Rentokil Initial announces the sale of City Link
Rentokil Initial PLC (FTSE: RTO) announces that it has today sold the entire share capital of City Link Limited to BECAP12 Fund LP (“Better Capital”), a private equity investor, for £1. There are no outstanding conditions required, so completion is effective immediately.
The current City Link management team, led by David Smith, will continue to run the business. Better Capital will invest £40m in the business to provide more than sufficient funding required by City Link to complete its turn-around plan.
City Link reduced adjusted operating losses from £31m in 2011 to £26m in 2012. First Quarter 2013 performance continued to show an improved trading performance delivering an adjusted operating loss of £8.1m, an improvement of £4.6m against Q1 2012.
The gross assets of City Link as at 31 December 2012 were £77.6m. Rentokil Initial will take an exceptional charge of approximately £40m with its Q2 results. This will comprise asset write offs of approximately £30m and additional cash costs of approximately £10m.
Rentokil Initial has retained certain parent company guarantees, including approximately £20m relating to leasehold properties. We anticipate that the contingent leasehold liabilities will significantly reduce over the next 3 years and that they would be mitigated substantially if the guarantees were called.
Alan Brown, Chief Executive of Rentokil Initial, said:
“I believe City Link has now turned the corner after five years of substantial losses. The business has made strong financial progress over the last two quarters, it now has a strong management team and we have found a very committed investor in Better Capital.
“Rentokil Initial has decided to divest of City Link at this stage of the turnaround so that we can concentrate on our core international businesses in Pest, Hygiene and Workwear. The sale positions Rentokil Initial as a stronger and more focused group.”
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About Rentokil Initial plc
Rentokil Initial is one of the largest business services companies in the world, operating in all the major economies of Europe, North America, Asia Pacific and Africa. It employs some 60,000 colleagues providing a range of services in over 60 countries.
Investors / Analysts enquiries:
Katharine Rycroft, Head of Investor Relations
Rentokil Initial plc
01293 858 166
Malcolm Padley, Corporate Communications
Rentokil Initial plc
07788 978 199
Kate Holgate/ Catriona McDermott / Oliver Hughes
020 7404 5959