CSR has finally found a buyer for its underperforming Viridian Glass business in the shape of local private equity group, Crescent Capital Partners for a total cash consideration of around $155 million, which could top $200 million once all property associated with the group is sold next year.
This transaction includes the Viridian property site at Dandenong, Victoria. CSR says it will retain the property at Ingleburn, in southwestern Sydney which has an estimated market valuation in excess of $60 million.
CSR has entered into a long-term lease on commercial terms with Viridian in relation to the Ingleburn property.
Following completion of the transaction with Crescent, CSR says it will begin a sale process for this property thereby completing the divestment of all Viridian assets.
This is expected to result in total cash proceeds to CSR of more than $215 million.
Viridian operates the only float glass manufacturing line in Australia and New Zealand as well as downstream glass processing operations. The decision to sell follows years of weak returns for CSR.
Following a strategic review announced in July, the company decided it could use the money invested in the business more productively elsewhere in CSR.
CSR Managing Director Rob Sindel said in a statement, “Viridian’s float glass and processing businesses supply customers including glass processors and fabricators which operate separately from CSR’s other building products businesses. This transaction will enable Viridian to align its footprint and cost structure to operate more effectively as a standalone business.”
The sale to Crescent is subject to a limited number of conditions with completion expected by January 31 next year.
Following completion of the sale of all Viridian assets, CSR expects to realise a pre-tax loss of approximately $20-$30 million in the financial year the year to next March 31, primarily due to the disposal of Viridian-related deferred tax assets.
With regard to the Crescent transaction, initial cash proceeds of $80 million are expected to be received in in year 2018-9 with deferred settlement of $75 million in the first half of 20-1920. Proceeds from the sale of the Ingleburn site will most likely be received in 2019-20.
CSR shares rose 2.3% to $3.03 yesterday after the announcement.
