Primorus Inv. Regulatory News (PRIM)

8 Jan 2008 07:00

CSS Stellar PLC08 January 2008 CSS Stellar Plc "CSS" or the "Company" Disposal of interest in US subsidiary The Directors of CSS Stellar plc are pleased to announce that CSS has todaydisposed of its interests in its 75% owned subsidiary, GEM Minneapolis, Inc. Thedisposal is in the form of a transfer to Studio One, Inc., a company owned byDavid Kuettel, who is the existing 25% minority shareholder in GEM Minneapolis,Inc., of the net third-party assets, goodwill and trade marks of GEMMinneapolis, Inc. David Kuettel, as a director of GEM Minneapolis, Inc., isconsidered a related party of CSS for the purpose of the AIM Rules. The value placed on the ongoing business is US$2,400,000. Consideration for theCSS 75% stake is US$1,800,000 paid by US$1,100,000 in cash on completion, plus afurther US$700,000 by way of a promissory note payable in cash in three annualinstalments between January 2009 and January 2011. As part of its strategy to focus on core businesses, the board of CSS decidedthat the nature of the business of GEM Minneapolis, Inc., in addition to itsgeographical location, means that it is no longer central to the Group's futurestrategy. Owing to the recent loss of a material contract with a major customerand the lack of certainty about the long-term sustainability of other majorcontracts, the board considers this disposal to be in the best interests of theshareholders. Following the transfer of the net third party assets to Studio One, Inc., CSSwill liquidate GEM Minneapolis, Inc. GEM Minneapolis, Inc. is a brand design and packaging business based inMinneapolis, U.S.A. In 2006, it generated pre-tax profits of US$890,000, ofwhich 75% (US$667,000) represent the beneficial interest of CSS. As a consequence of the transfer of the net third-party assets, CSS will writedown by way of impairment the carrying value of its investment in GEMMinneapolis, Inc. by around £3.6 million in its 2007 accounts. This is anon-cash accounting entry and has no impact on the Group's cash position. The net proceeds will be used partly to reduce bank debt and for workingcapital. The Directors of CSS Stellar plc consider, having consulted with LandsbankiSecurities (UK) Limited, the Company's Nominated Adviser, that the terms of thetransaction are fair and reasonable insofar as the Company's shareholders areconcerned. Enquiries David Buchler,ChairmanCSS Stellar PlcTelephone: 020 7647 9903 John Craven,Landsbanki Securities (UK) LtdTelephone: 020 7426 9000 This information is provided by RNS The company news service from the London Stock Exchange