LONDON (Alliance News) - Shares in home shopping and education company Findel PLC rose on Friday morning after the company said it has struck a deal to sell its beleaguered Kleeneze business to US direct-to-consumer company CVSL Inc, offloading a business which pushed it to a loss in the first half.
Findel shares were up 4.7% to 210.00 pence, one of the best performers in the FTSE All-Share index, after it said it will sell the Kleeneze business to Trillium Pond AG, a unit of CVSL, for GBP3.6 million. Findel said the majority of the consideration will be paid in cash and the remainder will be paid in CVSL shares. Findel did not define how much would be paid in cash and how much in shares.
The proceeds from the deal, which Findel expects to complete before the end of March, will be used to reduce the company's debt.
It added that, as part of an arms-length agreement, its Express Gifts business will continue to provide distribution and other support services to Kleeneze on an exclusive basis for a minimum of 18 months.
"CVSL represents a natural home for Kleeneze. We believe that this transaction is in the best interests of both Findel and Kleeneze, allowing Kleeneze to benefit from the extensive expertise and support of CVSL whilst allowing Findel to focus its resources on growing its core businesses," said Findel Chief Executive Officer Roger Siddle.
The deal comes after Findel saw its shares drop in November after it said its loss for the first half to September 26 widened substantially owing to an impairment charge on Kleeneze. It booked a GBP19 million cost in the half owing to the underperformance of the network marketing unit, which saw sales fall 24%.
"Whilst service levels have recovered and distributor numbers have stabilised, sales per distributor are yet to improve. A number of new options are being trialled and evaluated to improve performance," Findel said in November, commenting on the Kleeneze performance.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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