Disposal

RNS Number:1325T
Stoddard International PLC
11 December 2003


                           STODDARD INTERNATIONAL PLC

                                11 December 2003

                             FOR IMMEDIATE RELEASE

    PROPOSED DISPOSAL OF PART OF THE COMPANY'S PROPERTY AT GLENPATRICK ROAD,
                            ELDERSLIE, RENFREWSHIRE


Introduction


The board of Stoddard International PLC ("Stoddard" or "Company") today
announces that an agreement ("Disposal Agreement") was entered into on 10
December 2003 for the sale ("Disposal") of a twenty two acre site ("Property")
which comprises the majority of Stoddard's land and buildings in Elderslie ("
Elderslie Site") to Walker Holdings (Scotland) Limited ("Walker").  The total
consideration receivable under the Disposal Agreement is #7 million.


The remainder of the Elderslie Site comprises a one acre site ("Additional 
Land") and an eight acre site ("Greenfield Land").   These are not part of the
Disposal.


Due to the size of the Disposal, the UK Listing Authority requires the board of
Stoddard to seek the approval of the shareholders of Stoddard.  This will be
sought at an extraordinary general meeting of the Company expected to be held
shortly.  A circular containing further details on the Disposal and convening an
extraordinary general meeting ("Circular") will be sent to Stoddard shareholders
shortly.  Completion of the Disposal under the terms of the Disposal Agreement
is subject only to shareholder approval being obtained.


Background to and reasons for the Disposal


At 31 December 2002, the Group had net debt of #12.6 million.  During the six
months to 30 June 2003, net debt increased to #17.2 million as a result of the
restructuring of the Group's operations, continuing losses and seasonal working
capital requirements.  The board's strategy is to develop key markets, invest in
new manufacturing technology, achieve cost savings through site rationalisation
and reduce borrowings through the disposal of surplus sites.  The Disposal is a
major element of this strategy.


Following the announcement in April 2002 of the closure of the Company's
operations at Elderslie, the Elderslie Site was marketed through Ryden for
residential development.  The best offer received was from Walker and an
agreement was entered into on 23 September 2002 ("Option Agreement") which, upon
the disposal of the entire Elderslie Site, was expected to result in gross
proceeds of between #7 million and #10 million.   Walker paid a deposit of
#250,000 to Stoddard in November 2002 to fund the costs associated with
obtaining planning and certain other consents for the Elderslie Site.


Outline planning consent for the Property and the Additional Land was granted in
June 2003 but was not granted for the Greenfield Land.  The decision not to
grant outline planning consent on the Greenfield Land has been appealed, the
appeal was heard in November and a response is awaited.  Following the granting
of the consent for the Property and the Additional Land further negotiations
took place with Walker and agreement was reached whereby Walker will pay a total
of #7 million for the Property alone.  During September 2003 further informal
testing of the market was carried out by the Company through Ryden and this
confirmed that the terms agreed with Walker for the Property remained the most
attractive.


Terms of the Disposal


The Disposal Agreement supersedes the Option Agreement and relates only to the
sale of the Property, was entered into on 10 December 2003 and will result in
total proceeds for the Property of #7 million (including the deposit of
#250,000).  The balance is payable as follows:


(i)  the sum of #5 million, payable on the date of entry (which is
     expected to be around 12 January 2004); and

(ii) a further sum of #1.75 million, payable either on 31 March 2004
     or within 14 days of the granting of detailed planning permission for the
     Property, whichever is earlier.

An application for detailed planning permission was lodged in November 2003 and
the board expects to receive a positive response in the early part of next year.

If the appeal seeking outline planning consent for the Greenfield Land is
successful and the Greenfield Land and the Additional Land are subsequently
sold, the board believes that the aggregate proceeds for the entire Elderslie
Site are likely to be at the upper end of the predicted range of #7 million to
#10 million.


Completion of the Disposal is conditional only upon Stoddard shareholders'
approval.


A summary of the principal terms of the Disposal Agreement and a valuation
report and description of the Property will be set out in the Circular.


Use of Disposal proceeds


The proceeds from the Disposal will be used to reduce the borrowings of the
Company and its subsidiaries ("Group") by around #4.6 million with the remainder
being used to fund the working capital requirements of the Group.


Financial effects of the Disposal


The Property was included in the Group's unaudited interim report for the six
months to 30 June 2003 at a value of #2.9 million as at that date and has since
been independently valued by Ryden at #6 million.  The valuation report prepared
by Ryden will be set out in the Circular.  The Group's results for the year
ended 31 December 2003 are expected to include a gain on the sale of the
Property of #3.7 million.  The board has been advised that no tax liability will
arise on the Disposal due to existing tax losses within the Group.


Working capital


Stoddard is of the opinion that following the Disposal, having regard to the
bank facilities which are currently available, the Group does not have
sufficient working capital for its present requirements, being a period of at
least 12 months from the date of this announcement.  The board believes that the
earliest date by which the Group may have to seek additional bank facilities is
during June 2004.


As explained above, the disposal of surplus properties is a key element of the
board's plans to reduce Group borrowings.  In addition to the Disposal the board
expects to realise other material non-trading receipts from the disposal of the
Greenfield Land, the Additional Land, two other smaller properties and other
non-core assets.  In addition the board expects to receive proceeds from an
insurance claim, details of which will be set out in the Circular.  Excluding
the Greenfield Land, the directors expect these items to realise around #1
million over the next 12 months.  In addition to these items, the board expects
the Group's trading performance to improve early in the new year following
completion of the significant restructuring exercise.


While these proceeds, receipts and trading performance improvements are
anticipated to reduce Group borrowings significantly, their amount and timing
cannot be predicted with a sufficient degree of certainty for the board to be
satisfied that the Group can rely on them to fund its future working capital
requirements.  If they are realised as expected then Stoddard is of the opinion
that following the Disposal, the Group does have sufficient working capital for
its present requirements, being a period of at least 12 months from the date of
this announcement.  However if they are not realised to the extent expected, the
board would intend to seek additional bank facilities, although the board cannot
be certain that such facilities would be available to the Group or of the terms
on which they would be provided.


If the Resolution is not passed


The board emphasises to shareholders that if the Resolution is not passed the
Disposal cannot proceed.  The Disposal is a key element of the board's plans to
reduce the debt of the Group and the support of the Group's banks has been on
the basis of these plans.  If the Disposal does not proceed, the Group will have
to seek additional funding to support the ongoing working capital requirements
of the Group from, amongst other things, the realisation of the Property, and
other Group assets and by seeking additional borrowing facilities.  The board
cannot be certain of the basis on which such asset disposals would be made or
whether such additional borrowing facilities would be available to the Group or
the terms on which these facilities might be provided.


In addition, if the Resolution is not passed, Stoddard will be required to pay
Walker approximately #138,500 as a refund of the deposit and, in addition,
Walker's costs of #50,000.  Furthermore Stoddard would again be bound by the
terms of the Option Agreement.  This agreement provides Stoddard and Walker with
the opportunity to continue to work together to seek the detailed planning and
other necessary consents and permissions required for the development of the
Elderslie Site for private housing.


Commenting on the Disposal Alan Scott said:


"The Disposal is an important milestone in the Company's strategy of reducing
borrowings through the disposal of surplus sites.  All activities have ceased at
Elderslie and the Company is well advanced in consolidating operations from the
previous three separate sites into one in Kilmarnock.  We are confident that we
will now realise the benefits of the single site operation."



Further information:


Stoddard International PLC

Alan Lawson, Chief Executive                   01563 578000

Noble Grossart Limited

Todd Nugent                                    0131 226 7011

                      This information is provided by RNS
            The company news service from the London Stock Exchange
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