Sale of Automotive Business
Disposal
Further to its announcement on 6 June 2006, Renold plc is pleased to announce
that contracts have been exchanged on 31 July 2006 for the sale of certain
assets and liabilities of the Group's Automotive business to Schaeffler KG
('Schaeffler'). Completion is expected shortly.
The divestment of the Automotive business is in line with the Board's strategy
to focus on the core Industrial Power Transmission operations. Renold was a
relatively small player in the automotive supply industry compared with the size
of its major competitors. Schaeffler is in a better position to serve the
automotive market going forward.
Total cash consideration of Euro 5.5 million (£3.8 million) is due at
completion. The consideration is subject only to an adjustment in respect of the
value of net working capital at completion.
At 31 March 2006, the value of gross assets being divested under the transaction
was £22.6 million after a charge for impairment of £9.1 million. The net
liabilities of the Automotive business were £21.2 million; under the terms of
the contract, Renold will retain certain liabilities with a value of £2.9
million.
The Automotive business recorded an operating loss of £0.9 million in the year
to 31 March 2006.
Proceeds from the divestment will be used to reduce the level of Group net debt.