Holt Lloyd managers in 60m pounds buyout

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The Independent Online
MORGAN Crucible, the industrial materials group, has sold Holt Lloyd, the UK distributor of Turtle Wax car polish, to its management for pounds 60m cash, writes Robert Cole.

The buyout team, backed by Electra, the venture capitalist, and Bank of Scotland, is also taking on pounds 9.5m of debt.

Management has also promised Morgan pounds 3.5m of deferred payment if pre-arranged performance targets are met. It is understood that institutions will pay Morgan the extra pounds 3.5m if the Holt business increases in value by at least 26 per cent by flotation.

Holt Lloyd's profits have improved sharply over the past three years - from pounds 1.5m before interest and tax in the 1991 calendar year to pounds 8.2m last year.

The sale price, excluding the pounds 3.5m performance-related deferred element, is equivalent to 12 times post-tax earnings in 1993. The deal will almost halve Morgan's debt gearing from 65 to 35 per cent.

However, Bruce Farmer, chief executive, said he wanted to increase borrowings with a programme of small acquisitions.

He would be happy to see gearing rise to 70 per cent and ruled out the possibility of raising cash from shareholders. 'A rights issue is not on the cards.'

Holt Lloyd was listed on the Stock Exchange until 1987 when Morgan bought it for pounds 81m. Mr Farmer said the business sold yesterday was the largest of three divisions of the original operation acquired in 1987. He estimated the current value of all three parts at pounds 130m.

The Holt Lloyd deal had been expected for some time, muting market reaction. Morgan Crucible's shares were unchanged at 360p.