A £2 million rights issue, the departure of managing director Mr Paul Burke to a non-executive role, and a £1 million write-off against a Northern Ireland joint venture proposal which collapsed, are the main features of a major restructuring at packaging group ILP.

Its shares were suspended on Monday after failing to file interim results within the required period.

ILP duly published its interim results yesterday, showing a 31 per cent increase in sales to £8.8 million and a move from a £157,000 operating loss in first half 1997 to a £305,000 operating profit in the same period this year.

The creditable operating results were marred, however, by a £1 million writeoff following the settlement of a dispute with American group Sentinel Products, which withdrew at the last minute from a manufacturing joint venture with ILP in Northern Ireland.

After the American courts decided that the dispute between ILP and Sentinel should be settled within the US legal system and not through binding arbitration in Ireland, ILP decided to settle with both sides meeting their own costs. This has resulted in a £1.06 million write-off in the interim results compared to the £516,000 contingent liability included in the 1997 results.

The £2 million - £1.77 million after expenses - rights issue is aimed at boosting working capital, but it will see Mr Burke's stake in ILP fall from 44 per cent to under 30 per cent as he is only taking up 9 per cent of his rights with the balance of his nil paid rights being placed with institutions.

On completion of the rights issue, Mr Burke will become a non-executive deputy chairman and will be succeeded as managing director by Mr Paul McLaughlin. Mr Burke will receive £175,000 in cash as compensation for loss of office and ILP will pay up to £12,000 to him in respect of the legal costs involved in his negotiating the compensation package. In addition, Mr Burke will receive a fee of £7,500 a year for acting as non-executive deputy chairman.

The rights issue is on the basis of four new shares for every seven held at 16.65p compared to the 20p price of the shares before they were suspended. Apart from Mr Burke, other directors who hold just under 13 per cent of the company are taking up their rights in full with the balance of the rights issue underwritten by English Trust Company. Three directors, Mr McLaughlin, Mr Kevin Hogan and Mr Jasper Allen have agreed to act as sub-underwriters for 1.9 million shares.

Apart from restoring working capital after the £1 million writeoff, the proceeds of the rights issue will fund expansion to support increased sales. Apart from its operations in Ireland, ILP is in the process of setting up a joint venture in the Czech Republic and is also extending its operations into China through its Malaysian joint venture.