The 23m turnover division makes aluminium coated papers for use in cigarette packaging and labels, and employs 140 staff at its plant in Caerphilly.

Its losses escalated to 2.7m in the year to 30 September (2003 loss: 400,000) due to reduced volumes, price pressures and the exchange rate impact after key customers opted to buy in US dollars.

A sale had been on the cards since the summer, and it has now been sold for a deferred consideration of 500,000 to Metallised Products, a management buy-in group formed for the purposes of the acquisition.

The net book value of its assets and working capital was 2.4m, but API said that it was a "successful transaction" as the group would no longer have to cover the division's losses and negative cashflow of 1m a year.

The business will now trade as Metallised Products, because API has retained the Henry & Leigh Slater name as it is used elsewhere in the group.

Metallised Products also has an option to buy the premises, subject to valuation, for up to 600,000.

API is also in advanced negotiations to sell its converted products operation, which will leave the company free to focus on foils and laminates.

Story by Jo Francis