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DISPOSAL OF THE DUTTON FORSHAW GROUP - LONRHO PLC

Release Date: 17/12/1997 14:49
Code(s): LON
Wrap Text
LONRHO PLC
17 DECEMBER 1997
DISPOSAL OF THE DUTTON FORSHAW GROUP

THE BOARD OF LONRHO PLC ("LONRHO") ANNOUNCES THAT IT HAS COMPLETED THE SALE OF THE DUTTON FORSHAW GROUP LIMITED ("DFG") TO TANEL LIMITED ("TANEL") FOR A CASH CONSIDERATION OF #43.0 MILLION, INCLUDING A PRE-SALE DIVIDEND OF #6.5 MILLION, WHICH HAS BEEN RECEIVED IN FULL.
THE PURCHASER WILL ALSO ASSUME APPROXIMATELY #70 MILLION OF DEBT, WHICH, TOGETHER WITH THE SALE PROCEEDS, WILL PERMIT A REDUCTION OF SOME #113 MILLION IN LONRHO'S BORROWINGS. THE TRANSACTION WILL RESULT IN AN EXCEPTIONAL PROFIT ON SALE OF APPROXIMATELY #8 MILLION.
TANEL IS A NEWLY FORMED COMPANY BACKED BY CVC CAPITAL PARTNERS, WITH FURTHER LOAN FINANCING PROVIDED BY NATIONAL WESTMINSTER BANK PLC. THE EXECUTIVE DIRECTORS AND SENIOR EMPLOYEES OF DFG WILL HAVE AN EQUITY INTEREST IN TANEL. DFG IS ENGAGED IN THE OPERATION OF FRANCHISED MOTOR VEHICLE DEALERSHIPS, LEASING OF CARS AND COMMERCIAL VEHICLES, IMPORTATION AND DISTRIBUTION OF AGRICULTURAL MACHINERY AND THE DISTRIBUTION OF CONSTRUCTION MACHINERY. ITS MOTOR VEHICLE FRANCHISES INCLUDE AUDI, FORD, JAGUAR, LAND ROVER, PEUGEOT, ROVER, ROLLS ROYCE, VAUXHALL AND VOLKSWAGEN.
THE NET ASSETS OF DFG AT 30 SEPTEMBER 1996 WERE #31 MILLION, AND ITS PROFIT BEFORE TAX FOR THAT YEAR WAS #4 MILLION.
COMMENTING ON THE DISPOSAL, NICHOLAS MORRELL, CHIEF EXECUTIVE OF LONRHO, SAID : "THE SALE OF DFG IS ANOTHER IMPORTANT STEP TOWARD ACHIEVING OUR STATED OBJECTIVE OF SEPARATING THE GROUP'S MINING AND NON-MINING INTERESTS AND STRENGTHENING THE GROUP'S BALANCE SHEET. THIS BUSINESS WAS RECORDING
SIGNIFICANT LOSSES ONLY A FEW YEARS AGO AND I AM DELIGHTED THAT THE MANAGEMENT WHO HAVE WORKED SO HARD TO RESTORE ITS PROFITABILITY WILL HAVE THE OPPORTUNITY TO SHARE IN THE FUTURE SUCCESS OF THE COMPANY". ENDS

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