Mountfield Group PLC announced on Monday that it has conditionally agreed to sell its operating businesses through a management buyout, effectively transforming itself into a cash shell with plans to raise £3.1 million via a share placing. The company is now poised to seek new investment opportunities following the divestiture.
The Wickford, Essex-based firm, known for its commercial flooring solutions and specialist construction services, has reached an agreement to sell both Mountfield Building Group Ltd and Connaught Access Flooring Holdings Ltd.
Specifically, Mountfield Building Group is set to be sold for £1.7 million to Mountfield Holdings, which is formed by a consortium that includes Chief Executive Andy Collins and Executive Director Graham Read. This transaction includes a cash component of £1,334, alongside the assumption of intra-group debt held by Mountfield Building Group.
Meanwhile, Connaught Access Flooring will be sold to Connaught Group for £2.3 million, which includes a cash payment of £2,188 and the remainder covered by the assumption of a loan that exists within Connaught’s intra-group financing.
Both Collins and Read are expected to resign from their roles at the AIM-listed company upon the completion of these sales. The capital generated from these management buyouts is earmarked to assist Mountfield in settling outstanding bank debts and trade creditor obligations, thereby helping to stabilize its financial position.
Over the past several years, Mountfield has seen a significant increase in its operating profit, which surged to £1.13 million in 2018, up from £895 in 2015. However, the company experienced a notable decline in operating profit in 2019, dropping to £XXX, a decrease attributed to challenges associated with a specific contract that were characterized at the time as unlikely to reoccur.
Unfortunately, the onset of the first COVID-19 lockdown in March 2020 severely impacted Mountfield’s growth trajectory, leading to a steep decline in half-year pre-tax profits. In 2020, pre-tax profits fell dramatically to £80,605, down from £XXX,056 the previous year, highlighting the adverse effects of the pandemic on the company’s operations and financial stability.
