Heavy equipment distributor Finning International Inc.’s (TSX:FTT) has sold off its money-losing U.K.-based equipment rental business to an affiliate of Sun European Partners LLP.
The sale generated about $171 million: $139 million in cash, an interest-bearing five-year loan note receivable worth more than $30 million at current exchange rates and a 5% equity warrant subject to certain conditions being met. However, the deal will trigger a second-quarter accounting loss of about $247 million.
Finning generated revenue of $4.74 billion in 2009, down 21% from almost $6 billion in 2008. Finning’s U.K. division has been most responsible for dragging down revenue in recent years.
Finning’s revenue in 2009, compared with 2008, fell:
- 32% in the U.K. to $861 million;
- 28% in Canada to nearly $2.4 billion; and
- less than 1% in South America to nearly $1.5 billion.
The story was similar last year (see Infrastructure spending, oil sands projects key to Finning’s future; February 24-March 2, 2009, BIV #1009). BIV reported then that, outside Canada, Finning’s 2008 sales were hit hardest in the U.K.
Finning’s U.K. revenue fell 9.1% that year, although Finning attributed the decline to a weak pound sterling. Conversely, Finning’s revenue in Chile, Argentina, Uruguay and Bolivia grew 13.3% in 2008.
By Glen Korstrom