DBAY Douglasbay

TIDMDBAY

RNS Number : 9310W

Douglasbay Capital PLC

29 November 2010

29 November 2010

DouglasBay Capital plc ("DBAY" or the "Company") Disposal of major investment DBAY announces the disposal of its largest investment, the logistics business TDG Limited ("TDG"). The Company has reached agreement to dispose of TDG's holding company, Laxey Logistics Ltd ("LLL") to Norbert Dentressangle SA ("ND"). Ignoring deferred consideration, the transaction values LLL at approximately GBP196.5m on a cash and debt free basis as at 30 June 2010, before adjustments to the purchase price and interest running on the overall price from 30 June 2010 up to closing of the transaction. The precise amount of the cash consideration actually payable to the Company is mainly dependent upon a number of adjustments and the date that closing occurs with interest accruing on the purchase price until then. Assuming a closing date of 10 January 2011, DBAY would expect to receive approximately GBP205million in cash as at that date, after adjusting for any consideration payable to seven management sellers who also own shares in LLL. The consideration payable to DBAY comprises consideration for LLL shares and repayment of a shareholder loan to LLL from DBAY (net of monies owed by DBAY group companies to TDG). There is also potential for further deferred cash consideration to be paid to DBAY consisting of tax related recoveries which is estimated to be up to GBP3.5m. The TDG Disposal is conditional only upon competition clearance by the European Commission. Approval and completion of the transaction is expected between mid January and mid February 2011. The proceeds of the TDG Disposal will be used by DBAY to repay existing group indebtedness of approximately GBP16m associated with DBAY Property Group and transactions costs. The remaining cash proceeds (currently estimated at approximately GBP185m, equivalent of 14.3 pence per share, assuming a closing date of 10 January 2011) will be used for general corporate purposes according to the Company's stated investment principles. DBAY's investment policy remains unchanged and the Company will continue to focus on creating value and generating attractive long-term returns for its shareholders. These returns will be derived from a combination of dividends from cash generative businesses acquired, capital gains from any increase in the Company's share price and potentially one-off distributions following the realisation of investments. As part of the transaction DBAY has given customary warranties, some limited tax indemnities and two other indemnities related to environmental and employment related issues. These warranties and indemnities are appropriately capped and have appropriate time periods which limit the buyer's ability to make a claim. DBAY does not expect any material claims will be made under the warranties or indemnities but this will be dependent upon the approach of HMRC in respect of matters covered by the tax indemnities, and other governmental agencies in the case of the environmental indemnity. As part of the transaction DBAY and DBAY Property Group will be released from their current obligations to the TDG Pension Scheme apart from two properties owned by DBAY Property Group which are expected to be released within 12 months following completion. As at 30 June 2010 the consolidated net assets associated with the TDG Disposal were GBP146.2m. Alex Paiusco, CEO of DBAY, commented: "We are very pleased about the development of TDG over the past two years under DBAY's ownership. The company has streamlined its operations re-focused its businesses and is now a recognised and highly profitable market leader in specialised logistics in Europe. All this has been achieved thanks to TDG's highly skilled and motivated workforce, and a strong management team led by Mike Branigan and Ian Pringle. The support and the loyalty of TDG's customer base, particularly during the recent economic downturn, enabled us to re-vitalise the business. The strategic fit with ND is strong. The combination adds scale and global reach and thus ability to broaden the services to TDG's existing customer base. We wish the company, its management and staff continued growth under the new ownership. DBAY's investment in TDG has been very successful in spite of challenging global market conditions. Besides the net cash proceeds of GBP185m after repayment of DBAY group debt, DBAY also retains some former TDG real estate assets which have been transferred to DBAY Property Group and have a book value in excess of 2 pence per share as of 30 June 2010. Overall the investment in TDG has created substantial value for our shareholders. This investment is a great template for DBAY's 'active value' investment approach of identifying companies with a strong potential, actively working with management teams to achieve superior financial and operational performance and thus be the catalyst for change." Mike Branigan, CEO of TDG, commented: "DBAY has provided valuable support to TDG over the past two years. The company has been transformed: the business model is refocused; the freight forwarding division has rapidly grown; the use of return-on-capital driven operational discipline has improved the overall efficiency of the operations. The combination with ND makes strong industrial sense. It will provide a stronger organisation with greater opportunities for customers and employees. The companies share a similar culture and entrepreneurial spirit. We look forward to working with our new owners to further grow the business and strengthen our relationships with our customers."

For more information, please contact: DouglasBay Capital plc 01624 690 900 Alex Paiusco, Chief Executive Peel Hunt Limited, Nominated Adviser and Broker 020 7418 8893 Guy Wiehahn

Further information on TDG TDG is one of Europe's largest logistics companies with turnover and underlying operating profits for the year ended 2009 of GBP662m and GBP25m respectively and employs over 6,300 staff. Underlying operating profit of TDG, before DBAY management charges, for the six months to 30 June 2010 was GBP12.1m on revenue of GBP340m. TDG was acquired by DBAY on 2 October 2008 for an equity value of approximately GBP203m and an equity investment from DBAY of approximately GBP115m.

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