Legal disputes 'fact of life' for Tring

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TRING International, the budget- price compact disc supplier seeking flotation on the stock market, said yesterday that its vulnerability to litigation was an occupational hazard, writes Robert Cole.

Mark Frey, joint chief executive, said: 'We do not want to sound cavalier about it but lawsuits seem to be a fact of life for us.'

Tring is fighting legal action from four sources, all of whom allege breach of copyright. Last year it paid pounds 20,000 in a settlement with the EMI music concern.

The company has the right to reproduce 8,000 songs. It repackages the songs on CD and sells discs at a budget price - commonly pounds 2.99. Tring is a marketing and distribution business, contracting out the manufacturing process. Ninety per cent of sales are transacted outside record shops in outlets such as petrol stations and supermarkets.

Tring said in the prospectus: 'The group is engaged in a number of legal proceedings. The directors do not expect the outcome . . . to have a significant effect on the financial position.'

Half the company has been sold, raising pounds 25m. Shares have been placed with institutions at 118p. Tring said demand had outstripped supply and applications were being scaled back by about 50 per cent. Of the pounds 25m being raised, pounds 22m will go to directors and backers who helped set the business up. They invested about pounds 2m. The company will receive pounds 1.5m and pounds 1.5m will be used to pay the costs of the issue.

Tring forecast pre-tax profits of pounds 5.1m for the year to March, an increase of 54 per cent. At 118p, the shares are being placed at a prospective price/earnings ratio of 14. The company said the notional dividend yield would have been 4 per cent.