TIDMCRU
RNS Number : 7547J
Coral Products PLC
24 December 2020
Coral Products PLC
(the "Company" or "Coral")
Proposed disposal - Coral Products (Mouldings) Ltd and Interpack
Ltd
Coral Products PLC, (the "Company") a specialist in the design,
manufacture and supply of injection moulded plastic products based
in Haydock, Merseyside announces that it has entered into a share
purchase agreement (the "Agreement") for the conditional sale of
Coral Products (Mouldings) Limited ("CPL") and Interpack Limited
("Interpack") (together the "Sale Companies") for an estimated
initial net cash consideration of GBP7.9 million (the "Disposal")
to One51 ES Plastics (UK) Ltd (the "Purchaser").
The estimated initial net cash consideration of GBP7.9 million
is payable on completion and is subject to an adjustment following
the preparation of completion accounts and adjusting for certain
liabilities. Completion is expected to occur in February 2021 ,
with a back-stop date of 30 April 2021.
The Company will continue to hold the freehold for the Haydock
site from which CPL operates and intends to enter into a 10-year
lease with the Purchaser at rent of GBP300,000 per annum with a
5-year break clause and rent review after 5 years.
One51 ES Plastics (UK) Ltd is the UK subsidiary of IPL Plastics
Group ("IPL"). IPL's turnover is in excess of USD 700 million with
operations in the United States, Canada, Europe and China. IPL
operates across three divisions: consumer packaging solutions,
large format packaging and environmental solutions and returnable
packaging solutions. IPL has 15 plants, 9 of which are based in
North America, and employs over 2,000 people.
Pursuant to the terms of the Agreement, the Company has
conditionally agreed to sell, and the Purchaser has conditionally
agreed to purchase the entire issued share capital of the Sale
Companies, comprising CPL and Interpack.
The Agreement is conditional, inter alia , on:
(1) Shareholder approval and completion of the Agreement. The
Disposal is deemed to constitute a fundamental change of business
of the Company under AIM Rule 15 and is therefore conditional on
Shareholder approval at a General Meeting of the Company to be
convened in due course, and
(2) the completion of certain works at the Company's Haydock
site, expected to be finalised on or before 31 January 2021.
As is customary, the Company will make certain warranties and
give certain indemnities to the Purchaser in respective of the Sale
Companies' historic business.
The Company will be subject to restrictive covenants for a
period of 36 months from completion of the sale during which time
the Company will be restricted from competing with the Sale
Companies provided only that these restrictions shall not apply to
the Company's retained group companies existing customer base.
Michael Wood, CEO of the Company, will resign from the Company's
board on completion of the sale as he will be joining the Purchaser
as part of the sale agreement.
Joseph Grimmond, currently Non-executive Chairman, will be
appointed Executive Chairman of the Company.
The Company will ensure that a normal level of working capital
remains within the Sale Companies at completion. The final
consideration due to the Company is subject to other customary
adjustments at completion, such as the actual working capital at
completion against an agreed target level and adjustments for cash
or debt items.
At completion, the estimated initial net cash consideration of
circa GBP7.9 million will be paid by the Purchaser to the
Company.
Background and proceeds of Disposal
Following the Disposal, the continuing group will consist of
Coral Products plc, Tatra Rotalac Limited and Global One-Pack
Limited (together the "Continuing Group").
The Board believes that the Disposal provides the Company with
the opportunity to crystallise an attractive return on invested
capital with respect to the Sale Companies, reduce net debt and
also to provide additional financial flexibility to further develop
and support the recent progress of the Continuing Group.
Current Group Structure
The Group currently comprises four operating companies engaged
in the manufacture and supply of a range of injected, blow moulded
and extruded plastic products into a diverse range of sectors
including food packaging, personal care, household, healthcare,
on-line totes, telecoms and rail. The Group has operations in the
UK with manufacturing facilities in Haydock, Merseyside, and
Wythenshawe, Greater Manchester as well as a distribution facility
in Hyde, Greater Manchester.
The table below provides an overview of the activities within
each wholly owned subsidiary of the Company:
Company Name Description / Business Activity
Coral Products (Mouldings) Plastic moulding specialist, manufacturer
Limited and distributor of plastic injection, extruded
and blow moulded products into a diverse
range of sectors including food packaging,
personal care, household and automotive.
Over 50 dedicated machines ranging from
25 tonne to 1,150 tonne performance, operating
from a circa 100,000 sq. ft covering freehold
facility in Haydock equipped with modern
plant suitable for the supply of a wide
range of customers.
----------------------------------------------------
Interpack Limited Nationwide distributor of food packaging.
Supplying mainly to independent food manufacturers
or packers.
----------------------------------------------------
Tatra Rotalac Limited A leading UK plastic extrusions manufacturer
providing custom extrusions, PVC profiles
and injection moulding. Tatra has a wide
customer base in diverse markets ranging
from building, telecoms, aerospace and
rail.
----------------------------------------------------
Global One Pak Ltd Based in Manchester, the company is a leading
provider of own designed lotion pumps,
closures and trigger sprayers. International
market supplier to well-known brands.
----------------------------------------------------
Financial information relating to the Sale Companies
Set out below is key financial information on the Sale Companies
for the year ended 30 April 2019:
Sales GBPm Gross Profit/(Loss) Net assets GBPm
GBPm
Coral Products (Mouldings)
Ltd 11.16 (0.45) 0.06
Interpack Ltd 7.45 0.73 1.74
Financial effects of the proposed Disposal and use of
Proceeds
A pro forma Group balance sheet (based on the based on the
unaudited balance sheet figures of the Group's published interims
for the six months ended 31 October 2020) showing the impact of the
Disposal is set out below:
Group Adjustment Adjustment Adjustment Net Consideration Adjusted
disposal disposal Goodwill Group
of of Interpack
CPL
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- -------- ----------- -------------- ----------- ------------------ ---------
ASSETS
Non-current assets
Goodwill 5,145 - - (3,550) - 1,595
Other intangible
assets 986 - - - - 986
Property, plant
and equipment 2,768 (1,788) (365) - - 615
Right of use assets 4,058 (3,241) - - - 817
-------- ----------- -------------- ----------- ------------------ ---------
Total non-current
assets 12,957 (5,029) (365) (3,550) - 4,013
-------- ----------- -------------- ----------- ------------------ ---------
Current assets
Inventories 3,395 (1,495) (395) - - 1,505
Trade and other
receivables 4,575 (1,635) (1,142) - - 1,798
Cash and cash equivalents 1,292 (86) (273) - 7,900 8,833
Total current assets 9,262 (3,216) (1,810) - 7,900 12,136
-------- ----------- -------------- ----------- ------------------ ---------
Assets held for
sale 2,520 2,520
LIABILITIES
Current liabilities
Term loan -
Other borrowings 2,526 (809) (919) - - 798
Lease liabilities 1,393 (86) - - - 1,307
Trade and other
payables 3,212 (1,387) (1,050) - - 775
-------- ----------- -------------- ----------- ------------------ ---------
Total current liabilities 7,131 (2,282) (1,969) - - 2,880
-------- ----------- -------------- ----------- ------------------ ---------
Liabilities on assets
for sale 1,706 1,706
Net current assets/(liabilities) 2,945 (934) 159 - 7,900 10,070
Non-current liabilities
-------- ----------- -------------- ----------- ------------------ ---------
Term loan 1,000 1,000
Other borrowings -
Interco - (228) 180 48 - -
CBIL Loan advance - (444) - - - (444)
Lease liabilities 1,859 (2,167) - - - (308)
-------- ----------- -------------- ----------- ------------------ ---------
Deferred tax 398 (109) (37) - - 252
-------- ----------- -------------- ----------- ------------------ ---------
Total non-current
liabilities 3,257 (2,948) 143 48 - 500
-------- ----------- -------------- ----------- ------------------ ---------
NET ASSETS 12,645 (3,015) (349) (3,598) 7,900 13,583
SHAREHOLDERS' EQUITY
Share capital 826 (100) - - - 726
Share premium 5,288 - - - - 5,288
Other reserves 1,567 - - - - 1,567
Retained earnings 4,964 (2,915) (349) (3,598) 7,900 6,002
-------- ----------- -------------- ----------- ------------------ ---------
TOTAL SHAREHOLDERS'
EQUITY 12,645 (3,015) (349) (3,598) 7,900 13,583
-------- ----------- -------------- ----------- ------------------ ---------
Strategy for the Continuing Group
Following the Disposal, the Continuing Group will comprise:
-- Coral Products Plc, the Group holding company;
-- Tatra Rotalac Limited which specialises in the manufacture of
plastic extrusions and injection mouldings, Tatra manufacture
round, square and oval tubes as well as rigid and flexible profile
extrusions, co-extrusions and injection mouldings; and
-- Global One-Pak Limited, a leading supplier of lotion pumps, triggers and mist sprayers.
Summarised financial information on the Continuing Group's
operating companies' businesses, as extracted from the unaudited
management accounts for the 7 months ended 30 November 2020 is set
out below:
Sales GBPm Pre -tax Net assets
profits* GBPm
GBPm
Tatra-Rotalac GBP3.30 GBP0.34 GBP1.70
Ltd
Global One-Pak GBP2.10 GBP0.45 GBP0.90
Ltd
* Pre-tax profits are stated before management charges and Covid
related exceptionals
The Company's board believe there is a potential to further
develop the Continuing Group in terms of sales and profits.
Following completion of the Disposal, the Board will conduct a
review to determine the most advantageous route to deliver
shareholder value and apply the net proceeds from the Disposal.
A Circular setting out the proposals will shortly be posted to
shareholders.
This announcement contains inside information for the purpose of
Article 7 of the EU Regulation 596/2014 and has been arranged for
release by Sharon Tinsley, Finance Director of the Company. The
Directors of the Company take responsibility for this
announcement.
For further information, please contact:
Coral Products plc
Joe Grimmond, Non-Executive Chairman Tel: 07703 518148
Nominated Adviser & Broker
Cairn Financial Advisers LLP Tel: 020 7213
Liam Murray 0880
Sandy Jamieson
David Lawman (Corporate Broking)
This announcement contains unaudited information and
forward-looking statements that are based on current expectations
or beliefs, as well as assumptions about future events. These
forward-looking statements can be identified by the fact that they
do not relate only to historical or current facts and undue
reliance should not be placed on any such statement because they
speak only as at the date of this document and are subject to known
and unknown risks and uncertainties and can be affected by other
factors that could cause actual results, and Coral's plans and
objectives, to differ materially from those expressed or implied in
the forward-looking statements. Coral undertakes no obligation to
revise or update any forward-looking statement contained within
this announcement, regardless of whether those statements are
affected as a result of new information, future events or
otherwise, save as required by law and regulations.
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END
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