Utility support services group Spice Plc (LON:SPI) is set to pay off a chunk of its debt after agreeing to sell its Telecoms division for £32.8 million to a vehicle backed by private equity firm Gresham.

The move follows the appointment in February of interim chief executive Martin Towers who immediately launched a strategic review of Spice’s Public facing Distribution business, with all options under consideration.

The proposed sale, which needs shareholder approval, will see Spice Plc (LON:SPI) achieve a multiple of around six times EBITA on the Telecoms division and go some way in meeting its objectives of cutting debt and focusing on its Supply and Utilities facing Distribution business.

As part of the deal, Gresham is taking on £7.3 million of debt and other liabilities, leaving Spice Plc (LON:SPI) to plough £25.5 million into repaying bank debt. Last October, the company net debt figure stood at £116.5 million, up from £95.8 million in May 2009.

Mr Towers described the proposed transaction as “the first major step forward” following the strategic review.

He said: “Borrowings will be significantly reduced and the group will have greater focus on its on-going activities and exposure to markets which have strong underlying regulatory and environmental drivers.”

Elsewhere, Spice Plc (LON:SPI) said it had traded in line with management expectations since last reporting to the market in late February. At that time, it revised down its pre-tax profit guidance for the year but insisted the final figure would be slightly higher than the £32.3 million recorded in 2009.

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