Coral Products agrees £7.9m sale of two divisions

Injection-moulded plastic products company Coral Products has entered into a share purchase agreement for the conditional sale of Coral Products Mouldings (CPL) and Interpack, it announced on Thursday.

The AIM-traded firm said the estimated initial net cash consideration would be £7.9m, with the purchaser being One51 ES Plastics UK.

It said the £7.9m would be payable on completion, and would be subject to an adjustment following the preparation of completion accounts and adjusting for certain liabilities.

Completion was expected to occur in February, with a back-stop date of 30 April 2021.

The company said it would continue to hold the freehold for the Haydock site from which CPL operates, and intended to enter into a 10-year lease with the purchaser at rent of £0.3m per annum with a five-year break clause, and a rent review after five years.

“One51 ES Plastics UK is the UK subsidiary of IPL Plastics Group,” the Coral board said in its statement.

“IPL's turnover is in excess of $700m, with operations in the United States, Canada, Europe and China.”

It said IPL operates across three divisions - consumer packaging, large-format packaging and environmental and returnable packaging.

“IPL has 15 plants, nine of which are based in North America, and employs over 2,000 people.”

Coral said it would be subject to restrictive covenants for a period of 36 months from completion of the sale, during which time it would be restricted from competing with the sale companies, provided only that the restrictions would not apply to its retained group companies’ existing customer base.

Chief executive officer Michael Wood would resign from the board on completion, as he would be joining the purchaser as part of the sale agreement.

Joseph Grimmond, currently non-executive chairman, would be appointed executive chairman of the company.

“The company will ensure that a normal level of working capital remains within the sale companies at completion,” the board said.

“The final consideration due to the company is subject to other customary adjustments at completion, such as the actual working capital at completion against an agreed target level and adjustments for cash or debt items.”

At 1122 GMT, shares in Coral Products were up 66.53% at 10.2p.