Finning sells Hewden, its UK equipment rental business
- 02 October 2010
- Company & Industry News
Finning International has sold Hewden, its UK equipment rental business, for gross proceeds of £110.2 million to an affiliate of Sun European Partners, LLP, the European adviser to Sun Capital Partners. The consideration comprises cash of £90.2 million, an interest bearing 5-year loan note receivable of £20 million and a 5% equity warrant subject to certain conditions being met. Finning will use the proceeds primarily to reduce debt.
"After a comprehensive review, we have determined that for strategic and financial reasons, it is in our shareholders' best interest to divest Hewden," said Mike Waites, president and chief executive officer of Finning International. "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 UK dealership does not align with our strategic objectives. Finning remains fully committed to the UK Caterpillar dealership and its employees who are strongly positioned to serve the construction, mining and power systems markets."
"Going forward, Finning's UK dealership will continue to work closely with our plant hire customers to place Caterpillar equipment into the UK equipment rental market," added Andy Fraser, managing director of Finning UK Group. "Our market approach is to provide total solutions with extraordinary service and Caterpillar world class products. We are confident we can demonstrate the value of Finning to Hewden's new owners and maintain a productive commercial relationship with Hewden.
"This is a continuation of our journey towards a new Finning and the final step in rationalizing our UK operations. Combined sale proceeds from this transaction, Hewden Tools, and the dealership's Materials Handling divisions total almost $600 million," noted Mike Waites. "We have a great business model going forward and are completely focused on driving the operating performance and value potential of Finning."
Hewden covers 63 locations in the UK and has 1300 employees. The existing Hewden commercial centre in Manchester is proposed to be the new head office for Hewden. Finning has agreed to provide transitional services to Hewden.
Finning UK will continue to operate 20 branches in the UK with 1470 employees serving Caterpillar dealership customers throughout the UK based from its head office in Cannock, Staffordshire.
Finning meanwhile has announced a 3 year service/support-led deal for nine items of Caterpillar equipment worth in excess of £1m, with Raymond Brown Group for use in its construction, minerals and recycling divisions.
The deal includes five Cat 320DL excavators, two Cat 962H wheel loaders, one Cat 966H wheel loader and a Cat M318DL Material handler, with a guaranteed 3 year uptime promise for every machine.
The machines are fully backed up with a 3 year warranty and service package, guaranteeing Raymond Brown the most cost effective, efficient owning and operating costs. Also included in the deal was an industry first 3 year guaranteed uptime Lastability promise for all the machines, meaning Raymond gets Finning support for the full life of the machine.
Commenting on the deal with Finning, Raymond Brown Group plant director, Mark Isaac said: "Even though the country is officially out of the recession, the current climate is still very challenging. However as a forward thinking and well-run business, we recognised that there would be significant financial benefits in placing an order of this nature at this time. Not only would we have the most up to date fleet in the market, that would give us the ability to ramp up our operations in a recovery, we would also be able to benefit from competitive pricing and equipment availability.
"Learning from our recent experience, we have now moved to more service delivery approach to our fleet purchasing decision making process, where the overall cost of ownership, servicing and performance per litre of fuel, is more important than unit purchase price for example.
"What we also needed to be confident with in terms of this purchase decision was that we selected a supplier business in Finning and Caterpillar that is here to stay, not only from a production point of view but from a service delivery perspective, as we are not prepared to compromise on this."
Caterpillar/ Finning (UK) Ltd
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