The 220 employees of a Dublin-based environmental engineering consultants will receive a £1 million (€1.27 million) windfall following a decision of its three shareholders to sell the company to RPS, a British environmental consultancy group. Part of the deal involves the payment of the £1 million discretionary bonus to EEL Group's employees. The payment will depend on seniority and length of service, but it averages £4,545 per employee.
The three shareholders - Mr Tom Cahalan, (49), operations director; Mr James Doran (52), finance and administrative director; and Mr Seamus Tully (49), business development and diversified services director with responsibility for marketing - each own a third of the business. They have agreed to sell the company for up to £9 million, of which £3.6 million is deferred. The company was set up in 1984, with one employee.
The deal, in effect, values EEL at £10 million. The £1 million payment to the employees represents 10 per cent of the consideration, which is one of the most generous ever given to employees.
The deferred consideration is dependent on the three directors remaining with the group and fulfilling the terms of their service contracts.
Mr Tully said he and his co-directors decided to sell to RPS because it would give the group a better opportunity to expand, with the incentive of stock options in RPS.
Shares in RPS are quoted on the London Stock Exchange. Cash will account for 75 per cent of the £9 million price tag with the balance in RPS shares. Although RPS's shares fell by 25p sterling to 750p yesterday, they have almost doubled in the past year. The EEL Group consists of two companies - EEL (Environmental Engineering Ltd) and NES (National Environmental Sciences).
EEL, the larger of the two, is a consulting environmental engineering company with headquarters in Dublin and offices in Belfast, Waterford and Cork. Its clients include Motorola, Fujitsu, Pfizer, Allergan, Amdahl and Analog Devices. NES is a specialist environmental consultancy based in Dublin.
The EEL Group, advised by AIB corporate finance, is said to have shown consistent growth since it was set up in 1984. Sales grew from £8.8 million in 1997 to £14.7 million in 1999. Pre-tax profit increased from £946,000 in 1997 to £1,062,000 in 1998, but fell to £844,000 in 1999. The RPS offer document said a large contract caused a significant increase in sales in 1998, distorting the long-term growth trend.
RPS acquired the business of WJ Cairns and Partners (Ireland) in 1991. It is based in Belfast and had a business in Edinburgh. RPS announced results for 1999 yesterday. These showed a 31 per cent rise in profit before tax and goodwill amortisation to £6.65 million sterling (€10.86 million). It said it viewed the future with optimism and "believes prospect for the enlarged group are good".
