KUALA LUMPUR: LCL CORPORATION BHD [] has entered into a management buy-out agreement (MBO) with sofa maker Secret Sofa Sdn Bhd to dispose of the entire businesses and management of its unit LCL Cushion Sdn Bhd (LCLC) to the latter for RM1.14 million.

LCL said its board had today entered into the MBO which would see the disposal of LCL's 80% stake in LCLC to Secret Sofa. Subsequently, Secret Sofa will take over the operations and management of LCLC and its unit LCL Sofa Creations Sdn Bhd (LCLS).

LCL said the disposal was part of its strategies to streamlines the group's operations and business activities.

"Secret (Sofa) shall take all profits and existing movable and immovable assets including but not limited to all stocks, materials, foam, machinery, tools, vehicles, and works under all projects of the company as at Aug 31, 2009 and shall assume all debts and liabilities incurred from Sept 1, 2009," LCL said.

It added that the purchase price would be used to offset against the net amount owed to LCLC or LCLS by LCL's subsidiaries or associate companies as at Aug 31, 2009.

"Any net amount owed to LCLC shall be considered as goodwill and result in an upward adjustment of consideration," LCL said.

LCL said given that the original cost of investment in LCLC was RM438,000, the disposal in LCLC would result in a gain of RM698,404, based on the latest audited accounts of the group as at Dec 31, 2008. LCL said the disposal would be completed within four months.