Thursday 16th August 2018
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Tru-Test Corp will sell some of its business to Switzerland-based Datamars for $147.9 million, it said in its annual report.
Tru-Test announced plans to shed the bulk of its businesses, signing a conditional deal to sell its retail solutions and milk meter divisions, which account for about 85 percent of group revenue.
Those businesses include the weighing, electronic identification, contract manufacturing, electric fencing and milk metering operations. All intellectual property - including the Tru-Test name - form part of the deal.
Shareholders approved the transaction at a special meeting in June, where they would only support the deal provided the enterprise value was at least $132.4 million. The transaction still requires Overseas Investment Office approval.
Datamars confirmed the higher sale price at $147.9 million, which was contingent on efficiencies achieved and extrapolated out as a multiple of annualised earnings before interest, tax, depreciation and amortisation. It also relied on the businesses being sold debt-free and excluding cash.
The company had $3.2 million cash at bank and in hand on March 31. It also had $32.6 million of bank loans that it plans to pay back with the money from Datamars before the facility expires on Jan 31, 2019. Should the deal not complete as expected the bank debt is expecting to be refinanced.
"The floor price of the deal assumed a number of improvements, and essentially what the shareholders were committing to was that if Datamars agreed to a price above the floor, they would transact," chair John Loughlin told BusinessDesk.
Once the deal is done, Tru-Test's dairy division will operate as a standalone business, including the dairy automation systems, milk cooling and farm holding tank businesses and assets. Shareholders will continue to hold shares - in the same proportion they do now - in the remaining companies. Those businesses are expected to generate approximately $32 million of revenue and ebitda of $4 million to $5 million in the 2019 financial year.
Tru-Test said its loss for the March year was $2.27 million, down from $3.48 million in the prior year, and included one-off business restructuring costs, projects related to product pricing optimization, costs associated with the sale of the business and the ongoing Napier Tool and Die copyright court case.
Excluding those costs, Tru-Test says profit from operations was $3.2 million. Ebitda increased to $7.4 million from $5.8 million.
Tru-Test said it is now seeing improved operating performance and trading conditions in most of its markets.
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