Asciano has finally rid itself of the remnants of its ill-advised takeover of pallet giant Brambles, raising $484m in the process.
Asciano Group managing director and chief executive officer Mark Rosthorn has confirmed that the company sold its remaining stake of approximately 48.7 million shares in Brambles Limited at an average price of $10.11 per share. The shares have been sold to a range of institutional investors. The company will use the majority of the proceeds of the sale to retire existing debt, with the balance available for general working capital purposes.
Mr Rowsthorn said: “The sale of our Brambles shares achieves two key objectives for Asciano. It allows us to retire a $406 million debt facility, improving our overall level of gearing and enhancing balance sheet flexibility.
"Importantly, the sale also allows Asciano to focus on our core businesses and on enhancing securityholder value through continuing to apply our operating expertise and pursuing key growth initiatives within our existing operations."
Asciano expects the impact of the Brambles stake on its 2007/08 full-year results (including realised losses net of dividends), to be a non-recurring loss of approximately $85 million before tax and funding costs.
“It is obviously disappointing to have sold the shares at a loss," Mr Rowsthorn said. "However, we believe that the strategic advantages to the Company of divesting the Brambles stake outweigh the one-off impact on our results, particularly in the current market environment.”
Analysts believe the holding costs incurred in carrying the Brambles shares has severely restricted the company’s capacity to grow by acquisition, at a time when private equity firms and overgeared operators are looking to offload prime transport and infrastructure assets at rockbottom prices.
Some commentators expect Mr Rowsthorn will use the company’s new-found cash to make strategic investments in the coal supply chain, whilst others have forecast a move to build up Asciano’s global reach by acquiring European and/or Asian transport and logistics companies.
Asciano is currently trading at $4.35, up from an all-time low of $3.57. Brambles has also edged higher, its shares being traded around $10.30.