Alumasc Contracts to sell Brock Metal
THE ALUMASC GROUP PLC
The Alumasc Group plc (ALU.L), the premium building and engineering products group, announces that agreement has been reached to sell the Brock Metal business, the leading UK supplier of zinc and aluminium die-casting alloys, to Chelyabinsk Zinc Plant (“CZP”) for cash consideration of £8.15 million, subject to completion accounts adjustment. The consideration is equal to the net book value of the assets being transferred. Alumasc will retain ownership of Brock’s freehold factory near Cannock, which has an estimated value of £1.5 million and will be leased to CZP. All of Brock’s existing management team and employees will transfer with the business.
The sale of Brock, which is expected to complete at the end of June 2007, is strategically important for Alumasc, enabling increased management focus on growing the group’s higher margin core premium building and precision engineering products businesses. The proceeds of the transaction will be used to reduce group borrowings which had increased following the £13.5 million acquisition of Levolux in May. The transaction will also release about one-quarter of Alumasc’s existing working capital requirements and significantly reduce volatility within the monthly working capital cycle, allowing the group’s financial resources to be more effectively deployed.
CZP raised $368 million last year in an initial public offering of more than 30% of the company’s capital on the Moscow and London stock markets and is the leading producer of SHG zinc and zinc alloys in Russia. CZP confirmed in a press release today that the jobs of all Brock employees remain secure.
In the year to 30 June 2006, Brock’s operating profit was £0.7 million on revenue of almost £40 million. Brock’s gross assets at 31 December 2006 were £12.7 million. Brock’s revenue, profitability and working capital requirements have all increased significantly in the current year driven by a period of exceptionally high worldwide zinc prices.
Commenting on the transaction, Paul Hooper, Chief Executive of Alumasc, said: “The sale of Brock Metal announced today and the acquisition in May of Levolux, the UK’s leading provider of solar shading and control systems used in commercial and public buildings, each represent significant strategic developments for Alumasc. They demonstrate the group’s focus on further growing the profitability of its core niche premium building and precision engineering products businesses.I believe Brock, under CZP’s ownership, should benefit from becoming part of an international metals business and I would like to take this opportunity to express my gratitude to all the Brock employees for their contribution to Alumasc and to wish them every success in the future.”