This article is from the Australian Property Journal archive
STRUGGLING ASX and New Zealand-listed Fletcher Building is selling off its plumbing supplies and distribution business Tradelink to Metals Manufacturers (MM), a subsidiary of US-based Blackfriars Corporation, for $170 million.
Fletcher Building put Tradelink up for sale earlier this year as it swung to a first-half loss of $113 million
It expects to record a non-cash impairment of the Tradelink business of around $32.5 million in its FY24 accounts. When the transaction completes, it also expects to recognise a NZ$54 million non-cash loss from the derecognition of the foreign currency translation reserve balance for Tradelink.
The sale price of $170 million is on a cash and debt-free basis. After adjustments for working capital, and cash and debt-like items in the business at completion, the net proceeds to the company from the sale will be subject to transaction and stranded costs of about $10 million and separation costs of about $20 million over a period of up to 24 months from completion.
Fletcher will apply the sale proceeds to pay down debt.
Acting CEO of Tradelink, Nick Traber said: “We are pleased to have signed the Tradelink sale agreement in line with our target timing, and to have achieved an attractive outcome for both parties.
“We believe MM is an ideal proprietor for Tradelink given their long and successful history operating in the Australian trade distribution sector. The sale will enable us to concentrate our efforts on the performance and growth of Fletcher Building’s core businesses”.
Fletcher is expecting lower earnings for FY24, with market conditions remaining weak across the company’s materials and distribution divisions, which prompted credit ratings agency Moody’s to downgrade the company’s rating.
In June, it sold half of its business in Fiji for NZ$20 million, and is expecting to take non-cash impairment of around NZ$15 million on the business.
The company will release its annual results on 21st August.
There is rapid change at the top. CEO Ross Taylor exited after the poor half-year result, chief financial officer Bevan McKenzie is also on the way out, and chairman Bruce Hassell also left, while directors Rob McDonald and Martin Brydon both brought forward their exits from the board.
