Brambles to focus on automation after US exit
LOGISTICS group Brambles has offloaded its 50 per cent stake in the Hoover Ferguson Group joint venture as it looks to exit the oil and gas industry.
Brambles told shareholders yesterday that it would write down the investment as a significant item in its full-year results, with a carrying value of $US4.9 million ($6.3 million) as at March 31. In October 2016, the company merged its energy container businesses with US-based Hoover to supply container logistics to businesses in the oil and gas and chemicals industries.
It has now sold its stake in Hoover to its partner in the venture, First Reserve – an energy-focused private equity house – to concentrate on its core business.
Brambles chief Graham Chipchase said in a letter to the Australian Securities Exchange that the company no longer saw operations in the oil and gas industry as core.
It saw limited opportunity to deliver strong shareholder returns from the investment in Hoover, Mr Chipchase said.
“Focusing investment in our core businesses that provide significant opportunities for growth and strong returns is one of our strategic priorities,” he said.
“We are pleased, therefore, to have reached a mutuallybeneficial agreement with First Reserve to exit our investment.”
Hoover has repaid its $150 million shareholder loan to Brambles.
“We will use the funds from the shareholder loan repayment to pay down debt and to fund automation projects across the Group,” Mr Chipchase said.
“We wish First Reserve and the team at (Hoover) the very best for the future.”
When the joint venture was formed in 2016, Brambles received about $US77 million from First Reserve for an equal share.
About $US37 million of that payment was deferred, which remains in place and those terms remain in place.
The amount owing will continue to accrue interest at 6.25 per cent a year and be guaranteed by First Reserve, with a maturity date no later than July 31 in 2026.
Shares in Sydney-based Brambles fell 17c, or 1.7 per cent, yesterday to $9.62.