Kunick sale to raise pounds 12.5m

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The Independent Online
KUNICK, the troubled fruit machines and nursing homes group, is raising pounds 12.5m cash with the sale of a 50 per cent stake in its UK care business to a group of institutional investors.

The deal involves Goldsborough, the loss-making operator of old people's homes and private hospitals, acquired by Kunick in 1987.

The sale cuts Kunick's net debts from pounds 39.5m to pounds 10.5m. In addition, Kunick will be able to remove another pounds 18m debts owed by Goldsborough from its balance sheet.

Kunick is also providing total loans of pounds 6.4m to the business, of which pounds 5.4m is secured on surplus property that has been earmarked for disposal. The group has a second charge over the unwanted assets after bank lenders.

The moves were accompanied by the appointment of Russell Smith as Kunick's chief executive. Less than six months ago he stepped down as the group's chairman although he remained on the board.

His successor, Christopher Burnett, said his new role concerned the day-to-day management of Kunick's amusement games business. Graham Smith, an existing Kunick director, is moving across to become Goldsborough's chairman.

The disposal is in line with the group's strategy to reduce borrowings. The amusement machines business is being kept because it involves long term supply contracts with several brewers. These could be in jeopardy if it was sold.

The stake in nursing homes is being sold to institutional investors led by County NatWest Ventures. The buyers are also providing another pounds 26.5m in senior debt.

Goldsborough, which operates 18 residential and nursing homes, incurred a pounds 900,000 loss before tax last year.

Its performance deteriorated further in the first half of this year when it incurred another pounds 900,000 loss before exceptional writedowns and tax.

Kunick said that all parts of its business continued to suffer from difficult trading conditions in the second half. Amiro, the fruit machines business, had a 'mixed' year and was hit by sourcing problems.

Kunick's full year results ended last month are due to be published in January 1993.