RAC plc, the motoring and vehicle solutions business, has agreed to sell two of its UK mechanical handling businesses, Lex Harvey and Lex Birchwood, to Finning (UK) Ltd. for £98.7 million in cash, of which a maximum of £3.5 million will be contingent on the transfer of business assets. The transaction is earnings enhancing and is expected to complete on 31 May 2003.
RAC plc, the motoring and vehicle solutions business, has agreed to sell two of its UK mechanical handling businesses, Lex Harvey and Lex Birchwood, to Finning (UK) Ltd. for Ł98.7 million in cash, of which a maximum of Ł3.5 million will be contingent on the transfer of business assets. The transaction is earnings enhancing and is expected to complete on 31 May 2003.
Lex Harvey and Lex Birchwood, which supply forklift trucks and mobile maintenance services to business customers across the UK, made Ł4.4 million of pre tax losses in 2002. The value of the assets included in the transaction was Ł97.3 million as at 31 December 2002.
The proceeds will be used to pay down debt, including Ł72 million of non-recourse debt relating to these businesses. The net loss on disposal will include a profit of Ł1.4 million on the value of the assets sold, Ł3.3 million of transaction costs and Ł9.8 million of goodwill previously written off to reserves. There will also be Ł2 million of costs associated with the restructuring of RAC’s remaining mechanical handling businesses.
Andy Harrison, RAC plc Chief Executive, said:
“This is another important step in focusing RAC and realising value from under performing assets. We will continue to concentrate on our growth opportunities in consumer and business services, based on our strong brands and our unique motoring and vehicle capabilities.”
Andy Hobart, Group Managing Director, Lex Industrial Solutions, added:
“Global consolidation of lift truck manufacturers has led to significantly increased competition, which has placed pressure on independent operators such as Lex Harvey and Lex Birchwood. There is a good fit between the businesses being sold and Finning, which will create value and secure a better future for the people affected.”
Finning (UK) Ltd., a subsidiary of Finning International, also has a substantial forklift truck business and is the UK national dealer for Caterpillar equipment. It is intended that Finning will support RAC’s multi-activity bids in the business to business sector to the mutual benefit of both organisations.
RAC plc will issue its normal trading update at the AGM on 30 April.
For further information, please contact:
Andy Harrison, Chief Executive, RAC plc 020 7705 1257
Niall Addison, Group Finance & Investor Relations, RAC plc 01628 843 820
Anita Scott / Stuart Bruseth, Brunswick 020 7404 5959
Simon Southgate, Primus Communications (for Finning) 020 7924 7988
Notes to Editors
RAC plc business services
RAC plc provides a unique range of outsourced motoring and vehicle solutions to businesses under the two strong brands of RAC and Lex. Services provided under the RAC brand include roadside services, claims management, vehicle inspections and risk management. Services provided under the Lex brand include fleet management, contract hire, maintenance and parts support.
These activities are focused on growth opportunities in the defence, insurance, utilities, airside and vehicle manufacturer sectors.
Lex Harvey and Lex Birchwood
Lex Harvey and Lex Birchwood employ approximately 1,000 people over 18 sites and maintain 24,000 forklift trucks and related equipment for customers.
Finning
Finning (UK) Ltd. is a division of Finning International Inc., which sells, rents, finances and provides customer support services for Caterpillar equipment and engines, and complementary equipment, in Western Canada, the UK and South America ( Argentina, Bolivia, Chile and Uruguay). The corporation's Head Office is located in Vancouver, B.C., Canada. Finning International Inc. (www.finning.com) is a widely held, publicly traded corporation, listed on the Toronto Stock Exchange (symbol FTT).