Primedia is to sell its interest in UK-based fulfilment and telephony company Spark Response in a deal that will cut the group`s short-term debt by R22 million.
Spark is to be sold to a management consortium which will pay Primedia lb0.5 million and assume lb1.2 million of Spark`s bank debt.
Primedia says it also stands to benefit from participating in 50% of the capital appreciation of Spark that the management intends to create over the next three years.
"In addition to reducing our short-term debt by R22 million, the disposal will eliminate a significant loss-maker as well as improve Primedia`s operating margins," says Primedia CEO William Kirsh.
"We have also realised that this business, which has good long-term prospects, requires a different management approach and the way the deal has been structured will result in a stronger company from which we all stand to benefit."
The management consortium is to invest an additional lb0.5 million into Spark by way of share capital in a bid to strengthen the capital base and enhance the prospects for capital appreciation.
In the year to 30 June 2002, Spark contributed a loss of lb1 million to Primedia on turnover of lb10.6 million.
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