Inveresk to float with pounds 79m placing

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INVERESK, the Scottish paper maker, is braving tough trading conditions to join the stock market through a placing and intermediaries' offer that is expected to value it at pounds 79m.

The flotation, sponsored by Schroders, involves the issue of 22.6 million shares at 150p each. About two-thirds of the shares are being placed with institutions and the balance is on offer through stockbrokers.

The company is being launched on the market three years after it was bought out by its management for a total pounds 31m in equity and debt finance. Since then, the value of its equity has soared by 80 times, making Stefan Kay, managing director, a multi-millionaire.

Inveresk makes speciality papers and board for consumer goods labels and packaging, business stationery, cheques and hygiene products. A large proportion of its products are sold through paper merchants.

Operating profits have increased from pounds 7.4m in 1990 to pounds 8.6m for the year ended 28 November 1992, on sales down from pounds 58m to pounds 47m. The group will be debt-free on flotation.

A third of its total sales are to Continental Europe where demand for paper has been weak for the past two years due to worsening economic conditions and overcapacity.

However, Inveresk said that it had maintained its market position in a declining market.

The shares are rated at about 13 times historic earnings. Applications for the issue close on 27 May and share dealings start on 2 June.