Lee to sell bar firm for pounds 6m
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Your support makes all the difference.ARTHUR LEE & Sons, the Sheffield-based steel and plastics group, is to sell Lee Bright Bars, its loss-making subsidiary, to UES Holdings for pounds 6m cash.
UES will also take on external debt totalling pounds 1.5m. Last year Lee Bright Bars, Arthur Lee's largest subsidiary in terms of turnover, suffered a pounds 1.07m pre-tax loss on turnover of pounds 20.26m.
If the Office of Fair Trading approves the deal, which would give UES about 60 per cent of the European market in bright bars - a kind of steel bar - Arthur Lee's gearing of 25 per cent would be virtually eliminated, saving about pounds 600,000 a year in interest charges. It will also make about pounds 300,000 a year by leasing Lee Bright Bars' site in Sheffield to UES. In the six months to 31 March, the group made a profit before tax of pounds 604,000, on turnover of pounds 51.9m.
The company admitted that with the sale of Lee Bright Bars it might also make itself more attractive to predators. GM Firth, the loss-making steel stockholder and engineer that owns 22 per cent of Arthur Lee, is under pressure from its bank to sell the stake.
'No-one can predict what the OFT will decide, but we have invested a lot of time on this deal. We wouldn't have done that if we thought it was a complete wild card,' said Peter Lee, Arthur Lee's chairman.
'We have spent about pounds 2.25m in capital expenditure (on Lee Bright Bars) over the last two years. It's not producing the return on capital that we would wish, but it is well-founded and well-equipped. This is not a defensive move made for financial viability. We are not in danger of collapse. It is a strategic move to refocus our business in a more sensible direction.'
Carclo Engineering, which has a 7 per cent stake in Arthur Lee, is said to be interested in buying GM Firth's stake as a platform for a possible takeover bid.
'We have talked to a variety of people about this, but it is not our business to find homes for our shares. But we value our independence. We are not about to throw in the towel and say 'Come and get us',' Mr Lee added.
Yesterday Arthur Lee's shares rose 5p to 73p.
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