17th Nov 2005 13:42
Parity Group PLC17 November 2005 Parity Group plc Disposal Parity Group plc ('Parity') today announces the signature of a definitiveasset purchase agreement with Kenda Systems, Inc. ('Kenda'), a NewHampshire Corporation, under which Kenda will acquire substantially all thetrade and personnel of Parity's American activities ('Parity Americas').The consideration comprises an initial payment at closing and further paymentsover a 15 month earn-out period. In total the transaction is expected to yieldproceeds of between £1.1 million and £1.3 million, the majority of which will bereceived during the year ending 31 December 2006. All of the proceeds will beused to reduce Parity's indebtedness. Kenda has paid US$185,000 to Parity in consideration of the transfer to Kenda ofsubstantially all of Parity Americas' customer contracts, personnel and fixedassets as well as certain liabilities, this amount representing their net bookvalue. All working capital of Parity Americas remains with the group and will berealised by Parity over the course of the following months. In addition, underthe terms of the earn-out, Kenda will make monthly payments to Parity over a 15month period to 31 January 2007 relating to gross profit targets. Such paymentswill in aggregate, amount to a minimum of US$765,000 and a maximum of US$1.65million. For the year ended 31 December 2004, Parity Americas reported an operatingprofit (before goodwill, exceptional items and allocation of Parity centralcosts) of £91,000 on turnover of £14.5 million. As a consequence of thetransaction Parity will also write down in the current year that portion of thedeferred tax asset carried on its consolidated balance sheet which will not beconsumed by the transaction, which is currently estimated to amount to some£650,000, this being a non-cash item; as well as some US$364,000 relating touncollected accounts receivable (and their associated costs) due from asubsidiary of Delta Airlines, Inc. ('Delta') and dating from the periodimmediately preceding DeltaOs Chapter 11 filing for bankruptcy protection inSeptember 2005. Parity Group plc John Hughes, Chairman 020 7832 3500 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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