Shares rise adds Spice to possible telecoms sale

The Leeds-based firm has previously said it is reviewing the future of its gas, telecoms and facilities management businesses, and is widely expected to offload them.

The company works across the utilities spectrum, pinpointing unbilled properties to installing water meters. Share hit a six-week high of 37.25p at one point, before closing the day up 14.5 per cent, a rise of 4.5p to close at 35.5p.

In a statement the group said: "Spice notes the recent share price movement. Spice confirms that it is in discussions with a third party relating to the potential sale of the group's telecoms business. However, at this stage there can be no certainty that any transaction involving the group's telecoms business will take place. Spice will provide a further update when appropriate."

Early speculation placed a 30m price tag on the telecoms business, but analysts at Royal Bank of Scotland recently said downbeat statements by the group "may affect the price depending on what view potential purchasers take". RBS analysts said this sentiment may knock 20 per cent of the 30m price tag, meaning Spice could earn 24m from the sale.

However, Nick Spoliar at Altium Securities yesterday said the three businesses together could be worth in the region of 20m to 30m, with the bulk likely to come from the sale of the telecoms business.

Spice is keen to concentrate on organic growth, putting its previous acquisitive history behind it. It has set an aim of bringing net debt down to two times underlying earnings. Debt had ballooned to 116.5m by last October. Alongside cost cuts, disposals of non-core businesses were seen as the best way of achieving this.

The share price movement will be welcome news to Spice investors, who have seen their investment tumble in value. Shares touched a low of 27.5p late last month, a level not seen since late 2004. From the high of 134.5p achieved in July 2007, that was an 80 per cent fall.

In February, Spice parted company with founder and chief executive Simon Rigby. He had led the group on an aggressively acquisitive strategy, buying at least 35 businesses since 2001, including a 103m listed company.

Acting chief executive Martin Towers, former finance director of Yorkshire Water owner Kelda, has previously told the Yorkshire Post: "It's all about moving forward and leaving the history behind. We have come away from the acquisition-led strategy. These are very strong, good underlying businesses that we have."