Briefs: Alesco Continues Asset Sales, Silver Lake Abandons Phillips

Sydney-based building products group, Alesco, continues to slim itself with another asset sale.

The company said yesterday that it will sell the Parbury decorative surfaces business and small-plastic mouldings business Dekorform to privately held Borg Group for $4 million.

The move follows two asset sales in 2011: Marathon Tyres for $23 million and its troubled water products business for $20 million.

Alesco said the proposed transaction would not change its profit guidance and the sale was expected to be completed by April.

Alesco will take book losses of more than $20 million in the sale.

Alesco said at its half-year results release in January that net profit, excluding significant items, for the 12 months to May 31, 2012 was tipped to be between 30% and 35% lower than the $15.3 million it posted in the prior corresponding period.

Chief executive Peter Boyd said yesterday the sale of Parbury came after a seven-month review indicated a sale would be the best outcome for shareholders.

"Parbury's performance in fiscal 2011 was less than satisfactory," Mr Boyd said in a statement.

"In August (2011), we appointed a new management team to the Parbury business and commenced a strategic review to determine whether the business should be divested or undertake a turnaround process."

Mr Boyd said the review canvassed three options - a restructure, sale or closure - and determined the business was unlikely to return to acceptable levels of profitability in the short to medium term.

This was due primarily to structural changes in the local industry over the past few years, and ongoing challenging market conditions, he said.

Alesco's said its 2012 result will include net trading losses at the earnings before interest and tax level of $6.8 million for the combined Parbury and Dekorform businesses for the 10-month period up to the completion of the sale.

The company also said the sale would result in $10 million to $12 million of significant items for the fiscal 2012 full year accounts.

There would also be a $12.7 million impairment charge against the full carrying value of goodwill.

"While the transaction results in accounting losses, it is largely cash neutral," Mr Boyd said.

Borg is a manufacturer of melamine panels and components for all joinery applications and had three sites in NSW.

Mr Boyd said all Parbury employees, inventory, fixed assets, customer lists and brands would be transferred over to Borg, and Alesco will retain responsibility for debtors and creditors.

Alesco shares jumped by 10% or 13.5c to $1.47

And WA gold producer Silver Lake Resources says it has terminated the purchase of gold and copper explorer Phillips River Mining, although it agreed to buy one of its projects.

In a statement to the ASX yesterday Silver Lake said a condition of the deal, the completion of due diligence on Phillips River, had not been completed to its satisfaction, so it had terminated the planned scheme of arrangement.

Silver Lake agreed in January to acquire Phillips River via a scrip-based transaction that valued the target at about $20 million.

Phillips River shares fell 10c or 38% to 16c while Silver Lake shares fell 2c to $3.53.

"The due diligence process identified a potential issue with the concentrate delivery schedule within the metals offtake agreement for the Trilogy project between LN Metals International Limited and Phillips River," the gold miner said in a statement yesterday.

"Silver Lake did not have sufficient confidence that this issue could be satisfactorily resolved."

Phillips River conceded that it would not have been able to meet the delivery schedule, which is planned to start in the second half of 2013, due to project development delays and given current market conditions.

Silver Lake said it had agreed to buy Phillips Rivers' Munglinup project in WA, near the Trilogy project, for $325,000.