Bath-based mini-conglomerate CEPS has significantly increased its indirect shareholding in one of its portfolio firms, the fabric and wallpaper pattern books producer CEM Press (CEMP).
The deal takes CEPS’ holding from 21.4% to 71.5% and is in line with the group’s strategy of acquiring interests in established, cash-generative businesses.
Nottingham-based CEMP makes fabric and wallpaper pattern books, swatches and shade cards, with a focus on the high-end fabric and wallpaper market. It supplies clients in the UK and overseas. 
In the year ended December 31, 2014, CEMP made pre-tax profits of £54,280 on sales of £3.44m. Its net assets were £959,968 on that date.
Its trading performance so far in 2015 has been in line with management’s expectations.
CEPS previously acquired its shareholding in CEMP through CEM Press Holdings (formerly NG42 Acquisitions Limited) which was initially formed for the purpose of acquiring CEMP.
In line with CEPS’ financing strategy, the acquisition has been effected by the introduction of a new holding company, CEMTEAL, which has acquired 97.9% of CEMP and of which CEPS is a 73% shareholder. The remaining 27% of CL not owned by CEPS is owned by CEMP’s management team.
CEPS has advanced £300,000 to CL to fund the acquisition in the form of unsecured non-convertible loan notes carrying an interest rate of 7%.
In addition, CEPS has agreed to act as guarantor in respect of loan notes totalling £963,350 issued by CL alongside the CEPS loan notes to certain of the vendors. The CL loan notes carry an interest rate of 4% and are repayable in tranches between September 2016 and September 2018.
CEPS directors said they believed the acquisition would be a valuable addition to CEPS, whose portfolio includes four other companies ranging from a Kent-based trophy manufacturer to a business designing, selling and distributing body armour products, matting and a range of footwear repair products.
The group was created in 2004 from the refinancing of Bristol shoe parts firm Dinkie Heel.
