RNS Number : 2084H
Ransom(William) & Son PLC
16 February 2010
For immediate release 16 February 2010
WILLIAM RANSOM & SON PLC
(the "Company", "Ransom")
TERMINATION OF MEDIBEE SUPPLY AND LICENSING AGREEMENT
AND DEBT RESTRUCTURE
The Company is pleased to announce that it has today entered into an agreement with Bee & Herbal New Zealand Limited (a wholly owned subsidiary of Comvita UK Limited) to terminate its supply and licensing agreement of the Medibee range of products. The Medibee brand is composed of various manuka honey based products imported from New Zealand.
The Company will receive total cash consideration of £360,000 for the termination of the licensing agreement. £60,000 of the total cash consideration is dependent on meeting some performance related conditions. The proceeds will be used to reduce the Company's borrowings.
The Medibee products generated annual sales of approximately £1.7m and gross margin of approximately £0.4m for the year ended March 2009. In the year to date the sales and margin generated by Medibee products have reduced significantly due to continued material price increases and a corresponding reduction in promotions.
The Company has reached an agreement with its lending bank to convert the outstanding balance of its term loan into an overdraft facility. The balance of the Company's term loan has reduced substantially from £2.6m as at March 2009 to £475,000 following scheduled loan repayments, the proceeds of recent disposals, and the monies due to the Company from the Medibee license termination. The overdraft facility is a short term facility and therefore does not carry specific financial covenants as does the term loan. The total overdraft facility following completion of the termination of the Medibee supply and licensing agreement is expected to increase by £475,000 from its current level of £100,000 to a total of £575,000 of which £475,000 will be used by the Company to repay the term loan. The overdraft is expected to be reduced by at least £125,000 by 31 March 2010.
Ivor Harrison, Chief Executive, commented:
"The board believes that the termination of the Medibee supply and licensing agreement is in the best interest of the Company and its stakeholders as the divestment further reduces our borrowings. It is consistent with the Company's strategy of creating a focused, higher margin, differentiated natural consumer healthcare business."
William Ransom & Son plc: 01462 443527
Ivor Harrison, Chief Executive
Numis Securities Limited: 020 7260 1000
Nominated Adviser: Michael Meade
Corporate Broker: James Black
Buchanan Communications: 020 7466 5000
Charles Ryland /James Strong
This information is provided by RNS
The company news service from the London Stock Exchange
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