Schoolbook publisher may be put on market

CJ FALLON, the Republic’s biggest schoolbook publisher, is set to be put up for sale.

The company’s shareholder, Fleming Capital, has hired Goodbody Stockbrokers to advise on a possible sale of the business, which is focused mainly on producing primary and secondary school books.

If a deal goes ahead, it will become the latest investment backed by financier and property developer Niall McFadden to be sold. Mr McFadden and his family control 45 per cent of Fleming Capital – formerly Boundary Capital – and he has personal stake in the company and sits on its board.

Earlier this month, building services group Siteserv, in which Boundary Capital was a founding shareholder, was sold to Denis O’Brien for €45.5 million.

It is understood that Mr McFadden, or parties connected to him, may have some form of pre-emption that could give him the right to be offered the shares that he does not own personally should it be put up for sale. The advisers are working on a solution to this.

CJ Fallon is profitable, but has debts of €20-€25 million, owed mainly to Ulster Bank. Figures for 2010 showed its liabilities were €22.9 million, but the position is likely to have changed since then.

It ended 2010 with a net deficit of €95,000. The company was exempt from filing a profit and loss account, but the figures point to a surplus for the financial year of €700,000.

It is one of the few viable assets Fleming holds. Fleming itself had net liabilities at the end of 2010 – the last year for which accounts are available – of €31 million.

At that point, it owed €85 million to Anglo Irish Bank, now the State-owned Irish Banking Resolution Corporation, which is understood to be keen to see it cashing in investments. It valued its investments, including its 65 per cent stake in CJ Fallon, at €9.5 million, on December 31st, 2010.

CJ Fallon is one of the best-known companies in its business in the Republic. It publishes books for both the primary and secondary curriculums, but much of its business comes from the former.

Publishing for primary education is attractive because it operates on a seven-year cycle, with a different volume of each text used each year. This helps to lock in sales for the entire cycle.

It produces English, maths and Irish texts for primary level. At secondary, it covers the same core subjects, along with languages, business, history and science. The company has also moved into digital and online education.

Fleming and Mr McFadden bought into CJ Fallon in March 2007 and increased their stake later that year.

Mr McFadden founded and floated Boundary Capital in 2007. At the time, its investments were valued at more than €80 million.

Three years later, the debt-laden business delisted from the Dublin and London stock exchanges.

Its other investments included a stake in department store Arnotts and property business RQB, which were wiped out after the crash.