Elders offloads auto arm for $69m
Debt-laden takeover target Elders Ltd will offload its auto arm to US private equity firm Clearlake Capital Group for $69 million as part of a bid to restructure its struggling operations.
The sale of Futuris Automotive will be used to reduce Elders’ net debt by about $56 million.
Elders will also book a one-off net loss of about $28 million on the sale, which is subject to Foreign Investment Review Board approval.
In comes after Elders swung to a $303 million first half loss, dragged lower by a $166.5 million writedown on Futuris Automotive, taken after one of its key customers, Ford Australia, decided to pull out of manufacturing in Australia from 2016.
Elders said the sale "represents a major step in becoming a pure play rural services business".
The group said the sale of its only other significant non-core business, Forestry, was on track to be sealed by the year's end.
“The sale of Futuris is a good outcome for Elders, both in terms of our priority to focus capital on a “pure play” rural services business and the ability to further reduce our debt,” Elders managing director Malcolm Jackman said.
He said the sale was "a vote of confidence" in the Australian automotive industry.
Elders posted a $303.163 million after tax loss for the six months to March 31, a 744% drop on the $47.1 million profit recorded in the previous corresponding period.
It took a $166.5 million writedown on its automotive business, Futuris Automotive, taken after one of its key customers, Ford Australia, decided to pull out of manufacturing in Australia from 2016. It also took a $52 million writedown on its rural services arm.