TIDMWEST
RNS Number : 4211A
Western & Oriental plc
01 February 2011
1 February 2011
Western & Oriental plc
("Western & Oriental" or the "Company" or the "Group")
Disposal of the brands and certain assets of the travel
division
The Board of Western & Oriental, the luxury and specialist
travel group, announces that, having consulted with a number of its
major shareholders it has accepted, subject to contract and
conditional on shareholder approval, an offer for the brands and
certain assets of the Travel Division of the Company ("the Travel
Business") by Furze International Limited (the "Proposed
Transaction").
Background to the Transaction
During the strategic review commenced in 2010 and discussed
further over the last two months, a number of options available to
the Board have been reviewed and investigated. The Board concluded
that of the available options, a sale of the Travel Business would
be an appropriate course of action for the Group. The Board also
concluded that the sale of the Travel Business would enable the
Company to increase its focus and apply its resources to the
development of its profitable Events Division. The Board of the
Company has, further to the announcement made on 26 January 2011
entered into extensive discussions with two interested parties.
Only one of those parties, Furze International Limited ("the
Purchaser"), which is owned by the Kumar Family Trust of which Raj
Kumar, a Director of the Company, is a beneficiary, has confirmed
its offer on terms acceptable to the Board.
Summary terms of the offer
The terms of the offer made by the Purchaser are:
1. Cash consideration of GBP1m. The consideration will be
effected by the deemed repayment of the GBP800,000 loan, which Mr
Kumar has provided to the Company, as announced on 21 December
2010, and the balance of GBP200,000 to be paid in cash on
completion of the Proposed Transaction which is envisaged to take
place as soon as the requisite shareholder approval is obtained. If
the Proposed Transaction does not gain sufficient shareholder
support the Company will need to repay the GBP800 000 loan in cash
or convert it into shares or a combination of the two;
2. The Purchaser will acquire all the brands and certain assets
of the Travel Business, specifically the forward order book as at
31 January 2011 and net customer monies relating to those forward
orders stands at GBP3,845,000 ;
3. The Purchaser will take over the lease of all properties
operated by the Travel Business as well as the remaining 4 years of
the existing lease of the Group's head office, Welby House in
Victoria. Whilst the Company intends to continue to sub-lease part
of Welby House for its Events and corporate operations, it is
anticipated that the transfer of the remaining lease obligations of
Welby House and the other properties will result in a saving of
approximately GBP300,000 per annum for the next four years, when
the last of the existing leases expire.
4. All employees, including Kerry Golds who is a Director of the
Company connected with the Travel Business will transfer to the
Purchaser and as such it is expected that the Company will not have
any redundancy or other employee costs relating to this
transaction.
Western & Oriental's Travel Business reported a loss from
continuing operations of GBP6.1m on revenues of GBP32.9m for the
year ended 30 September 2010 (GBP940,000 profits on revenues of
GBP32.1m for the year ended 30 September 2009).
Transaction Rationale
In considering the offer made for the Travel Business by the
Purchaser, the Directors of the Company have taken account of a
number of relevant matters. The Travel Business has been loss
making and along with the significant cost of its Welby House
property, a significant level of ongoing obligations and costs will
be removed from the Company's overheads. The offer is also not
subject to any due diligence being undertaken.
In addition, the continuing losses of the group have put
pressure not only in relation to the Company's available cash but
also in relation to its ability to meet the asset requirements set
by its regulatory authorities and travel related bodies of which
the Travel Business are members. The disposal of the division will
therefore relieve the Company of this pressure while the net cash
proceeds from the sale will be used to provide working capital to
the Company going forward.
The Board considered a number of offers and given the need for
certainty and to conclude a swift completion of a sale, it believes
that it is in the Company's and the Shareholders' best interest to
accept the offer of the Purchaser.
Completion of the Proposed Transaction will allow the Company to
focus its resources on the development and growth of its profitable
Events Business. Western & Oriental's Events Business reported
a profit from continuing operations of approximately GBP700,000 on
revenues of GBP13.8m for the year ended 30 September 2010 (GBP1.98m
profits on revenues of GBP21.37m for the year ended 30 September
2009).
Shareholder approval
Completion of the Proposed Transaction remains subject to
contract and will be conditional on shareholder approval which will
be sought at a General Meeting which the Company expects to convene
shortly. Further details in relation to the Proposed Transaction,
the ongoing effect on the Company and the Company's future focus
will be outlined in the circular containing the notice of meeting
which will be circulated to shareholders as soon as realistically
practicable.
Related Party Transaction
Mr Raj Kumar, a Director of the Company, is deemed to be a
related party for the purposes of AIM rule 13 in relation to
transaction on the basis that the Kumar Family Trust, of which Mr
Kumar is a beneficiary, owns Furze International Limited. With the
exception of Mr Kumar, who is involved in the transaction as a
related party, the Company's directors consider, having consulted
with its nominated adviser, that the terms of the Proposed
Transaction are fair and reasonable insofar as its shareholders are
concerned.
In addition to the interest notified above, Mr Kumar has a
personal holding of 26.5m shares in the Company which were acquired
before his appointment as a Director on 30 November 2010 and a
beneficial interest over a further 2m shares held by a Kumar Family
Trust by virtue of being a beneficiary of that trust. Mr Kumar's
total holding amounts to 28.5m shares representing 7.92% of the
Company's share capital.
Enquiries:
Western & Oriental plc
Pavlos Savvides, Chairman +44 (0)20 7821 4078
Collins Stewart
Adrian Hadden +44 (0)20 7523 8350
About Western & Oriental plc
Western & Oriental is a specialist luxury travel group with
a number of established high quality brands. The company was
admitted to trading on AIM under the ticker symbol WEST in March
2006. The Group acts as a tour operator, travel agent and
conference and incentive organisers, offering a premium service for
tailor-made and specialist packaged holiday programmes to
destinations worldwide.
For more information on Western & Oriental and its
individual luxury travel brand websites, go to
www.westernorientalplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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