William Ransom & Son (AIM: RNSM) has entered into a sale and purchase agreement to dispose of its Metanium brand made up of Metanium nappy rash ointment and Metanium cradle cap cream to Thornton & Ross Ltd for £2.2 million in cash.
The consideration consists of £2 million for the brand and £0.2 million for Metanium inventory with £0.4 million of the total paid into an escrow account and will be released to the company against the delivery of finished Metanium product to Thornton & Ross.
William Ransom intends to use £1 million of the proceeds to reduce its debt with the rest used for the company’s working capital purposes.
“The board believes the divestment of Metanium is in the best interests of the company and its stakeholders. Furthermore, the divestment is consistent with the company's strategy of creating a focused, natural consumer healthcare offering,” said chief executive of William Ransom Ivor Harrison.
Ransom added that trading continued to be difficult and the outlook was still uncertain as the group continued to implement its turnaround plan while operating under "very testing business and economic conditions".
The Metanium products generated annual sales of about £1 million and gross contribution of £0.6 million. The net book value of total assets of Metanium at 11 January 2010 was £1.1 million.
Williom Ransom will continue to manufacture Metanium products while it transfers production to Thornton & Ross's facilities.
Disclosure: The author holds no positions in the company