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INDUSTRIAL group Barloworld is to sell its Scandinavian car rental interests for R222 million plus debt and instead build its rental business in southern Africa.
The company, which leases and sells cars and earth-moving equipment, said it would sell its interest in the Avis and Budget car rental operations in Denmark, Norway and Sweden to a Norwegian investment group PETT and the chief executive of its Scandinavian Car Rental Operations.
Barloworld, which has been trying to sell its Scandinavian car rental business for nearly two years, said it expected the deal to go through by mid-August and it would book an accounting loss of 180 million rand related to the sale.
The deal depends on the unit repaying a 713 million rand bank loan and releasing Barloworld from a loan guarantee as well as repaying a 186 million-rand loan from Barloworld.
Barloworld said last month it hoped to sell its Scandinavian car rental business for around 1,4 billion rand by the end of September this year.
"The net proceeds will reduce borrowings and enable the group to redeploy capital in higher return business opportunities," the company said in a statement.
Barloworld, which operates in 41 countries, posted a sharp drop in first-half profits in May, mainly due to a winding down of construction activity ahead of the soccer World Cup.
"Even though there is a large loss, we do view it as a potential sale that is positive. It eases the debt burden on a balance sheet that's already strained," said Investec Securities trader Andrew Crawford. - Reuters