Quadrant Group Plc - Disposal
August 07 1997 - 2:35AM
UK Regulatory
RNS No 4113e
QUADRANT GROUP PLC
7th August 1997
Quadrant Group plc ("Quadrant")
(The Precision Engineering and Electronics Systems Group)
SALE OF YEWLANDS
Following the receipt of #4.3 million from the recent Placing
and Open Offer, Quadrant Group plc ("Quadrant") has taken a
further step towards recovery with the sale of its loss-making
UK aerospace engineering subsidiary, Yewlands Engineering Co.
Limited ("Yewlands"). Yewlands has been sold to Chevron
Aerospace Engineering Limited ("Chevron") for nominal initial
consideration, plus assumption of #620,000 of debt. In
addition, deferred consideration of up to #550,000 may be
payable by Chevron dependent on the purchaser's utilisation of
tax losses in Yewlands.
Excluded from the sale is the building occupied by Yewlands,
of which the freehold is owned by Quadrant. Chevron has
guaranteed a 15-year lease of this building from Quadrant to
Yewlands at an initial annual rental of #150,000.
In the 15-month financial year to 31 May 1997, Yewlands made a
loss before tax (after exceptional items) of #2.65 million.
The net assets of Yewlands on disposal were approximately #2.2
million and the sale will therefore generate a loss on net
assets of that amount plus costs. In addition goodwill of
#1.9 million previously written off to reserves will be taken
as an exceptional loss on disposal, but will have no effect on
net assets.
Yewlands was acquired by Quadrant in 1994 as part of an
expansion in the aerospace precision engineering sector in
both the UK and USA. Shortly following the acquisition,
serious problems were identified that resulted in a damages
claim cash settlement of #1 million paid to Quadrant by the
vendor. Since that time, Quadrant has been engaged in a
fundamental turnaround of Yewlands in difficult market
conditions, involving substantial changes of personnel and
processes.
Although Yewlands' prospects are now much improved, with
increased order books and a strengthening market, the timing
of profit recovery and positive cash flow remain uncertain.
Quadrant's board has stated that firm action would be taken if
any delay in recovery became likely. Following a recent re-
assessment Yewlands' short term projections, such a delay
seemed probable and accordingly the decision was made to seek
a buyer for the company.
Quadrant's US aerospace engineering subsidiary, which is
profitable and experiencing strong growth, is not part of the
sale.
The disposal of Yewlands reduces Quadrant's consolidated
borrowings by #620,000 and removes the need to fund Yewlands'
further cash requirements. More importantly, it allows
Quadrant to focus its UK activities on its growing electronic
systems subsidiaries involved in closed-circuit television
security and flight simulation.
For further information, please contact;
David Coghlan (Chief Executive) 0171 408 1062
Brian Coleman-Smith
(Binns & Co. Public Relations) 0171 786 9600
END
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