Buyout near for Pentos arm

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The Independent Online
PENTOS is on the verge of selling its office furniture business to a management buy-out team headed by Brian Matthews, a main board director and chief executive of the subsidiary. The cash proceeds may help to stave off an embarrassing second rights issue in a year for the group.

Mr Matthews, who is being backed by institutional investors, is believed to have offered around pounds 15m for the business, close to book value.

Pentos, which announced a pounds 36m pre-tax loss for the half year to 2 July last Monday, has been trying to sell the business for five years. A sale will enable the group to concentrate on its core businesses of the Dillons book stores, Ryman stationers and the Athena poster shops. Sources close to the company say the deal will be announced shortly.

The office furniture business made around pounds 750,000 pre-tax profit in the first half of the year, so a sale will have a negative short-term effect on Pentos's earnings.

Pentos shares fell to 9p immediately after the company's half-year results were announced on Tuesday, although they made up ground during the week to close at 16.5p on Friday.

Bill McGrath, the group's chief executive who took over in January after the removal of Terry Maher, the group's founder, said that the results 'should mark a low point in Pentos's fortunes'.

He added that considerable progress had been made in refocusing the group since it received the proceeds of a pounds 45m rescue rights issue in May. The pounds 36m loss included exceptional costs of pounds 10.5m.