Heavy equipment dealer Finning International Inc. said Wednesday it is selling its Hewden U.K. equipment rental business to an affiliate of Sun European Partners LLP for about $171-million "for strategic and financial reasons."
Finning, the world's largest dealer, said it received £90.2-million in cash plus a five-year loan note receivable of £20-million and a 5 per cent equity warrant from Sun European.
Vancouver-based Finning said it plans to use the proceeds primarily to pay down its debt.
"While we believe that Hewden's broad product offering combined with our recent restructuring and national accounts focus will serve it well in the future, owning a large, short-term rental business operating separately from our U.K. dealership does not align with our strategic objectives," Finning president and CEO Mike Waites said in a statement.
"Finning remains fully committed to the U.K. Caterpillar dealership and its employees who are strongly positioned to serve the construction, mining and power systems markets."
The deal will trigger a second-quarter accounting loss of about $247-million or $1.44 per share, Finning said, including the realization of $101-million of foreign exchange losses and a $68-million charge on recognition of an unfunded pension liability being assumed by the buyer.
In all, $78-million of the charge comprises the loss on Finning's net carrying value of Hewden.
Hewden covers 63 locations in the U.K. and has 1,300 employees.
Finning will continue to operate 20 branches in the U.K. with 1,470 employees serving Caterpillar dealership customers throughout the UK based from its head office in Cannock, Staffordshire.
Shares in Finning declined 49 cents or 2.6 per cent to $18.64 in morning trading on the Toronto Stock Exchange.