Flotation of Subsidiary - Nonferral Recyclers Ltd
Cohen(A.) & Co PLC
10 February 2000
As outlined in the Company's announcement on 20th October 1999, the public float
of the Australian subsidiary, Nonferral Recyclers Ltd (NFR) has been completed
and was fully subscribed.
NFR is now listed on the Australian Stock Exchange with 32,630,048 shares, of
which A. Cohen & Co. Plc holds 17,100,048 shares, representing 52.4% of the
issued capital of NFR.
NFR issued 15,530,000 new shares to the public and institutional investors, in
addition to placing 1,800,000 new 8.5% pa, 60-cent convertible notes redeemable
by 1-1-2003 in NFR. In addition NFR has issued 13,257,500 options, each of
which entitles the holder to subscribe for additional shares, exercisable by
31-7-2001. A. Cohen & Co. Plc received 8,000,000 options, representing 60.4% of
the options in issue.
Total funds raised were £3.5 million prior to the costs of issue. After payment
of the costs, funds will be applied to additional working capital for NFR, to
settlement of obligations to A. Cohen & Co (Great Britain) Ltd as set out below,
and to the payment of inter-company debt with A. Cohen & Co. Plc totaling £1.5
million over the next 90 days.
The operations of NFR, which became profitable again in the third quarter of
1999, have continued to benefit from the improvement in metal prices and the
recovery in Asia. The company has made a profit forecast for 2000 of £830k at
current exchange rates, of which A. Cohen & Co. Plc shareholders will be
entitled to 52.4%.
The acquisition of the Glasgow Aluminium works by NFR from A. Cohen & Co (GB)
Ltd in order to create a more significant global aluminum group, was advised in
the last announcement of 20th October 1999. This was achieved in September 1999
by the creation of a wholly owned subsidiary of NFR named A. Cohen (UK) Ltd.
The settlement of this transaction has raised funds which has facilitated the
reduction of bank debt by £573k and will result in the reduction of £1,814k of
trade creditors and debt over the next 90 days. The settlement will also result
in a net profit of £95k being brought to account by A. Cohen & Co plc. As A.
Cohen (UK) Ltd is a wholly owned subsidiary of NFR, 52.4% of the future profits
of the works will be included in the profits of A. Cohen & Co plc through the
shareholding in NFR.
The wholly owned subsidiary, Jacob Metals Ltd, has continued to trade
successfully, contributing to profits for the year ended 31-12-99 and has
completed the establishment of Jacob Metals (South America) Ltd, a joint venture
trading company with NFR and the local management in South America. This
business was started late in 1999 and has commenced to trade satisfactorily.
Both Jacob Metals Ltd and Jacob Metals (South America) Ltd are expected to
contribute to group profits in 2000.
The copper based activities in the United Kingdom located at Woolwich continued
to generate unsatisfactory results which, together with Head Office costs, has
caused the activities in the UK to continue to incur losses, notwithstanding the
improvement in metal prices. As indicated to shareholders at the time of my
appointment on 10th August 1999, a decision would be made to exit all activities
that were not profitable by the end of 1999. As a consequence, the future
arrangements of the Head Office premises and staff at Clareville House are being
reviewed and changed appropriately for the period to the end of the lease in
2001. In addition, in an attempt to achieve profits at the Woolwich works, it
has been decided that this operation will continue, but producing a more limited
range of products comprised of work which is consistently profitable.
Unfortunately, this will result in a substantial number of redundancies, which
will occur in both management and operational employees. The future of these
activities will be subject to continuing further review until positive results
are achieved.
Mr. Jim Ferguson, the executive director of the Glasgow Works, has become an
executive director of the NFR subsidiary, A. Cohen (UK) Ltd, ceasing to be
an executive director of A.Cohen & Co Plc but remaining on the board. I have
become a Director of A. Cohen (UK) Ltd and Mr Anders Cohen has resigned as a
Director of A. Cohen & Co Plc. The structure and composition of the Board and
Board sub-committees will be subject to further review.
The funds received and to be received from the settlement of the Glasgow
Works and from the payment of inter-company debt from the float of NFR have
enabled the group to reduce bank debt in the United Kingdom and are expected
to improve the working capital position of the group through the reduction
of trade credit and debt over the next 90 days, notwithstanding the additional
funds required as a result of the recent increases in metal prices and
restructuring costs.
The continuing losses in the UK, and the abnormal and extraordinary costs of
the restructure in Australia and the UK referred to in my previous announcement,
are significant and are expected to result in total losses of
the group for the year ended 31st December 1999 being in the order of
£4million, including the abnormal and extraordinary items.
Full details of 1999 losses will be announced when finalized in conjunction with
the full year results by which time it is expected that the restructure of the
Group will be completed and the working capital and debt position improved.
As part of the float of NFR, a Directors and Staff option plan has been
implemented and 1,250,000 options exercisable at 50 cents per share have been
allocated to Directors and Staff of NFR. The allocations included 50,000
options to Roger Cohen, a Director of NFR and the company, and to Jim Ferguson,
an executive Director of The NFR subsidiary, A.Cohen (UK) Ltd and a Director of
the company. There are also 250,000 options allocated to myself as Chairman of
both NFR and the company, and 900,000 options to Directors and employees of NFR
and its subsidiaries. As required under the Listing Rules the approval of
shareholders will be sought at a General Meeting to be held within 90 days for
the Allotment of these options.
In addition the company, subject to shareholder approval, has allocated me
options to subscribe for 82,605 ordinary voting shares in the company
exercisable at any time until 31-12-2004 at 85p per share. This allocation of
options in the company will also be submitted to shareholders for approval
within 90 days.
The operations of the group will, in the short term, harness the trading skills
of the A.Cohen (Great Britain) Ltd and Jacob Metals Ltd businesses built up over
many years in conjunction with the reorganized manufacturing activity at
Woolwich, the major manufacturing and trading activities of NFR in Australia and
Glasgow and the associate interests in South Africa and Zimbabwe.
Following the completion of the restructuring and rationalization of activities,
the reduction of debt and the improvement in the working capital position of the
Group over the next 90 days, the structure and activities of the Group will
continue to be under review, with the objective of better utilizing the skills
and contacts which the Group has built up over 200 years.
Royce Ritchie
Executive Chairman
9th February 2000
For further information or clarification please contact
Royce Ritchie - Executive Chairman - telephone (Australia) 0061 417 500979
Simon Redman - Company Secretary - telephone (UK) 0208 310 7890
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