Transpacific to sell commercial vehicle group

Group offloads business to Penske, will use funds to repay existing debt.

Transpacific Industries Group Ltd will sell its commercial vehicle group to Penske Automotive Group Inc, as it looks to pay down existing debt.

In a statement to the Australian Securities Exchange, Transpacific said it would offload the group for a price of $219 million "subject to normal completion adjustments and a small number of usual conditions precedent".

The group said the sale would generate an after tax profit of $85 million and would be recognised as a significant item in the 2014 financial year.

The sale is expected to be completed by September 30.

"The net cash proceeds from the sale will be used to reduce debt," the group said.

"On an annualised basis, this is expected to generate net interest savings of approximately $12 million."