IWP sale of Skiffy raises €28m

IWP is now focussed almost totally on the personal health care sector following the sale of Skiffy for €28 million in cash which will push company debts down to €70 million.

The sale of IWP’s Dutch plastics business to international distribution and outsourcing group Bunzl plc is subject to shareholder approval, it includes IWP’s Johan Putzfeld operations.

The operations being sold had historical profits of €3.5 million, on sales of €12 million.

Goodbody stockbroker’s analyst Robert Eason said that while the deal will be dilutive to earnings the proceeds will go a long way to reducing IWP’s net debt burden, which currently stands at over €100 million. Skiffy’s profits represent around 45% of forecast earning before interest and tax (EBIT) for the 12 months to the end of March 2004.

“In particular the monies received can be used to pay off some of the loan notes, which are commanding interest rates of over 7.5%. With the disposal of Skiffy, IWP is now focused solely on personal care.

“The next step in the restructuring process is the re-negotiation of the group’s debt facilities given that it is in technical breach of certain loan/banking covenants,” he said.

Davy Stockbrokers’ John O’Reilly said: “IWP’s interest cover is the thinnest of thin.”

IWP chief executive Jim Murphy said: “The sale of the Skiffy Group, which was indicated in our interim results statement, is a significant step in focusing our activities on our core personal care business.

“We are satisfied with the consideration achieved, which will be used principally to reduce debt,” he said.

Skiffy is based in Amsterdam and the business operates across Europe.

Bunzl said the value of the net assets to be acquired are expected to be approximately €7.1 million on a net debt/cash free basis.

Skiffy operates primarily in the plastic components market in 76 countries.

Its four principal markets are France, Netherlands, Germany and Britain and its product range includes washers, caps, plugs, handles and fasteners.