Plumbing and heating products supplier Wolseley Plc (WOSCY.PK,WOS.L) Monday said that it has agreed to sell 100% of its shareholding in Wolseley Ireland Holdings Ltd. to private investor backed company WIBHM Ltd. for a total consideration of EUR 26.5 million or GBP 23.8 million.
Wolseley added that a cash consideration of EUR 6.5 million or GBP 5.8 million was paid on completion, and the remaining EUR 20 million or GBP 18 million will be satisfied through a loan note issued in favour of Wolseley at a coupon of 10%, which is to be repaid within a year.
As per the agreement terms, Theale, Reading-based Wolseley said it has agreed to fund the deficit in Northern Ireland pension scheme, which is presently estimated to be EUR 5.5 million or GBP 4.9 million, and will be repaid by the purchaser by means of a separate loan note with a coupon of 3%.
Wolseley sees repayments under the loan note to start at the end of its second year, at a rate of EUR 1.5 million, or GBP 1.3 million, per annum. Wolseley stated that the balance of any deficit still remaining in the fifth year will be repaid in full, and that both loan notes are secured in full on Wolseley Ireland Holdings freehold property assets in Ireland.
Wolseley Ireland Holdings comprises of Wolseley's entire interest in Republic of Ireland including Heat Merchants, Brooks, Tubs and Tiles, and Encon Ireland trading brands. It also includes Brooks business in Northern Ireland. The combined businesses operate through a network of 67 branches and nearly 650 employees.
Wolseley said it is disposing of the businesses in line with its strategy of focusing its activities where it has built sufficient scale, established leading market positions and can deliver an appropriate financial return.
In the year ended July 31, 2009, the businesses had combined sales of EUR 237 million or GBP 204 million, and underlying operating losses of EUR 34 million or GBP 30 million. On a pro forma basis, sales for the five-month period ending December 31, 2009 was EUR 75 million or GBP 67 million, and underlying operating losses were EUR 5 million or GBP 4.6 million.
On completion, net assets are anticipated at EUR 73 million or GBP 66 million and exceptional pre tax loss on disposal, excluding any recycling of currency translation from reserves arising from transaction, is seen to be about EUR 55 million or GBP 50 million.
Commenting on the divestment, Wolseley's chief executive Ian Meakins said, "It will also enable us to bring an even greater degree of focus on driving performance improvement in our core UK businesses."
In Friday's regular trading session, WOS closed trading on the London Stock Exchange at 1,438.00 pence per share up 77.00 pence or 5.66% on a volume of 1.63 million shares. In the past 52-week period, the shares have been trading in a range of 131.30 pence to 1,570.00 pence.
WOSCY.PK closed Friday's regular trading session at $2.32 per share on the Pink Sheets. In the past 52-week period, the shares have been trading in a range of $1.61 to $5.98.
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