Thorn EMI expected to sell lighting division
Monday 21 June 1993
The disposal, which has been planned for years, follows the sale of Thorn's 59 per cent stake in Thames Television to Pearson and of its fire extinguishers business to Williams Holdings for pounds 41m.
The disposals reflect the strategy of the chairman, Sir Colin Southgate, of concentrating on two areas - music, including the Virgin business, and the television rental operation.
Thorn also owns a defence operation but is understood to be in protracted talks with GEC, headed by Lord Weinstock, over its sale.
Last month Thorn announced profits of pounds 289.9m for the year ending March 1993. The lighting division contributed pounds 15.2m, 21 per cent more than in the previous year, to operating profits of pounds 379m. On this basis the sale might produce pounds 150m, assuming Investcorp pays 15 times earnings. This would help to reduce Thorn's net borrowings, which at the end of the last financial year were pounds 476m, almost equal to shareholders' funds.
In 1990 the company talked to GTE about selling the lighting business but this effort failed and it sold part of the division, the lamps operation, to GE of the US in 1991. At the time of the lamps disposal Thorn made an extraordinary provision of pounds 40.4m after tax to cover costs - including the run-down of a Merthyr Tydfil factory.
Thorn's latest figures included a further pounds 10m pre-tax provision to cover 'additional liabilities' relating to the sale and GE's subsequent decision to close certain factories. This was treated as an exceptional item in the accounts.
There were also a large write-off and provisions for Thames.
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