Prontaprint parent to go private with buyout offer

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CONTINUOUS Stationery, which came of age this year as a public company, is heading back to the private sector. Its directors are proposing to end its 21-year Stock Exchange history with a management buyout offer at 40p cash per share.

The offer values CS Stationery, parent company of the Prontaprint high-speed print shops, at nearly pounds 7m. It already has backing from shareholders owning 49 per cent of the company.

Finance for the deal includes pounds 5m of shares and loan stock issued to investors led by 3i Group and ECI Capital Partners, and pounds 6.2m of loan facilities provided by Samuel Montagu.

Richard Raworth, the new executive chairman, said the costs of being a public company had been sizeable in terms of profits and turnover. In the year to April, it made pre-tax profits of pounds 1.14m on turnover of pounds 16m.

'A private company which is leveraged can give incentives to management to enable them to perform better than they would have otherwise,' he added.

Mr Raworth said the previous policy of growth by acquisition was clearly unsuccessful as the share price languished. Both the print shop side, which has 270 outlets, and the business forms division would now develop organically.

A paper alternative is on the table in the shape of a new 'A' ordinary share and pounds 5 of loan stock for every 10 shares. But it comes with a strong 'health warning' which should persuade investors to take cash. The shares rose 4p to 38p before the announcement.