At last, some good news from the embattled Trans-Tasman building products giant, Fletcher Building (ASX:FBU), with the announcement of a key asset sale.
Fletcher has agreed to sell its Tradelink plumbing and bathroom supplies business to Metals Manufacturers, a subsidiary of the US-based Blackfriars Corporation.
Blackfriars is known as a highly secretive and very conservative company, operating across the US building sector with interests in electricals, plumbing, and plastics.
The sale price is A$170 million, and FBU says it will take a A$32 million impairment into its results, which are to be announced Wednesday of next week.
FBU will receive a cash payment of A$160 million, payable on the settlement date, expected to be September 30, 2024. There are no regulatory or other conditions to be satisfied to complete the transaction.
The remaining A$10 million will be a deferred cash payment, contingent on achieving separation milestones. Separation is expected to take up to two years, with completion anticipated by September 2026.
In Monday’s statement, FBU said that the sale price of A$170 million is on a cash and debt-free basis. However, this will be reduced by up to A$30 million in additional costs: transaction and stranded costs (expected to be approximately A$10 million) and separation costs (expected to total approximately A$20 million over a period of up to 24 months from completion).
"Based on the forecast net sale proceeds, Fletcher Building expects to record a non-cash impairment of the Tradelink business of approximately A$32.5 million in its FY24 accounts. When the transaction completes, it also expects to recognize a NZ$54 million non-cash loss from the derecognition of the Foreign Currency Translation Reserve balance for Tradelink."
Fletcher Building Acting CEO Nick Traber stated that FBU would apply the sale proceeds to reduce debt.
