Last checked at 3 Oct 2008 09:39
CSS Stellar Plc
Disposal of interest in subsidiary
The Directors of CSS Stellar plc ("CSS" or the "Company") are pleased to announce that CSS has agreed to dispose of its wholly owned subsidiary, Icon Display Limited ("Icon") to Maidstone Road Holdings Limited (the "Purchaser"),a newly formed company backed by a consortium of investors which includes two of Icon's directors: John Francis and Keith Goodwin. John and Keith, as directors of Icon, are considered to be related parties of CSS for the purpose of the AIM Rules. Icon is one of Europe's leading providers of the design, production, supply and branding solutions, and the installation of signage, with offices in the UK, Europe, Middle East and Africa.
Following the review of the business announced with our 2007 Annual Results, the Board decided it is in the best interests of CSS shareholders to focus on the core business of Sports Marketing.
The total consideration receivable by the Company for the Transaction is £4,300,000, of which £4,000,000 is payable in cash on completion. This includes a payment of £841,000 in respect of a freehold property occupied by Icon, the assumption of £348,072 of third party debt owed by Icon which the Purchaser has agreed to discharge, and the settlement of £1,114,592 inter-company debt owed by Icon to the Company. The balance of £300,000 is deferred consideration payable in cash and will be paid by the Purchaser within twelve months of the date of completion. CSS has given various warranties and indemnities to the Purchaser in relation to the disposal.
The Purchaser has undertaken to CSS that if a future sale occurs within 12 months of completion then the buyer will pay to CSS a sum equal to 15% of any future sale proceeds or during the period commencing on the first anniversary of completion and ending 6 months thereafter then the buyer shall pay to CSS a sum equal to 5% of any future sale proceeds.
John Francis and Keith Goodwin and Andrew Hodson own 198,516, 113,663 and 81,029 CSS ordinary shares respectively. Under the terms of the sale agreement, they have each entered into an orderly market agreement governing any future sale of their shares.
Icon's operating profit for the year ended 31 December 2007 was £0.3 million (2006: £0.9 million) on turnover of £8.6 million (2006: £11.6 million), with net assets at 31 December 2007 of £1.4 million (2006: £1.2 million). The disposal is expected to generate a profit of £2.1 million before write off of goodwill of £2.1 million.
Due to the size of Icon relative to the CSS Group, the sale is conditional on the approval of the CSS shareholders at an Extraordinary General Meeting ("EGM") to be held on Friday 24 October 2008. A circular containing further details of the transaction and formally convening the EGM is expected to be posted to shareholders on Friday 3 October 2008.
Subject to the approval of CSS shareholders, it is expected that completion will take place following the EGM. The proceeds from the disposal of Icon will initially be used to repay both the outstanding overdraft of the Company and the mortgage outstanding on the property which was part of the disposal. Once this has taken place, all debt within the Company will be eliminated, and the Company will consider making investments in sports marketing businesses, predominantly in North America and Europe, which show considerable potential for growth and which will optimise shareholder value.
The Directors of CSS Stellar plc consider, having consulted with Dowgate Capital Advisers Limited, the Company's Nominated Adviser, that the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned.
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Enquiries
Julian Jakobi, Chairman, CSS Stellar Plc
Telephone: 020 7078 1400
Tony Rawlinson, Chairman, Dowgate Capital Advisers Limited
Nominated Adviser to the Company
Telephone: 020 7492 4777