APV sells US packaging company to its managers

APV, the food-processing equipment manufacturer, yesterday offloaded another of its subsidiaries as part of its heavy rationalisation programme, writes John Murray.

The group, whose profits have declined after an acquisition binge in the 1980s, has sold Douglas Machine Corporation, its US packaging business, to a management buyout team for dollars 28.9m.

The team, backed by Norwest Venture Capital Management, will retain about dollars 6.9m of net cash in the business. APV said the proceeds would be used to cut its debts, which were 36 per cent of shareholders' funds at the half year.

Analysts said the deal would leave the group with no net debt, but it is understood the cash will not be used to maintain the final dividend, which has been under threat as profits have slipped.

The money is more likely to be injected into the core business of supplying manufacturing plant to the food and drinks industries, particularly in the US and the Far East.

APV has closed two production plants and sold six other businesses since Clive Strowger was appointed chief executive 18 months ago.

Douglas made dollars 4m before tax last year. Its net assets at the year-end were dollars 13.9m but APV's disposal profit will shrink to about pounds 9.5m after the costs of the deal and a write- back of pounds 1.6m in goodwill. The shares closed 1 1/2 p higher at 119 1/2 p.