Johnson Service Group PLC Disposal of Facilities Management Activities (1066L)
07 Agosto 2013 - 3:00AM
UK Regulatory
TIDMJSG
RNS Number : 1066L
Johnson Service Group PLC
07 August 2013
7 August 2013
Disposal of Facilities Management Activities
Johnson Service Group PLC (the "Company", the "Group" or "JSG")
is pleased to announce the sale of its Facilities Management ("FM")
activities (the "Disposal") to Bell Rock Bidco Limited, a new
company formed to effect the acquisition, with financing provided
from funds managed by Lyceum Capital Partners LLP. The
consideration is GBP32.2 million on a debt free, cash free basis
and subject to adjustments for normalised working capital.
After the adjustments and transaction costs, the initial net
proceeds will be approximately GBP28.0 million with up to a further
GBP2.2 million of deferred consideration potentially receivable. Of
this deferred consideration GBP0.3 million is expected to be
received within 12 months of completion and a further GBP0.8
million in August 2015. The receipt of the balance of GBP1.1
million is dependant on the future utilisation of deferred tax
balances by the purchaser.
The FM activities are undertaken within the Johnson Workplace
Management Limited ("JWML") subsidiary and largely comprise SGP
Property & Facilities Management Limited ("SGP") and six
related Special Purpose Companies, which undertake certain PFI
contracts. The transaction is for the sale of the entire issued
share capital of JWML. The total external revenue, including costs
recharged to customers, of the FM activities for the year ended 31
December 2012 was GBP52.3 million and adjusted operating profit was
GBP4.5 million. The reported segmental net assets relating to FM
activities as at 31 December 2012 were GBP37.9 million.
The results of the strategic review undertaken at the beginning
of 2012 are becoming evident. Over the last 18 months the Group has
refocused the business on Textile Services, having acquired Cannon
Textile Care in March 2012, rationalised the Drycleaning business
closing over 100 under-performing branches and disposed of its
non-core Alex Reid Limited business. The Disposal of FM represents
a further step in the Board's strategy to create a single, focused
Textile Services business.
Following the Disposal JSG will continue to operate through
Johnsons Apparelmaster (Textile Rental), Stalbridge (Premium Linen
Rental) and Johnson Cleaners and Jeeves of Belgravia
(Drycleaning).
The initial net cash proceeds arising from the Disposal will be
used to reduce net debt by an estimated GBP28.0 million, with
GBP25.5 million of the Term Loan from the Company's banks
cancelled. The bank facility remaining after the cancellation will
be GBP50.0 million, with no further repayments due prior to the
expiration of the bank facility in May 2015. The Disposal is
expected to be earnings dilutive in the short term pending any
re-investment of the proceeds into Textile Services.
We believe there is potential to expand Textile Services both in
terms of range of services and geography and we are actively
pursuing potential opportunities. The headroom in our existing bank
facility is available to support funding for investment in the
business.
We also believe that the strengthening of the balance sheet and
reduction in debt together with the improving profitability of the
remaining businesses provides a strong and stable platform to allow
future growth, both organically and potentially through selective
acquisitions.
The Company currently has an interest rate hedge over GBP40.0
million of the Term Loan. Following the Disposal, GBP20.0 million
of the hedge will be cancelled, resulting in a cash payment and
charge to Discontinued Operations of approximately GBP0.6 million,
with an annual interest saving of approximately GBP0.9 million. The
residual borrowings on the unhedged portion of the Term Loan will
be at LIBOR plus margin.
Under the terms of certain PPP contracts there are a number of
Parent Company Guarantees ("PCG") in place which have, in line with
market practice, been provided by JSG in order to guarantee the
performance of the obligations of SGP. The purchaser has committed
to work with JSG to complete the transfer of the obligations away
from JSG. To the extent that this is not achieved within six months
of completion a payment of up to GBP0.25 million per annum, pro
rata for the proportion of PCG covered contracts remaining, will be
paid to JSG until the liability is transferred. Appropriate
indemnities and warranties are included in the sale and purchase
agreement to limit the potential contingent liability of JSG. Under
the terms of the Agreement, JSG retains the liability for any
deferred consideration potentially payable in relation to a
previous acquisition.
Kevin Elliott, the Managing Director of the FM activities, has
resigned from the Board of JSG with effect from completion of the
Disposal.
John Talbot, Executive Chairman, commented:
"I am very pleased with this Disposal which effectively
completes the long term plan of reorganising the Group, refocusing
the business on its original core market in Textile Services and
achieving normalised borrowing levels. There is a major opportunity
for continued expansion within Textile Services based on a strong
financial and operational platform.
I would like to thank the SGP management team, under the
leadership of Kevin Elliott, for their contribution to the Group
during my tenure as Chairman and wish them every success for the
future."
Enquiries:
Johnson Service Group PLC
John Talbot, Executive Chairman
Yvonne Monaghan, Finance Director
Tel: 01928 704600
Investec Investment Banking (NOMAD) Newgate Threadneedle
James Rudd Graham Herring
David Flin John Coles
Tel: 020 7597 4000 Tel: 020 7653 9850
www.jsg.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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