LAMONT Holdings has entered into conditional agreement to sell the Yorkshire based, financially troubled, Shaw Carpets operation, and certain related assets to Broomco, for £1 million sterling.
Broomco is partly owned by some of the Shaw Carpets managers and the consideration is subject to adjustment for the carpet business, Lamont said in a statement. The consideration "is subject to adjustment, as at December 31st 1996, certain transferring assets less certain trade liabilities to be assumed by the purchaser are less than or greater than £5.5 million", the statement added.
The maximum additional payment would be £800,000.
The proceeds from the disposal will be used to reduce Lamont's borrowings. Lamont noted that group trading in the second half of 1996 was similar to the first. However it hoped that, as a result of its action to eliminate Shaw Carpets' losses and a planned restructuring of its Moygashel plant, it would see an improved trading performance in 1997.
Group operating profit fell from £2.1 million to £1.1 million in the first half. Announce group disclosed mounting financial difficulties at its Shaw Carpets operation and at its Moygashel linen business in Northern Ireland.
The haemorrhaging at Shaw Carpets took the form of a £1.2 million increase in losses to £1.8 million on turnover down £550,000 at £10.68 million. At the time Lamont described Shaw Carpet's losses as "particularly disappointing" coming so soon after extensive restructuring and cost cutting exercises in late 1994, designed to restore profitability. The difficulties mainly centred on marketing and product pricing issues rather than labour problems.
