Valpak Propose Management Buyout Plans

4 August 2011

Managers of he UK's largest packaging producer compliance scheme, Valpak, are proposing to buy-out the company from its members

The surprise move is linked to the ongoing "uncertainty" surrounding the PRN system.

The Rt Hon John Gummer, the company's chair and executive director and who was responsible for creating the UK's PRN system, reportedly wrote to all the company's compliance scheme members earlier this week, asking them to forgo legal ownership of the company in exchange for an initial cash consideration of £170, with a further possible consideration of up to £270.

Change in government policy to focus more on "voluntary agreements" and "responsibility deals" as opposed to further regulatory legislation - which has traditionally been the core focus of Valpak's work - is reported to be the main reason for the move.

According to the company, this was particularly the case when it came to packaging waste, with the uncertainty regarding the possible lack of recycling targets set beyond 2012.

As a result, the current structure of the company stifles its ability to diversify its business in a time when it needs to raise funds.

Uncertainty

"The uncertainty and risk that these changed conditions introduce will leave Valpak needing additional access to capital which our structure does not easily allow", explained Gummer.

"After careful consideration of all possible options, the Independent Directives decided that it is now in the best interests of Valpak, its customers and its staff to change a structure that relies on members' funds, to the more conventional limited liability company, which gives access to external capital to enable future service development".

Under the proposal Valpak would be transferred to a newly formed company, Valpak 2011, which would then be acquired by Hamsard, the company 100 percent owned by Valpak's senior management team and its four executive directors - Lord Deben, chief executive Steve Gough, policy director Adrian Hawkes and finance director Philip Gale.

Two meetings are being held at Valpak's company offices in Stratford on August 18 to consider the restructure, at which members can cast their vote.

If Valpak owners approve and the court sanctions the schemes, the company expects the changes to be effective sometime in late August or early September 2011.

Visit www.valpak.co.uk

Darrel Moore