Anchorage Capital Partners, a Sydney-based private equity turnaround specialist, has acquired the refrigerated logistics division of Australian automotive retail and logistics firm Automotive Holdings Group (AHG) for A$100 million ($65 million).
The PE firm will acquire the business from AP Eagers Ltd, Australia’s largest automotive retailer, on a debt and cash basis. The deal will result in the reduction of AP Eagers’s net debt of approximately A$95 million ($62 million).
In a disclosure to the Australian Securities Exchange, AP Eagers said AHG’s refrigerated logistics division comprises all of the transport and warehousing operations and associated employees. AHG Refrigerated Logistics was the result of bringing together supply chain providers Scott’s, Rand, Harris, and JAT.
“The sale of AHG Refrigerated Logistics is consistent with our strategy to focus on our core automotive retailing business,” said AP Eagers CEO and managing director Martin Ward.
The deal follows an extensive sale process to find a buyer for the business on the optimal price and terms, Ward added. The sale achieves AP Eagers’ objective to divest the division as soon as commercially possible at a reasonable price.
According to the disclosure, AP Eagers will receive cash proceeds of approximately A$100 million on completion. The amount will be used to repay all finance leases and hire purchase liabilities associated with the division.
The company may also receive additional cash proceeds at the time of Anchorage Capital’s exit from its investment in AHG Refrigerated Logistics, depending on certain financial outcomes.
AP Eagers acquired AHG last year resulting in the creation of Australia’s largest automotive dealer group and the privatisation of the latter. The company held 28.84 per cent of AHG before the acquisition.
Anchorage Capital Partners is a specialised private equity firm that invests in businesses operating below their full potential or undergoing a significant transformation.
It invests in companies, which have reported revenues of over $100 million located in Australia, New Zealand or Southeast Asia. It partners with management teams via control investments to turn around companies.
In January, the PE firm acquired CF Asia Pacific, a full-service rail leasing business in Australia and the fourth-largest owner of assets on the Defined Interstate Rail Network.
CF Asia Pacific was a dominant player in the rail leasing market and a growing locomotive and wagon maintenance operator until it was impacted by the drought in Australia as well as the slowdown in mining activity.