15.01.2004

Ashtead sells Ireland business

The Ashtead Group plc has announced today that it has sold its 15 “profit centre” rental business in Ireland to McCormick Macnaughton, the Irish Caterpillar dealer, for £12.1 million (€17.4 million).

The Ashtead Ireland business has locations in Dublin, Belfast, Galway, Limerick, Cork and Carlow and incorporates Rentarc and Acrow Ireland. McCormick are expected to merge the operation into its Cat Rental stores, following a trend across Europe where Caterpillar distributors have bought their way into the rental business after struggling to grow it organically.

The Finning purchase of Hewden in the UK is a prime example of this (Finning sold the Irish division of Hewden to McCormick Macnaughton last year). This brings the number of rental locations for the Irish Cat dealer up to 14.

"In our acquisition of A-Plant's business interests in this country, we are seeking to further develop our ability to meet and exceed customer service expectations in this business," stated Malcolm Macnauhgton, Chairman and Managing Director of McCormick Macnaughton. "As the nature of our customers' requirements change, so too will we."

The £12.1 million deal comprises £8.2 million in cash on closing, with the balance payable in stages over the coming months, following agreement of asset values.

The business being sold generated a profit before interest of £500,000 in the year ended 30 April, 2003 and £200,000 for the twelve months for the calendar year ending 31 December, 2003. The book value of the net assets being sold is £12.5 million and its EBITDA for the twelve months ended 31 December, 2003 was £2.4 million.

Ashtead has said that after paying costs, the net proceeds will be applied to reduce outstanding bank debt. This disposal brings to an end a restructuring programme that was accelerated somewhat by the discovery of accounting irregularities in Ashtead's Sunbelt business in March of 2003, which resulted in a £9 million write-off and default on its loan covenants. Other disposals have included surplus properties in the UK and the sale of the mast climber division in June last year to Mastclimbers Ltd for £1.4 million.

Following the disposal, A-Plant still claims to be the second largest equipment rental company in the UK, with 216 locations/profit centres in three different divisions, Plant hire, Tool Hire Shops and Specialist businesses, one of which is the Powered Access division.

George Burnett, chief executive of Ashtead Group, said: “We are delighted to announce this transaction, which represents the completion of our restructuring programme in A-Plant. We are now looking forward to being able to focus exclusively on driving A-Plant forward.”

Ashtead also confirmed the previously announced departure of Henry Staunton as non-executive chairman and his replacement, Cob Stenham.