Safestyle’s rival to support its ‘continued recovery’ through no compete agreement

Bradford-headquartered Safestyle has entered into a five-year non-compete agreement with a rival firm trading as Safeglaze, which could see the competitor acquire a stake in the firm in 2020.

The listed company in September announced a settlement of its claims against NIAMAC. Safestyle had filed a legal claim against its competitor for alleged trade mark infringement, passing off, misuse of confidential information, malicious falsehood and various other matters.

The firm announced this morning that Safestyle has entered into an agreement with Mr M Misra, who was a party to the company’s dispute involving NIAMAC – trading as SafeGlaze UK –  and which is currently in the process of re-branding following the recent legal settlement with Safestyle.

Safestyle said: “Whilst the full detail of the agreement is confidential, it encompasses a five year non-compete agreement and the provision of services by Mr Misra in support of the continued recovery of Safestyle. The Company has agreed consideration with Mr Misra subject to the satisfaction of both clear performance conditions by him over the period to Q4 2020 and Safestyle’s trading performance in 2019 being above existing market expectations.”

The agreement the consideration will take the form of an allotment by Safestyle to Mr Misra of four million ordinary shares of 1 pence each in the capital of the company and a payment of cash consideration of of up to £2m. Both the allotment of shares and payment of the cash fees, if any, would only be made in Q4 2020.  

 Mike Gallacher, Chief Executive of Safestyle UK, said: “The three phase turnaround plan that was outlined in our Interim Results is underway and is already helping to stabilise the Group before returning it to profitability and then accelerating growth. The focus of the whole Group remains on delivering this plan quickly and effectively.”

Today’s announcement follows on from Friday’s when Safestyle denied that it was in discussions with Safeglaze to acquire its business or assets.

Broker Zeus Capital added: “The Commercial Agreement includes a five year non-compete that should be taken positively. Safeglaze UK had directly targeted Safestyle’s customer base by poaching staff. Whilst difficult to attribute the exact loss of volume in H118 directly to Safeglaze the market was down mid-single digit against the c.28% loss experienced by Safestyle.

“Mr Misra will also provide services in support of the recovery of Safestyle. It can only be speculated what these services may include but the management team must be confident of the potential benefits. The consideration Mr Misra will receive, should he adhere to the terms of the agreement and Safestyle outperform current FY19 profit estimates (c. £4.5m PBT), is up to £2m in cash and four million shares, payable in Q4 2020. The dilution from the issue of shares will be less than 5% and the £2m cash payment should not prove a stretch on the assumption that performance is better than anticipated in FY19.”

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