Disposal and Directorate Change


 

TIDMSTBR 
 
RNS Number : 5503H 
Southern Bear PLC 
23 February 2010 
 

 
                                                                23 February 2010 
 
                                Southern Bear Plc 
                        ("Southern Bear" or the "Group") 
 
          Disposal of Engineering Subsidiaries and Directorate Change 
 
 New Strategic Focus on Support Services and Fire Protection/Prevention Markets 
 
The Board of Southern Bear plc has today agreed to dispose of all of the Group's 
engineering subsidiaries, comprising Phoenix Dynamics Limited ("Phoenix"), 
Tarvail Limited ("Tarvail"), Tarvail Design Limited ("Tarvail Design"), 
Towerinput Limited ("Towerinput") and Towerinput Distribution Limited 
("Towerinput Distribution"). This will enable the Group to focus on the support 
services and fire protection/prevention markets, which the Directors consider 
hold greater opportunity for the Group. At the same time this will enable 
central overheads to be reduced. 
 
The engineering division of the Group has been faced with many challenges and 
trading results have been disappointing. It is the Group's intention to build an 
innovative and robust business with solid foundations and the Board firmly 
believes that the remaining businesses within the support services sector will 
provide this opportunity. 
 
Southern Bear's Chairman, Mr Nigel Wray, commented: 
 
"I have been the Chairman of Southern Bear for just over one month; the Group 
also has a new Finance Director, Michael Clough, and a new CEO, Steve Hancock 
who join Mark Sims and Paul Richardson on the Board. This new Board has made the 
strategic decision to dispose of all of our engineering subsidiaries. This will 
enable the group to be highly focused on the UK's legislation led support 
services and fire protection/prevention markets for which we have great hopes 
for the future. 
 
The markets in which the support services businesses operate have been 
relatively insulated from the challenges in the wider economy. The disposal of 
the engineering operations will enable the Group to continue its positive 
progress and to ensure it remains well placed to fully capitalise on the 
opportunities that may arise in our core markets." 
 
In addition, the Group today announces that following the extensive 
reorganisation of Southern Bear's activities to focus entirely on the provision 
of support services, the previous Chairman of the Group, Jon Pither, has 
submitted his resignation to the Board so that he is free to establish a direct 
interest in two of the Group's former engineering subsidiaries. His knowledge 
and experience will, however, remain available to the refocused group under 
terms of a consultancy agreement.  The Board would like to take this opportunity 
to thank Jon for his services and wish him all success with the engineering 
businesses. 
 
Details of the disposals are as follows: 
 
Phoenix 
 
Towerinput Trading Limited (a wholly owned subsidiary of Southern Bear) has 
disposed of the entire issued share capital of Phoenix to Phoenix Dynamics 
Investments Limited ("Phoenix Investments"), a company wholly owned by Mr Graeme 
Boull. 
 
Mr Nigel Wray, has provided debt finance to Phoenix Investments for the purposes 
of the acquisition. Mr Boull  resigned as a Director of Southern Bear (and of 
all Group companies of which he was a Director) immediately before the sale . 
 
The aggregate consideration payable to the Group is GBP1.5 million in cash. Of 
this consideration GBP1.3 million is payable on completion and a further 
GBP200,000 is payable on 31 March 2010. Of the consideration, GBP700,000  will 
be used to reduce Southern Bear's current bank debt and the balance will be used 
for general working capital purposes. 
 
The principal activity of Phoenix is the manufacture of specialist wiring 
systems. In the year to 31 March 2009 Phoenix earned profits before tax of 
GBP558,000 and had net assets of GBP1.3 million. 
 
As Mr Boull was a Director of Southern Bear within 12 months prior to the 
completion of the disposal, the transaction is classed as related party for the 
purposes of the AIM Rules for Companies. The members of the Board, excluding Mr 
Boull and Mr Wray who have taken no part in board deliberations on this 
disposal, have consulted with the Group's Nominated Adviser and consider the 
terms of the transaction to be fair and reasonable insofar as the shareholders 
are concerned. 
 
Tarvail & Tarvail Design 
 
The Group has disposed of the entire issued share capital of Tarvail and Tarvail 
Design to an MBO team led by Mr Christopher Dalton. 
 
The agreed consideration is GBP50,002 payable as GBP2 on completion of the 
disposal and a deferred payment of GBP50,000 due six months post completion. The 
consideration will be used for general working capital purposes. 
 
Mr Dalton has resigned as a Director of Southern Bear with immediate effect. 
 
The principal activity of Tarvail is pipeline design, installation and general 
engineering. In the year to 31 March 2009 Tarvail earned profits before tax of 
GBP91,000 and had net assets of GBP1.2 million. 
 
The principal activity of Tarvail Design is the provision of technical design 
and support services. In the year to 31 March 2009 Tarvail Design made a loss of 
GBP36,000 and had net liabilities of GBP47,000. 
 
As Mr Dalton was a Director of Southern Bear within 12 months prior to the 
completion of the disposal, the transaction is classed as related party for the 
purposes of the AIM Rules for Companies. The members of the Board, excluding Mr 
Dalton, have consulted with the Group's Nominated Adviser and consider the terms 
of the transaction to be fair and reasonable insofar as the shareholders are 
concerned. 
 
Towerinput and Towerinput Distribution 
 
The Group has disposed of the entire issued share capital of Towerinput to Mr 
Marc  Rickards. The consideration is GBP1 payable on completion with an 
additional deferred consideration of up to GBP200,000 payable over a two year 
period immediately following completion. The consideration will be used for 
general working capital purposes. 
 
The principal activity of Towerinput is to find and implement engineering 
solutions for its clients. In the year to 31 March 2009 Towerinput made a loss 
of GBP51,000 and had net assets of GBP244,000. 
 
The Group has also agreed to dispose of the entire share capital of Towerinput 
Distribution to Mr Rickards. The agreed consideration is GBP2 payable on 
completion. 
 
The principal activity of Towerinput Distribution is that of the import and 
distribution of welding products. In the year 31 March 2009 Towerinput made a 
profit before tax of GBP112,000 and had net assets of GBP65,000. 
 
As Mr Rickards was a Director of some Southern Bear subsidiaries within 12 
months prior to the completion of the disposal, the transaction is classed as 
related party for the purposes of the AIM Rules for Companies. The members of 
the Board have consulted with the Group's Nominated Adviser and consider the 
terms of the transaction to be fair and reasonable insofar as the shareholders 
are concerned. 
 
CFC 0084 Limited - Trading as Ronald Thompson 
 
The Group has disposed of the entire share capital of CFC 0084 Limited to Mr 
Gavin Thompson. 
 
The agreed consideration is GBP1 payable on exchange of the sale and purchase 
agreement with an additional deferred consideration of GBP50,000 payable over 10 
equal monthly instalments following completion. 
 
The sales of Tarvail, Towerinput, Towerinput Distribution and Ronald Thompson 
will involve non cash write downs in goodwill and assets. This as an unfortunate 
but necessary consequence that will allow the Group to focus  on its continuing 
and profitable businesses. 
 
Continuing Operations 
 
The disposals will enable the Group to realign its business strategy and focus 
its attention on support services and fire protection/prevention. The Group will 
comprise the three mainstream businesses of BGC Limited, Fenhams Limited and 
Intumescent Protective Coatings Limited. The Directors expect the reorganised 
Group to grow both organically and by acquisition. As part of this development, 
the Group is planning to introduce strong entrepreneurial incentives at each of 
the subsidiaries to motivate the leadership team. 
 
The markets serviced by the Group's support services businesses have proven to 
be relatively resilient to the economic downturn which has challenged the wider 
economy. The Board has made the strategic decision to position Southern Bear so 
that it is able to capitalise on the opportunities arising in the support 
services and fire protection/prevention markets. Looking forward, the Group 
plans to raise further equity to clear all the remaining bank borrowing. Subject 
to any regulatory and necessary shareholder approvals, Mr Wray will underwrite 
any such fund raising. 
 
For further information, please contact: 
 
Southern Bear plc 
Steven Hancock - CEO 
Tel: +44 (0) 1926 888302 
 
Nominated Adviser: 
Grant Thornton Corporate Finance 
Gerry Beaney/Adam Suggett 
Tel: +44 (0) 20 7383 5100 
 
Broker: 
Dowgate Capital Stockbrokers Limited 
Neil Badger 
Tel: +44 (0)1293 517744 
 
Astaire Securities plc 
Katie Shelton 
Tel: +44 (0)20 7448 4400 
 
Financial PR: 
Bishopsgate Communications 
Robyn Samuelson/Siobhra Murphy 
Tel: +44 (0) 20 7562 3350 
 
 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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