Article date: 28 April 2003
RAC plc, the motoring and vehicle solutions business, has agreedto sell two of its UK mechanical handling businesses, Lex Harveyand Lex Birchwood, to Finning (UK) Ltd. for £98.7 million in cash,of which a maximum of £3.5 million will be contingent on thetransfer of business assets. The transaction is earnings enhancingand is expected to complete on 31 May 2003.
Lex Harvey and Lex Birchwood, which supply forklift trucks andmobile maintenance services to business customers across the UK,made £4.4 million of pre tax losses in 2002. The value of theassets included in the transaction was £97.3 million as at 31December 2002.
The proceeds will be used to pay down debt, including £72million of non-recourse debt relating to these businesses. The netloss on disposal will include a profit of £1.4 million on the valueof the assets sold, £3.3 million of transaction costs and £9.8million of goodwill previously written off to reserves. There willalso be £2 million of costs associated with the restructuring ofRAC’s remaining mechanical handling businesses.
Andy Harrison, RAC plc ChiefExecutive, said:
“This is another important step in focusing RAC and realisingvalue from under performing assets. We will continue to concentrateon our growth opportunities in consumer and business services,based on our strong brands and our unique motoring and vehiclecapabilities.”
Andy Hobart, Group Managing Director,Lex Industrial Solutions, added:
“Global consolidation of lift truck manufacturers has led tosignificantly increased competition, which has placed pressure onindependent operators such as Lex Harvey and Lex Birchwood. Thereis a good fit between the businesses being sold and Finning, whichwill create value and secure a better future for the peopleaffected.”
Finning (UK) Ltd., a subsidiary of Finning International, alsohas a substantial forklift truck business and is the UK nationaldealer for Caterpillar equipment. It is intended that Finning willsupport RAC’s multi-activity bids in the business to businesssector to the mutual benefit of both organisations.
RAC plc will issue its normal trading update at the AGM on 30April.
For further information, pleasecontact:
Andy Harrison, Chief Executive, RAC plc 020 7705 1257
Niall Addison, Group Finance & Investor Relations, RAC plc01628 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 vehiclesolutions 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 thedefence, insurance, utilities, airside and vehicle manufacturersectors.
Lex Harvey and LexBirchwood
Lex Harvey and Lex Birchwood employ approximately 1,000 people over18 sites and maintain 24,000 forklift trucks and related equipmentfor customers.
Finning (UK) Ltd. is a division of Finning International Inc.,which sells, rents, finances and provides customer support servicesfor 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 inVancouver, B.C., Canada. Finning International Inc.(www.finning.com) is a widely held, publicly traded corporation,listed on the Toronto Stock Exchange (symbol FTT).