MBL: Morrisons Terminates Contracts, MBL Now In An Offer Period
March 15 2011 - 3:22AM
Dow Jones News
MBL Group PLC (MUBL.LN), said Tuesday that it has received
formal notification from its major customer, Wm Morrisons
Supermarket PLC (MRW.LN), of the termination of its two existing
supply agreements with MBL, adding that it is now in an offer
period.
MAIN FACTS:
-KPMG Corporate Finance is to be appointed to seek a suitable
purchaser for the Group.
-As such this may or may not result in an offer for the entire
issued share capital of MBL, though there can be no certainty that
any offer will be forthcoming.
-The final termination date of the agreements will be Sept.
14.
-In the financial year ended March 31, 2010, 78% of MBL turnover
related to sales to Morrisons.
-The notification is a significant disappointment to MBL which
has had a successful long-term commercial relationship with
Morrisons for 14 years.
-The Board of MBL had been in negotiations with Morrisons for
several months regarding a future commercial relationship but have
also been notified that they have been unsuccessful in securing the
third party logistics service tender.
-MBL previously announced that Morrisons had decided to move
away from the existing full supply arrangements provided by
MBL.
-The announcement will necessitate a significant downsizing of
operations and with regret the resultant loss of employment for
many of our employees.
-The company is commencing discussions with Morrisons and the
new service provider regarding those employees who will be in scope
for TUPE (Transfer of Undertakings (Protection of Employment)
Regulations) at the end of the agreements.
-Negotiations are also continuing regarding the stock balances
which MBL has purchased in support of the existing agreements and
which represent a high proportion of the total stock balances of
the Group.
-Further to the announcement made on Jan. 31, the Board would
like to confirm that Steven Walsh-Hill will be leaving the business
by mutual agreement with immediate effect.
-This is due to being unable to reach agreement on the terms of
Walsh-Hill's appointment.
-MBL shares closed Monday at GBP0.31, valuing the company at
GBP5.36 million.
-By Razak Musah Baba, Dow Jones Newswires; 44-20-7842-9275;
razak.baba@dowjones.com
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