Proposed disposal of the Travel Business (4211A)

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    [phone] 
 
 Collins Stewart 
 Adrian Hadden                [phone] 
 
 

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

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