AP Eagers and Anchorage agree on $25 million reduction for transaction
AP Eagers will receive $25 million less for the sale of AHG Refrigerated Logistics (AHG RL) to Anchorage Capital Partners (ACP) due to the impacts of the Covid-19 crisis.
The transaction is now expected to be completed on June 30, 2020 and is not subject to any further conditions within the private equity firm’s control.
“Following broader market impacts as a result of Covid-19, AP Eagers and Anchorage have agreed a number of steps to facilitate completion of the transaction, including Anchorage waiving certain conditions precedent and the parties agreeing to adjust the cash proceeds that AP Eagers would receive on completion to $75 million,” the company states in an announcement to shareholders.
The original agreed price was $100 million for the division comprising all of the transport and warehousing operations of Rand, Harris, Scott’s and JAT.
“These steps allow AP Eagers to meet its objective to divest the Refrigerated Logistics division as soon as commercially possible at a reasonable price and provide greater certainty about timing of the divestment,” it adds.
The original announcement of the sale was in February
The announcement was accompanied by its annual report, which, without alluding to other trading impacts of the coronavirus, notes its merger with AHG gave it the scale and competitive advantage to withstand the challenging external conditions.
“The underlying core automotive result for January 2020 demonstrated strong profit growth on the prior corresponding period, representing a good start to the year for the combined group particularly in the context of a 12.5 per cent decline in the national new vehicle market for the same month,” it says.
The company notes, however, RL made “a loss after tax of $14.4 million post its acquisition”.
“AP Eagers maintains that Anchorage is the ideal owner for the Refrigerated Logistics business and beliefs the business will have a positive future under its new owner,” AP Eagers says.