Toll banks on $100m return from asset sell-off


Toll is offloading a number of assets in Asia and Australia, including its marine logistics division.

Toll banks on $100m return from asset sell-off
Toll managing director Brian Kruger says the sell-off will have multiple benefits for Toll.

 

Toll is offloading assets in Australia and Asia in a move expected to add more than $100 million to the company’s bottom line.

Toll managing director Brian Kruger announced a number of asset sales today to improve shareholder returns and downsize Toll’s portfolio of businesses.

Toll is selling its northern Australian marine freight divisions to Sea Swift and will sell Toll Global Express Asia.

Kruger says it will also sell its 50 per cent share in Toll dnata Airport Services and completely withdraw from its Asia marine logistics operations.  Meanwhile, it has sold its 40 per cent share in BIC India to the company’s major shareholder.

"These transactions will have multiple benefits for Toll, including releasing significant capital presently tied up in real estate, exiting loss-making businesses that are non-core to Toll to more natural long-term owners," Kruger says.

He says Toll expects to reap more than $100 million from the sales.

Sea Swift will pay $45 million for Toll’s marine freight operations in Queensland and the Northern Territory, and Toll will take a 20 per cent stake in the new business.

The deal includes four vessels, but does not extend to Toll’s marine logistics work for the gas sector in Queensland and Western Australia.

"This is a good result considering the particularly difficult market conditions faced by Toll’s marine logistics business in far north Queensland and the Northern Territory in recent years," Kruger says.

The deal is expected to be finalised in 2015, subject to approval from the Australian Competition and Consumer Commission (ACCC).

Toll is aiming to exit the Asian marine logistics sector within the next six months. It is selling its entire fleet of 37 vessels, which provide tug and barge services. The company blames ongoing regulatory challenges and a weak outlook for its decision to sell.

It cites a lack of critical mass and competitive advantage behind the reason to offload express parcel outfit Toll Global Express Asia.

Toll’s share of Toll dnata Airport Services will be sold to joint venture partner dnata, subject to approval from the Foreign Investment Review Board.

Toll has been involved in BIC India since 2009, but says it is finding it increasingly difficult to make progress with the company. BIC is a less than truckload carrier focused on the automotive sector.

Toll is also looking at monetising its oil and gas supply base in Singapore. Toll is the landlord to a number of tenants on the base and its supply base operator.

The base underwent a major redevelopment that finished last year, and Toll will now look at options to monetise the assets while continuing as the base operator.

"While the final timing of the various transactions announced today will vary between the first half and second half of this financial year, we expect that they will all complete during this financial year, resulting in an overall positive contribution to reported earnings," Kruger says.

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