Logitek sold to management for pounds 2.5m

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MICROVITEC, the computer terminal maker, is to sell Logitek, a distribution business it acquired in a hostile takeover only 18 months ago, writes Tom Stevenson. The news accompanied a warning yesterday from James Bailey, chairman, that profits for 1992 would be below expectations.

Mr Bailey said Logitek had been making losses throughout last year, but would not say how much. James Warhurst at Microvitec's broker, Henry Cooke Lumsden, expects a pounds 1m loss overall, the third year running of red ink, despite a pounds 62,000 interim profit.

Logitek is being sold to its management for pounds 2.5m, with the proceeds being used to reduce gearing from 84 per cent to under 50 per cent. With Microvitec's other businesses profitable and cash-generative, Mr Warhurst expects profits of pounds 3m this year and thinks gearing will fall below 20 per cent.

'With the benefit of hindsight, it wasn't a good time to buy a box shifting business,' Mr Bailey said. 'Prices and margins have been slashed, with everyone fighting just to stay in business.'

Microvitec acquired Logitek in May 1991 in a bid that valued the company at pounds 3.1m.