VTY Vistry Group Plc

RNS No 4968w                    
VERITY GROUP PLC
4th September 1997
                     VERITY GROUP PLC
                             
       Disposal of Wharfedale International Limited
 ("Wharfedale") and Quad Electroacoustics Limited ("Quad")
                             
 
Verity  Group  Plc  ("Verity" or the "Company")  announces
that  it  has  entered into a conditional  agreement  with
Pointfield Limited ("Pointfield") and Pointfield's  parent
company,  IAG Limited ("IAG"), for the sale to  Pointfield
of  Wharfedale  and Quad   (the "Transaction").   However,
the Company will effectively retain a 40 per cent interest
in  Wharfedale and Quad through a 40 per cent shareholding
in  Pointfield.   The  effective 60 per  cent  holding  in
Wharfedale  and Quad is being sold for a consideration  of
#5.8  million  in cash and loan notes as described  below.
Pointfield is currently dormant.  IAG will subscribe  #4.8
million  in  cash  (#2.2  million on  completion  and  the
balance  in stages so as to enable Pointfield to meet  its
obligations  under the term loan note referred  to  below)
and  hold  60  per cent of the ordinary share  capital  of
Pointfield.
 
The  sale  of  the  shares  in  Wharfedale  and  Quad   to
Pointfield  will  be  for  a  nominal  consideration   but
Pointfield will also purchase from the Company at par  the
benefit  of  #8.0 million of loan notes to  be  issued  by
Wharfedale and Quad prior to completion, evidencing  inter
company indebtedness of the same amount currently owed  by
Wharfedale and Quad to the Company.  The consideration for
the  sale of the loan notes is to be satisfied as to  #3.2
million by the allotment to the Company of 40 per cent  of
the  ordinary  share  capital of Pointfield,  as  to  #2.2
million in cash and as to #2.6 million by the issue to the
Company  of  a term loan note.  The term loan note  is  to
carry a coupon of 8% per annum and is repayable in the sum
of  #800,000 on 30 November 1997, #800,000 on 31  December
1997, #500,000 12 months following completion and #500,000
21 months following completion.
 
Under the terms of an option agreement to be entered  into
at completion by the Company and IAG, the Directors expect
that  the Company's interest in Pointfield will reduce  to
approximately  20 per cent within two years of  completion
and  will  be  eliminated entirely within  five  years  of
completion.  Under the option agreement IAG is required to
purchase  within  a  period of two years  from  completion
approximately  50  per  cent of the shares  in  Pointfield
allotted  to Verity for a cash consideration  based  on  a
premium  of 20 per cent over the value attributed to  such
shares  on allotment, such premium falling to nil  in  the
event that IAG purchases those shares within the first  14
months  following completion.  Further, between three  and
five years following completion, Verity can require IAG to
purchase,  and  IAG  can  require  Verity  to  sell,   the
remaining shares in Pointfield held by Verity for  a  cash
consideration based on the higher of the value  attributed
to  such  shares  on allotment, or a value  calculated  by
reference  to  four  times  the  consolidated  profits  of
Pointfield  in  the financial year prior to the  financial
year in which such shares are purchased.
 
The  obligations of Pointfield and IAG under the term loan
note and option agreement respectively will be secured  by
a  second  charge  over the shares held by  Pointfield  in
Wharfedale  and  Quad  and  the  shares  held  by  IAG  in
Pointfield, to rank behind charges to be granted in favour
of  the new bankers to Wharfedale and Quad.
 
In view of the size of the disposal of Wharfedale and Quad
the   Transaction   is  conditional,  inter   alia,   upon
shareholder approval.
 
 
Information on Wharfedale and Quad
Wharfedale  is  a manufacturer of loudspeakers,  marketing
mainly  to  the  mid-price sector of  the  market  through
specialist hi-fi retailers and several of the larger  high
street chains.  Quad designs, manufactures and distributes
premium  quality  hi-fi  products,  including  amplifiers,
tuners,  CD  players and loudspeakers.  Its  products  are
sold  into  the  consumer and professional  audio  markets
worldwide.
 
For  the  year  ended  30 June 1996, Wharfedale  and  Quad
contributed  combined  profits  before  taxation  of  #1.2
million   to   the   group  comprising  Verity   and   its
subsidiaries  (the "Group") on turnover of #14.6  million.
At  30  June  1996  Wharfedale and Quad had  combined  net
assets  of  #4.3  million  (excluding  outstanding   inter
company indebtedness totalling #8.7 million).
 
The  combined profit referred to above, however,  includes
the  results  attributable to certain parts of  Wharfedale
and  Quad's  business  which have  been  disposed  of,  or
retained  by  the  Company,  do  not  form  part  of   the
transaction.
 
 
Reasons for the Transaction
The  rapidly  growing interest in NXT flat  panel  speaker
technology  ("NXT")  from potential  licensees  in  recent
months  and  the  increasing number of applications  being
developed by existing licensees have led the Directors  to
re-focus  Verity's  strategy.   The  Directors   are   now
convinced  that  Verity's future  lies  primarily  in  the
development  and  exploitation  of  its  NXT  and  related
technologies.   The  Directors have therefore  decided  to
commit Verity's full resources to developing both NXT  and
Mission,  its  premium  speaker  brand.   In  addition  to
developing  its  own  application  of  NXT,  the   Mission
business   will  continue  to  strengthen  its   worldwide
distribution and marketing network.
 
The  position  of Premier Percussion Limited is  currently
under   review  and  shareholders  will  be  informed   of
progress.
 
In  the circumstances and in order to ensure that Verity's
full management and financial resources can be devoted  to
these businesses, the Directors have decided that it is in
the  best  interests of Verity and its  shareholders  that
Wharfedale  and Quad be sold.  The disposal of  Wharfedale
and Quad will generate net cash which the Directors intend
to  employ  in  meeting  the future  funding  requirements
associated with the continued development of NXT.
 
Current Trading
Since  27  September  1996, Verity  has  launched  NXT  in
Europe,  Japan and the USA.  Licence agreements have  been
signed with NEC, Samsung and Peerless Fabrikkerne A/S  and
the  Directors expect that further licences will be signed
with major international companies during the next month.
 
Since  30  June 1996, Verity has increasingly concentrated
its   management,  engineering,  marketing  and  financial
resources on NXT.  As indicated at the time of the interim
results,  this  has  adversely  impacted  on  the  trading
results of Verity's non-NXT businesses for the year  ended
30  June  1997, and in particular on Wharfedale and  Quad.
In  addition, the increased strength of sterling  in  1997
has  led  to  reduced  profitability in  all  of  Verity's
manufacturing businesses.
 
An  explanatory circular, incorporating further details of
the  Transaction  and  notice of an extraordinary  general
meeting  of  Verity, will be sent to shareholders  of  the
Company as soon as possible.
 
It  is  expected that the preliminary announcement of  the
Group's  results for the year ended 30 June 1997  will  be
made by the end of the first week in October.
 
For further information, please contact:
 
Verity Group Plc
Peter Thoms, Corporate Affairs Director       01480 451777
 
Ludgate Communications
Richard Hews                                 0171 253 2252
 
 

END

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