Imaging Solutions to be sold to company owned by CEO

According to a press release, the consideration for the proposed disposal is €200,000 (£ 170,340/US$ 284,000) plus a contribution of £136,000 (€ 158,000/US$ 225,000) towards the Company’s costs of the proposed disposal, all payable in cash on completion. In addition, PMI will be entitled to an amount of approximately CHF 633,605 (€ 417,000/US$ 591,000) in respect of a patent licence agreement to be entered into. The latter sum is to be set-off against a loan of the same amount owed by PMI to ISAG.

The agreement further provides that, if the shares of ISAG or ISAG’s business, or material parts thereof, are sold to a third party within one year of the date of completion, any profit derived from such sale will be shared with the PMI on a 50/50 basis, the ompany’s share being limited to a maximum amount of €4.5 million (US$ 6.4 million).

For the year ended 30 April 2008, the most recent year for which Photo-Me’s audited consolidated accounts are available, the ISAG Group generated a loss before taxes of £0.9 million (€ 1.05 million/US$ 1.49 million), comprising a pre-exceptional items loss of £0.8 million and exceptional charges of £0.1 million.

For the six months to 31 October 2008, the ISAG Group generated a loss before taxes of £1.3 million (€ 1.51 million/US$ 2.14 million).

On 4 June 2009, PMI had announced that it had initiated discussions with interested parties with a view to a possible sale, reflecting the Board’s conclusion that ISAG’s activities were neither a core element of Photo-Me’s strategy nor capable of further integration within the group. Further, the Board was keen to avoid exposure to further substantial losses and a requirement to fund a capital expenditure programme to develop photo-processing equipment which uses different printing technology from silver halide, ISAG’s current technology. 

PMI pointed out that the company‘s Board considered RB Imaging’s offer to be the best solution for Photo-Me shareholders in view of ISAG‘s operational losses and the potential of a loss on disposal. The Board had also evaluated the potential for closure of the ISAG Group.

PMI said it will issue its preliminary announcement of annual results for the year ended 30 April 2009 tomorrow, 2 July 2009. The ISAG Group will be accounted for as a discontinued business in the results for the year ended 30 April 2009 and as assets and liabilities held for sale at 30 April 2009. In these results, the proposed disposal is expected to result in a write-down, totalling approximately £8 million (€ 9.3 million/US$ 13.2 million), of ISAG Group assets.  No taxation payable or receivable is expected to arise on the proposed disposal.

The proceeds of the proposed disposal will be used to reduce Photo-Me’s debt.

The transaction is subject to the approval of PMI’s shareholders. A circular is expected to be posted to Photo-Me shareholders by 10 July 2009 to convene a general meeting.