Perth-based logistics and transport company Centurion has signed a binding agreement to purchase K&S Corporation's Regal General Freight arm, which is part of its broader Regal Transport business.
Under the deal, Perth Airport-based Centurion will buy the division for “a nominal purchase price”, with the bulk of the asset value related to customer contracts and intangible assets.
Centurion will make offers employment to the majority of the existing employees at Regal General Freight, according to K&S.
K&S said it had undertaken strategic review of Regal earlier this year, and Business News understands that if the division did not find a buyer it would be shut down and all jobs would have been lost.
K&S said the sale would free-up working capital of approximately $7 million, but it would record a $5.1 million impairment as a result of the transaction.
Centurion chief executive Justin Cardaci said resources clients were demanding more and more efficiencies from their services providers, including logistics companies, and the increased scale that the acquisition of the Regal business provided would enable Centurion to remain cost competitive through better asset utilisation.
“Centurion’s business is focused on Australia’s resource-rich areas, so we possess comprehensive knowledge and understanding of Regal’s Pilbara and Kimberley focused business, customers and routes,” he said.
Regal General Freight services the towns of Broome, Derby, Karratha, Newman, Port Hedland and Onslow.
Victoria-based K&S said the transaction would provide ongoing certainty to Regal General Freight’s employees and customers, and allow K&S to focus on its Regal Heavy Haulage division, which is also part of Regal Transport.
Regal Transport is located in Hazelmere.
Regal General Freight’s customers include Mount Gibson Iron, Coca Cola, Westrac, Bunnings, Downer EDI, NRW, BGC and Thiess.
Earlier this month, K&S flagged cost reduction strategies would be implemented across its business operations in Western Australia, South Australia and the Northern Territory.
Also earlier this month, CTI Logistics foreshadowed a marginal profit for the latest half year, saying weak economic conditions particularly in Western Australia had resulted in significant reductions in activity and increased margin pressure.