One of the dark clouds hanging over telecommunications and automotive components producer Pressac plc has lifted with the eleventh-hour, out-of-court settlement of a long-running dispute over its purchase of injection molder W.H. Smith (Scotland) Ltd.
Two years ago Pressac of Nottingham, England, initiated legal action to recover a large slice of the £18 million ($26 million) it paid in 2000 to purchase the East Kilbride, Scotland-based molder. Pressac sued the firm's former owner alleging misrepresentation and breach of warranty.
A bid to settle the case earlier this year failed. But days before the case was to go to trial Oct. 1, Pressac accepted a settlement under which it will receive a gross payment of £11.1 million ($17 million).
The deal includes a renegotiation of the Smith purchase price and Pressac's sale of some plants and equipment back to the former owners. Both sides will bear their own legal costs, Pressac said in a news release.
``In drawing a line under this issue, the management team can now devote all its energies to rebuilding the group's business,'' said Pressac Chairman and Chief Executive Officer Chris Woodwark.
This year the company embarked on a far-reaching restructuring to improve profitability and adjust capacity to match reduced demand in both its main markets.
The move has included the sale and shutdown of some operations and an expected companywide layoff by the end of the year of about 100.
Pressac originally acquired the Smith business to meet demand in the cell-phone market. Smith operated 42 injection presses making parts such as battery covers, key caps and front and back phone handset sections. When acquired by Pressac the business employed about 300.
By mid-2001 the plant was closed as Pressac consolidated telecommunications production in its new, 110,000-square-foot facility in Bishopbriggs, Scotland.
In other news, negotiations to buy Pressac were aborted in August after several months of speculation on the firm's future. None of the several interested parties put a suitable bid on the table that Pressac would recommend to shareholders, a Pressac spokesman said.
Pressac also announced that in June it pulled out of a 50-50 venture, Woorymac Co. Ltd. in Nam-Do, South Korea. The venture makes decorative automotive and interconnect components.
Pressac also closed its former headquarters in Derby, England, and relocated to Nottingham.
The company recently reported that it turned a profit of £3.14 million ($4.86 million) on sales of about £77 million ($119 million) for the first half of 2002. The profit figure was down from £6.14 million ($9.51 million) from the same period a year ago, and sales were down from £90 million ($139 million).
Results from the company's Kaumagraph Flint Corp. operation in Millington, Mich., meanwhile, benefited from strong performance of major customer General Motors Corp. Pressac reported the U.S. market is buoyant and had recovered from the decline seen in the second half of 2001.
