27 Apr 2018 09:16
This announcement contains inside information for the purposes of article 7 of Regulation 596/2014 (the "Market Abuse Regulation").
27 April 2018
Management Consulting Group PLC
Update on the Kurt Salmon escrow funds
Further to the announcement on 23 April 2018, Management Consulting Group PLC (the "Group") provides the following update on the Kurt Salmon escrow funds.
As previously announced, several of the Group's businesses, including Kurt Salmon in Europe, were disposed of through a series of transactions in 2015 and 2016. The Group has continued to manage the residual activities and contingent liabilities related to this disposal programme and which are reported in Discontinued Activities in the Group's financial statements.
A material aspect of this process has been the negotiation of the release of funds held under the escrow arrangements which guarantee certain contingent liabilities relating to the disposal of parts of the Kurt Salmon business to Wavestone in 2016 (the "KS Escrow Funds"). The KS Escrow Funds represent approximately £6m of the Group's total cash resources of £16.1m as at 31 March 2018. Under the terms of the sale agreement, the KS Escrow Funds were due to be released in two equal tranches on 7 January 2018, upon expiry of an initial guarantee period, and on 7 July 2018, being the final expiry date of the guarantees. However, securing the release of the first tranche of the KS Escrow Funds has taken longer than we expected due to negotiations over the treatment of certain potential indemnification claims. As a result, final agreement as to the first tranche was reached yesterday evening with Wavestone with an amount of approximately €2 million (approximately £1.7 million) being released to the Group while the balance of approximately €2 million (approximately £1.7 million) remains in an escrow arrangement until the potential indemnification claims have been agreed or finally determined on a case by case basis. The continuing escrow arrangement for the remaining approximately €4 million (approximately £3.5 million) ends on 7 July 2018 (as previously agreed).
While the Board remains confident as to the Group's overall position in terms of the claims raised to date by Wavestone, and so expects to secure the release of the remaining outstanding KS Escrow Funds progressively, the Board believes a degree of uncertainty still exists as to the timing of the remaining KS Escrow Funds being released to the Group in the second half of 2018.
The Board will provide further updates on these matters as appropriate.
Management Consulting Group PLC
Tel: +44 20 7710 5000
Nick Stagg, Chairman and Chief Executive
Market Abuse Regulation
The information contained within this announcement is deemed by the Group to constitute inside information as stipulated under the Market Abuse Regulation. Upon the publication of this announcement via a regulatory information service, this inside information is now considered to be in the public domain.
The person responsible for arranging for the release of this announcement on behalf of the Group is Nick Stagg, Chairman and Chief Executive.
Forward-looking statements
Certain information contained in this announcement constitutes forward looking information. This information relates to future events or occurrences or the Company's future performance. All information other than information of historical fact is forward looking information. The use of any of the words "anticipate", "plan", "continue", "estimate", "expect", "may", "will", "project", "should", "believe", "predict" and "potential" and similar expressions are intended to identify forward looking information. This information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward looking information. No assurance can be given that this information will prove to be correct and such forward looking information included in this announcement should not be relied upon. Forward-looking information speaks only as of the date of this announcement.
The forward looking information included in this announcement is expressly qualified by this cautionary statement and is made as of the date of this announcement. The Group does not undertake any obligation to publicly update or revise any forward looking information except as required by applicable securities laws.
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