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Sprue Aegis to pay over £10m to settle legal dispute
Home safety products firm Sprue Aegis announced on Thursday that its subsidiary Sprue Safety Products has terminated all agreements with BRK Brands and associated parties following an alleged contract breach by Sprue.
BRK announced its intention to terminate the agreements earlier this year after it alleged a breach of terms by Sprue Aegis involving the use of BRK trademarks was "not curable".
The termination of the agreements with BRK Brands, BRK Brands Europe Limited, Jarden LLC and Detector Technology Limited, including a distribution agreement (DA) dating back to 7 April 2010 and a manufacturing and supply agreement (MA) dated 1 August 2008, will see Sprue pay £10.97m and $71,000 in outstanding cost to BRK by 24 December.
BRK will deduct £1.02m from this amount through a purchase of all BRK inventory manufactured from 1 January 2017, save for 3,097 units required by Sprue for its ongoing warranty purposes.
All inventory that predates 1 January 2017 will be disposed of by Sprue Aegis.
Furthermore, Sprue has granted BRK a 12 month non-exclusive licence for its relevant intellectual property, including registered patents and design registration, while BRK has approved Sprue's use of its brand to sell products valued at £300,000 for a period of six months.
Graham Whitworth, executive chairman of Sprue Aegis, said: "I am pleased to announce that we have reached agreement with BRK following the termination of the DA and MA, which deals with all outstanding matters and enables us both to move on with our respective businesses without the risk of legal claims."
The settlement agreement will be reflected in Sprue Aegis' results for the year ended 31 December which are set to be released on 15 May.
These reflections include a £3.8m exceptional charge as part of cost of sales, largely due to a £3.4m write down the book value of the remaining BRK inventory and costs associated with legal fees and product disposal.
As of 1108 BST, Sprue Aegis' shares were up 13.64% at 125.00p.