16 Mar 2018 14:58
16 March 2018
The information communicated in this announcement contains inside information for the purposes of Article 7 of Regulation 596/2014.
MBL Group PLC
("MBL" or the "Company" or the "Group")
Disposal of the Garden & Home division
MBL Group plc (AIM: MUBL) announces that it has disposed of its entire shareholding in Redworth Limited and its subsidiary, The Garden and Home Trading Company Limited (together the "Garden & Home division"), to Invalesco Limited for a total cash consideration of £0.8 million (the "Transaction").
Background
As previously announced, following a review of the Group's operations at the end of 2016, the Board concluded that a third party may be better placed to develop the potential in the Group's trading businesses and take them forward to the next phase of their development. The Board set out on the 22 December 2017 that it had examined the business and discussed the sales process, agreed to its continuation, was mandated by shareholders and would continue to look for buyers. The Board has therefore recently been conducting, and continues to conduct, a formal sales process regarding each of the Company's trading businesses. The Company received a number of initial offers for the Garden & Home division and reverted to all prospective purchasers to procure revised offers. Initial and revised offers were reviewed by the board and its advisers. The decision was made to proceed with the sale to Invalesco Limited.
Redworth Limited holds the entire share capital of The Garden and Home Trading Company Limited. The company sells garden bird and wildlife related products via mail order and online retail channels. In the year to 31 March 2017, the Group's last audited Report & Accounts, the Garden & Home division had revenue of approximately £6.4 million, made a profit before tax of approximately £0.247 million and had net assets of approximately £0.989 million. Since 1 April 2017 the business has seen a decline in revenue and gross margin, as was noted in the interim results announcement released in December 2017, and this trend has continued.
Terms of the Transaction
The total consideration is £0.8 million payable in cash. The consideration is payable in three instalments being £0.1 million on 16 March 2018, £0.325 million on 31 May 2018 and £0.375 million on 31 August 2018. The Company has received security commitments in respect of assets, including property and shares, which exceeds the outstanding consideration.
Related Party Transaction
The Transaction is classified as a related party transaction for the purposes of the AIM Rules by virtue of the fact that Invalesco Limited is wholly owned by Martina Allan. Martina Allan is the beneficial owner of 4,520,399 Ordinary shares in MBL owned by The Allan Family Trust, which represents 26.14 per cent. of the issued share capital of MBL. This would make The Allan Family Trust a "substantial shareholder" in the Company, as defined in the AIM Rules. In addition, Anton Lane, the non-executive chairman of the Company is a Trustee of The Allan Family Trust. The Independent Director of MBL, James Reynolds, having consulted with SPARK Advisory Partners Limited, as Nominated Adviser to the Company, considers the terms of the sale of the Garden & Home Division fair and reasonable insofar as the shareholders are concerned. In providing advice to the Independent Director, SPARK Advisory Partners Limited has taken into account the Independent Director's commercial assessments of this related party transaction.
Effect on the Group
The effect on the Group will be a substantial reduction in trading operations pursuant to the strategic review and sales process as outlined above. The Home Entertainment division, Windsong International Limited, continues to operate as before, and the Board intends to continue to pursue the sale process with a view to realising value for shareholders and returning capital in the short term.
Further announcements will be made as appropriate.
ENDS
For further information, please contact:
MBL Group plc Tel: 01772 440440
Anton Lane
James Reynolds
SPARK Advisory Partners Limited Tel: 0113 370 8970
(NOMAD)
Mark Brady