Plastics firm Carclo has announced the sale of its Wipac Czech division to Magna Automotive Europe.
Wipac Czech designs and develops automotive lighting, historically acting as a sub-contract engineering resource for the main Wipac business in the UK.
The Transaction will be structured as the sale of 100 per cent of the share capital of Wipac Czech for a total consideration of €1.1m, which comprises €0.8m in cash and the assumption of €0.3m of outstanding liabilities.
Money from the sale will be used to reduce the outstanding net indebtedness of the group, Ossett-based Carclo said.
In the year to March 31, 2019, Wipac Czech reported operating profits of €0.1m and had gross assets of €0.9m at the end of the period. The sale is expected to take place on November 26, 2019.
Carclo added that discussions regarding a potential sale of the principal Wipac UK business were ongoing, with negotiations now in an advanced stage with a single party.
However, there was no certainty that a successful sale of this business will occur nor as to the terms or structure of any such transaction.
Carclo faced an “extremely challenging year” as Wipac performed poorly.
Chairman Mark Rollins said: “The year to 31 March 2019 was an extremely challenging one for Carclo, with Wipac’s poor operational and financial performance putting significant pressure on the whole group.
“However, with Technical Plastics and Aerospace delivering encouraging performances in 2019, which have continued in the first half of the current year, and Wipac’s immediate cash needs being funded by its customers, the group’s net debt has fallen over the past six months.
“This is providing a foundation for the ongoing long-term funding and pension contribution negotiations which, along with a successful exit from the Wipac business, are key to the future of Carclo.”