12/02/2010
Friday

SSL strengthens its position in the CIS
 

·        BLBV strong growth continues

·        SSL stake in BLBV increases to 75%

·        Option to purchase remaining shares extended to 2011

·        BLBV managers/vendors incentivisation continues

SSL International plc ("SSL") announces that it has exercised an option, conditional upon the approval of SSL's shareholders, to increase its stake in the holding company for its CIS ("Commonwealth of Independent States") business, Beleggingsmaatschappij Lemore BV ("BLBV"), to 75 per cent. SSL has agreed a further option to take its shareholding in BLBV to 100 per cent which is exercisable in 2011.

Garry Watts, Chief Executive of SSL, said: "We have been delighted with our investment in BLBV; the underlying performance of the business since our partnership began has exceeded all our expectations. Together with BLBV's existing shareholders and management, we have made excellent progress in bringing our businesses together. We are very optimistic for BLBV's prospects and the potential for SSL's products within the CIS and Eastern Europe.

“We are pleased to have reached an agreement which allows us to strengthen our control of BLBV in a staged and balanced manner. We expect that the completion of the transaction announced today will have a beneficial impact on our financial performance and be earnings enhancing in the first year.” 

For further information:

SSL International plc ("SSL") announces that it has exercised an option, conditional upon the approval of SSL's shareholders, to increase its stake in the holding company for its CIS ("Commonwealth of Independent States") business, Beleggingsmaatschappij Lemore BV ("BLBV"), to 75 per cent. SSL has agreed a further option to take its shareholding in BLBV to 100 per cent which is exercisable in 2011.

SSL has proposed and has now agreed with Abraca B.V. (“Abraca”), the minority shareholder in BLBV, to amend the terms of the option agreement entered into by SSL and Abraca in February 2008, under which SSL had an option to increase its stake in BLBV from 50 per cent. plus one share to 100 per cent (the “original option”).  Under the amended agreement, SSL has negotiated and exercised an option to take its shareholding in BLBV to 75 per cent. (“Option A”), and negotiated a further option over the remaining 25 per cent., exercisable in 2011(“Option B”).

BLBV is experiencing strong growth in a challenging market environment with dollar reported revenues for the year 2009 expected to be up 50% since 2007  with an EBITDA in excess of $50 million for the year 2009. Financial and operating performance is significantly ahead of initial expectations.

The amended agreement allows for the continued incentivisation of many of the management team of BLBV who are shareholders in Abraca, extending their equity participation by approximately a further 12 months during a critical period including the completion of the integration of the BLBV business, with the aim of continuing the impressive performance achieved to date into 2010 and beyond. SSL expects that the terms of the amended agreement will enable the integration of BLBV into SSL to continue successfully.

As part of the continuing integration process we are pleased to announce that, Konstantin Kirsenko, currently the General Director of the business, has agreed to join SSL as General Director, Russia and CIS. He will report directly to Ian Adamson, currently Managing Director Europe and Americas, who with effect from 1 April 2010 is appointed Group Commercial Director. In this new role, Ian Adamson will oversee the Company’s worldwide commercial operations.

The terms of Option A are based on those applicable to the original option.  The consideration for the shares to be acquired pursuant to the exercise of Option A comprises two elements: the first is based on 9 times the adjusted EBITDA of BLBV for 2009 pro rated for the shareholding, the second is based on 2.25 times the improvement in BLBV’s adjusted EBITDA since 2007. The consideration which is payable in cash on completion of the exercise of Option A will be no more than £140 million and will be funded from SSL’s cash and existing facilities.

Abraca is a related party to SSL and as such completion of the exercise of Option A will require the approval of SSL’s shareholders, which will be sought at a general meeting of shareholders to be held in April 2010. Completion of the acquisition of shares in BLBV under Option A is expected to follow shortly after the general meeting.

The terms of Option B are similar to the terms of Option A, save that the formula for the consideration payable under Option B is linked only to BLBV’s adjusted EBITDA in 2010. If Option B is exercised, the completion of Option B will also require the approval of SSL’s shareholders given Abraca's status as a related party to SSL.

Background:

BLBV is a subsidiary of SSL and a holding company for operating companies primarily engaged in the packaging and distributing of condoms and medical products in a number of companies in the CIS. BLBV is a market leader in this steadily growing condom market and its key condom brands are Contex and Durex. The existing management team will remain in place.

For the year to 31 December 2008 BLBV reported revenue of $212 million with profit before tax of $34 million. The gross assets of BLBV as at 31 December 2008 were $74 million.