc Peter Hallett, Chief Financial Officer
| Tel. +44 (0)845 203 3903 |
| FinnCap Marc Young, Charlotte Stranner
| Tel. +44 (0)20 7600 1658 |
| Hansard Communications Justine James
| Tel. +44 (0)20 7245 1100 +44 (0) 7525 324431 |