CEPS PLC Acquisition of Milano International Limited (8928O)
07 October 2019 - 5:00PM
UK Regulatory
TIDMCEPS
RNS Number : 8928O
CEPS PLC
07 October 2019
7 October 2019
CEPS PLC
("CEPS" or the "Company")
Acquisition by Signature Fabrics Limited of Milano International
Limited, trading as Milano-Pro Sport
CEPS announces that its subsidiary company, Signature Fabrics
Limited ("Signature"), has acquired 90 per cent of the issued share
capital of a newly incorporated company, Milano International
Holdings Limited ("MIHL"), which has been formed to acquire 100 per
cent of the issued share capital of Milano International Limited
("Milano"), trading as Milano Pro Sport, for a consideration of
GBP1,850,000. The vendors, founders and shareholders of Milano,
Paul Pendergest and Lesley Pendergest ("Vendors"), will hold 10 per
cent of the issued share capital in MIHL. The transaction was
completed on 4 October 2019.
Milano was established in 1996 and is based in Preston,
Lancashire. The company is one of the leading providers in the
design and manufacture of athletic and gymnastic leotards and
costumes.
David Kaitiff, founder and Managing Director of Friedman's
Limited ("Friedman's"), the trading company of Signature, will be
the Chief Executive Officer of Milano and Neil Fox, Managing
Director of Milano, will remain in his position. Paul Pendergest
will be acting as a consultant to Milano.
Milano is profitable and cash generative. In the year ended 31
May 2018, Milano's unaudited accounts show sales were GBP1,683,570,
EBITDA was GBP110,462 and profit before taxation was GBP92,881.
EBITDA reflects significant one-off costs to the business during
that reporting period. At 31 May 2018, net assets were GBP288,408.
Trading performance and net assets of Milano for the year to 31 May
2019 have been in line with management's expectations for the
period.
The acquisition of Milano fits with Friedman's strategy of
broadening its service offering into complementary areas, working
with a management team that is committed to developing the business
further. It is expected that both businesses will benefit from the
relationship moving forward.
The Directors of CEPS believe that the acquisition of Milano by
Signature will be a valuable addition to CEPS.
The consideration for the acquisition of Milano was funded
jointly by CEPS (GBP1,000,000) and Friedman's (GBP700,000). The
Vendors' total consideration of GBP1,850,000 was made up of
GBP1,580,000 cash at completion and, in addition, MIHL issued
GBP160,000 of Vendor Loan Notes, GBP100,000 of Shareholder Loan
Notes and 10,000 ordinary shares issued at a price of GBP1 per
share. The Vendors have provided CEPS with appropriate warranties
and indemnities.
Third party loan and related party transaction
CEPS has taken out a loan from a third party for GBP2,000,000
("Loan"), part of which will be used to fund the acquisition of
Milano. The Loan Agreement was entered into on 18 September 2019 in
advance of the acquisition, and carries interest at an annual rate
of 10 per cent. accruing daily and payable in arrears on 31 March,
30 June, 30 September and 31 December. The Loan is repayable on or
before 31 October 2020 and may be repaid in one or more instalments
after 30 June 2020.
CEPS' obligations in respect of the Loan have been guaranteed by
Mr David Horner, a director of the Company as the provision of the
guarantee is considered to be a related party transaction under AIM
Rule 13. Mr Horner is not receiving any benefit from the provision
of the guarantee.
The independent directors consider, having consulted with Cairn
Financial Advisers LLP, the Company's Nominated Adviser, that the
terms of the guarantee are fair and reasonable insofar as the
Company's shareholders are concerned.
The announcement contains inside information for the purposes of
Article 7 of EU Regulation 596/2014.
Enquiries
CEPS PLC
David Horner, Chairman +44 1225 483030
Cairn Financial Advisers LLP
Tony Rawlinson / James Caithie +44 20 7213 0880
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END
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