IVS Inveresk

RNS Number:3710N
Inveresk PLC
09 June 2005


                                  INVERESK PLC

                   INVERESK SELLS ITS GEMINI PAPERBOARD BRAND

Inveresk Plc ("Inveresk" or "the Company") announces today the sale of its
Gemini paperboard brand to highly respected Scottish paper producer Tullis
Russell Papermakers Ltd ("Tullis Russell") for a maximum total consideration of
#7 million with a further #8 million being payable to Inveresk in respect of
services provided to Tullis Russell between now and November 2005.

Inveresk will sell their Gemini brand name and order book to Tullis Russell,
also based in Scotland at Markinch, Glenrothes in Fife. Gemini is a
well-established brand within the UK and mainland Europe in the coated board
market where Tullis Russell are also already represented with their Trucard
product. Both products are used in high quality cards, covers and packaging
applications. Tullis Russell intend to take advantage of recent productivity
increases to absorb much of the current Gemini sales into its own operation and
will continue to invest strongly in the brand in the future. The move will help
Tullis Russell to secure its future by strengthening its competitive position
and improving the mill's product mix. Production is planned to transfer fully to
the Markinch operation by early November.

The consideration for the sale of the Intellectual Property is #5 million in
cash on completion. A further #2 million will become payable in cash dependent
upon the level of sales tonnes made between November 2005 and November 2006.
This consideration will become payable in early December 2006. A further #8
million will be payable in cash on a monthly basis between June and November
2005 in respect of Inveresk maintaining the continuity of Carrongrove's
production, sales and marketing.

The proceeds generated from these transactions of between #13 million and #15
million will be used to substantially eliminate bank borrowings which at 31st
December 2004 stood at #15.7 million.

In the year ended 31 December 2004, the Carrongrove mill generated sales revenue
of #26.2 million and operating profits of #1.62 million struck before central
costs, exceptional costs and financial interest. The assets which are being sold
have a nominal value within the books of Inveresk.

Inveresk's other mill at St Cuthberts in Somerset is unaffected by the sale and
will continue to operate in its speciality fields of artist and inkjet papers in
addition to its pre-impregnated resin based papers for the decor and furniture
industries. Indeed, the company has recently appointed a new General Manager for
the business in the shape of David Doorbar who has joined Inveresk after a
distinguished 26 year career with Arjo Wiggins and has exciting plans for the
development of the site's range of speciality products.

Inveresk's real estate portfolio is likely to play a more prominent role in the
future strategic development of the Company's activities.

Commenting on the announcement, Inveresk Chief Executive Alan Walker explained
the reasons behind the decision:-

"This is a day of mixed emotions in the long history of Carrongrove where
papermaking has taken place for more than 200 years. The mill enjoys an
excellent reputation for the quality of its products and its people and we have
made excellent progress in improving customer service levels, internal
efficiencies and growing international sales. However the harsh reality is that
the business is operating in very challenging market conditions and I have long
spoken of the need for consolidation within the industry. We are facing
escalating costs, particularly in energy and in raw materials, which we are
simply unable to pass on to our customers in a market which is resistant to
sales price increases. This, allied to the significant investment costs the
business is facing in terms of safety, energy, environment and new equipment,
together with the mill's dependency on international markets for its sales and
therefore its exposure to the extreme volatility of the Euro and US dollar, has
convinced us that shareholders' interests would be best served by finding a
suitably like minded producer to whom we have now sold our brands resulting in
the significant enhancement of shareholder value. The closure of the Carrongrove
Mill is anticipated to take place in November of this year with the potential
loss of around 150 jobs. We obviously regret enormously the impact on the people
involved and on the local Stirlingshire community and will be doing all we can
to help and support our employees through what will clearly be a difficult and
emotional time. We feel confident that our brand is passing into safe hands at
Tullis Russell who will protect the integrity of the products and service the
needs of our loyal customers around the world."

Giving his view on the deal, Tullis Russell Chief Executive Fred Bowden
commented "Whilst we feel greatly for all impacted by the Carrongrove closure
later this year, for Tullis Russell it represents an enormous opportunity to
improve our performance and secure the future of papermaking jobs in Markinch.
It also ensures the enhancement of the Gemini brand and safeguards supply for
its many customers around the world."

9th June 2005


Enquiries:

Inveresk Plc

Alan Walker         Telephone        020 7240 1234
                    Mobile           07710 620 260



                      This information is provided by RNS
            The company news service from the London Stock Exchange

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