Spice sells telecoms business in £32.8m deal
UTILITY support services firm Spice announced today that it has sold its telecoms business.
SIATEL Holdings, a vehicle backed by funds managed by private equity house Gresham, has bought the telecoms arm – Team Telecoms Group (TTG) – for £32.8m in a move aimed at reducing Spice’s debt.
The management buy-out, which is subject to shareholder approval, is led by TTG chairman Peter Burridge and group chief executive Mike Norfield.
TTG comprises four distinct but complementary telecoms services businesses; Team Simoco and ComGroup based in Derby in the UK and in Victoria, Australia; Air Radio based in West Drayton, Middlesex and Indigo Telecom Group based in Monmouthshire, Wales.
The fee for the business includes £7.3m of debt and other liabilities. Gross cash proceeds of £25.5m will be used to repay bank debt.
The proceeds of the sale, plus the estimated bank overdraft of £4.9m of the telecoms business, will reduce Leeds-based Spice’s net debt by around £30.4m before transaction expenses, the group said.
The disposal, which was speculated last week, is subject to shareholder approval.
Spice said that its trading has been in line with the board’s expectations since its interim management statement in February.
Martin Towers, interim chief executive of Spice, said: “The proposed transaction is the first major step forward following the strategic review of our public facing distribution business.
“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.
“I am pleased that the telecoms business and its management team are moving to a committed new owner in Gresham.”
Ernst & Young’s transaction support team provided vendor due diligence services to Spice.
HSBC provided debt finance to Gresham.
David Buckley, senior partner at Ernst & Young in Leeds said: “Gresham is buying a business with an experienced management team which has been formed through a number of bolt-on acquisitions.
“It is very positive to see a deal of this size in the Yorkshire region involving a private equity acquirer.”
Paul Franks, partner at Gresham who led the deal, said: “We approached Spice to see if they would consider selling TTG.
“Each of the businesses in TTG have compelling market positions in their own right and we are delighted to be investing in this global business.
“There is considerable growth potential in this area of telecommunications, both in the UK and overseas, and we look forward to working with TTG as they build the business over the coming years.”
Mr Norfield, chief execuitve of TTG, said: “This is a very exciting time for TTG. We have a superb management team and have invested heavily over the past three years to develop market leading businesses and products. With Gresham’s support we intend to continue this investment and increase our international presence, both organically and by acquisition.”
The Gresham team comprised of Paul Franks, Andy Tupholme, Mitch Titley, Gary Ward and Simon Inchley. Paul Franks and Ken Lawrence have joined the TTG board.
The HSBC team included Graham Young, Stuart Grantham, Chris Liddiard (Midlands Leveraged Finance team), plus Guy Rothery and Dave Gregson (Yorkshire Corporate Banking team).
Stuart Grantham, director of HSBC Leveraged Finance Midlands, said: “HSBC has supported TTG and Spice over a number of years and we are delighted to enable this dynamic and experienced management team to take ownership of the business. In conjunction with Gresham, we look forward to supporting TTG as it continues to expand its global presence.”
Lead advisors to Gresham and the management team were Deloitte (Darren Boocock and Darren Hodson) and Hammonds (Peter McLintock and John Heaton).
