Primorus Inv. Regulatory News (PRIM)

5 Sep 2005 10:30

CSS Stellar PLC05 September 2005 CSS STELLAR PLCDISPOSAL5 September 2005 CSS Stellar PLC ("CSS" or "the Company") today announced that it is to sell TheGEM Group (Europe) Limited ("GEM Europe") its wholly owned UK subsidiary whichundertakes marketing services. GEM Europe is being bought by Passhold Limited(the "Buyer"), a newly formed company backed by private equity company KayeEnterprises Limited, plus several of the existing GEM Europe management team,including directors of GEM Europe ("the Acquisition Team") for, in aggregate,£2.01m. CSS Stellar will maintain a minority holding in the new company. The consideration comprises £869,420 in cash, with the balance being paidthrough CSS acquiring 2,280,232 ordinary shares currently owned by theAcquisition Team. The share buy-back will be completed after the Companyannounces its interim results for the period to June 2005. GEM Europe's operating profit for the year ended 31 December 2004 was £73,000 onturnover of £5.2 million with net assets at 31 December 2004 of £268,000. Thedisposal is expected to generate up to a profit for the group of £1.7 millionbefore goodwill amortisation. The proceeds realised from the sale of GEM Europewill be used to reduce the CSS Group's borrowings and be reinvested in groupactivities. The Directors of CSS consider, having consulted with Bridgewell Securities Ltd,that the terms of the transaction are fair and reasonable insofar as itsshareholders are concerned. The disposal was anticipated in the Company's AGM statement earlier this year inline with the Board's strategy of maximising shareholder value through thedisposal of non-strategic assets. GEM Europe's client base has not expandedinto North America as had been expected and there has not been the resultantinteraction between Europe and North America. Completion will occur on the first business day after satisfaction of theCondition on which the Vendor is able, in connection with all applicable lawsand the AIM Rules, to effect the Share Buy Back, provided that such date is nolater than 31 December 2005. The Share Buy Back will occur on Completion. In order to ensure the satisfaction of the Condition and the Share Buy Back, itis the intention of the Company to convene an Extraordinary General Meeting atwhich a resolution will be put to shareholders to facilitate the Share Buy Back.A formal notice of this EGM will be sent to shareholders with committedtiming. CSS originally purchased GEM Europe on 26 April 2002 for £1,350,000 in cash plus2,502,078 ordinary shares in CSS. During its time within the group, GEM Europepaid £1,020,000 in dividends to CSS. Commenting on the sale, CSS Stellar CEO Sean Kelly said, "We are constantlyevaluating the mix of companies within the CSS Stellar Group and the Board feltthat the GEM Europe business had reached a stage of maturity which indicated itwas a good time to sell the business and realise shareholder value. The sale ofGEM Europe will also enable a reduction of GEM North America overhead cost. Thepurchase of GEM Europe in 2002 has proved to be commercially very successful forthe group with a cash on cash profit over £500,000 in just over two years,giving a rate of return of 40%. We have enjoyed a very good working relationshipwith GEM Europe and there are several existing sports marketing programmes onwhich we will continue to work closely together." The GEM Group is primarily based in North America with offices in New York,Minneapolis, Denver and Toronto and specialises in a range of marketingdisciplines. GEM Europe specialises in sports marketing through sponsorship andits activation. GEM Europe will be re-named and continue to work closely withCSS Stellar on a number of ongoing projects. Related Parties The Acquisition Team includes Nigel Currie, Kate Hill, Marcus Robertson andMarie Still who, as directors of GEM Europe are considered related parties ofCSS for the purpose of the AIM Rules. These individuals will, from Completion,be interested in the Buyer as follows: Ordinary Shares of £0.10 Preference Shares of £1Nigel Currie 6,890 77,331Kate Hill 6,890 94,110Marcus Robertson 6,890 325,110Marie Still 6,890 44,710 Pursuant to the Share Buy Back they (and their connected persons) will receivethe following cash consideration for their shares in CSS, which will be used tofund the acquisition of GEM Europe by the Buyer: Nigel Currie £68,221.00Kate Hill £102,624.00Marcus Robertson £510,768.50Marie Still £1,810.00 CSS intends to report its interim results for the period ended 30 June 2005 on21 September 2005. - end - For further information contact: CSS Stellar Tel: 020 7078 1400Sean Kelly, Chief ExecutiveKevin Rose, Finance Director Buchanan Communications Tel: 020 7466 5000Bobby Morse, Rebecca Skye Dietrich This information is provided by RNS The company news service from the London Stock Exchange