23/11/2017 - 10:32

AHG in $400m logistics sale

23/11/2017 - 10:32

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Automotive Holdings Group has sold its underperforming refrigerated logistics business to Chinese conglomerate HNA Group for an enterprise value of $400 million.

AHG in $400m logistics sale
AHG's logistics business includes the operations of Scott's Refrigerated Freightways

Automotive Holdings Group has sold its underperforming refrigerated logistics business to Chinese conglomerate HNA Group for an enterprise value of $400 million.

Perth-based AHG will receive $280 million in cash while HNA will assume $120 million of debt associated with the logistics business, which includes the operations of Rand, Harris, Scott’s and JAT.

HNA is an international company with a focus on tourism, logistics and financial services with around $145 billion of assets and more than 400,000 employees across America, Europe and Asia.

The deal is expected to occur in the first half of next year and is subject to regulatory approvals.

AHG chief executive John McConnell said the new owner would utilise its experience in the logistics industry to add value to the business.

"HNAI has indicated a commitment to growing and continuing to invest in the refrigerated logistics sector, both internationally and in Australia,” he said

“As an experienced participant in the logistics sector, HNA will continue to deliver quality services to customers and we strongly believe that the business will have a very positive future under its new owners.”

Under the agreement the business will retain its current management team, including chief executive Stephen Cleary.

The refrigerated logistics business recorded earnings before interest, tax, depreciation and amortisation of $35 million last financial year, and AHG said it expected improvement on that result this year due to restructuring initiatives.

The business had registered improved trading for the first four months of the 2018 financial year compared with last year with underlying profit (Ebitda) of $10.8 million, up 46 per cent.

AHG said the sale would allow for further growth in its key automotive retail division.

The Perth-based automotive business said it did not initiate the sale process but chairman David Griffiths said the company had previously announced it would explore all opportunities.

“Although the restructuring initiatives are delivering a significantly improved financial performance, the sale provides AHG with the opportunity to realise a certain value for shareholders that reflects this continuing improvement,” he said

“The sale also provides AHG with both the resources for further growth in our automotive operations and scope for capital management."

UBS and Ashurst are acting as financial and legal advisers, respectively, for AHG.

Meanwhile, AHG also announced a trading update with net profit after tax down 3.1 per cent for the first four months of the year.

The company said the consolidated outlook for the year was now dependent on the timing of completion of the sale of the logistics business.

Shares in AHG were up 5 per cent at $3.64 at 1pm AEDT.

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