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BARLOWORLD LIMITED - BARLOWORLD EQUIPMENT AND WESBANK ESTABLISH SMART
PARTNERSHIP JV AND WESBANK ACQUIRES BARLOWORLD"S R1.3 BILLION SOUTH AFRICAN
EQUIPMENT LEASING BOOK
Barloworld Limited
(Incorporated in the Republic of South Africa)
(Registration number 1918/000095/06)
(Share code: BAW)
(ISIN: ZAE000026639)
("Barloworld") BARLOWORLD EQUIPMENT AND WESBANK ESTABLISH SMART PARTNERSHIP JV
AND WESBANK ACQUIRES BARLOWORLD"S R1.3 BILLION SOUTH AFRICAN EQUIPMENT LEASING
BOOK
International industrial brand management company Barloworld today announced the
formation of a Smart Partnership alliance with WesBank, a division of FirstRand
Bank Limited. Under the terms of the alliance, Barloworld will sell its South
African equipment finance book to WesBank for an estimated gross consideration
of R1.3 billion cash ("the sale"). The final consideration will be determined
based on the net asset value of finance contracts on the effective date.
Thereafter, Barloworld Equipment will receive a share in the profits flowing
from both the existing finance contracts being sold to WesBank as well as any
future new business flows into the alliance. Barloworld will not be required to
inject any capital into the alliance.
WesBank acquired Barloworld"s R881 million South African third party motor
vehicle finance book in March 2003 and in line with that transaction, the
affected Barloworld employees currently working on the equipment leasing
business will be offered employment by WesBank. The alliance is subject to
approval by the Competition Tribunal and the FirstRand and Barloworld boards.
Tony Phillips, Barloworld chief executive officer, said: "We are pleased to have
concluded this partnership with WesBank, which has the resources to honour
existing contracts and the expertise to build on our service standards. It will
remain an important element in the future provision of a total solution-based
offering to our mining and construction customers."
The sale will be effective on the first day of the month following the granting
of approval by the Competition Tribunal. Proceeds from the sale will be used to
retire the external debt used to fund the advances book. Whilst the sale will
not have a material effect on Barloworld"s earnings or net asset value, it will
have a positive impact on the gearing of the balance sheet and would have
reduced Barloworld"s total borrowings (including leasing operations) to
shareholders funds at 30 September 2003 from 59.5% to 46.1% assuming all the
proceeds were used to repay existing debt. There is no material change to
Barloworld"s gearing excluding leasing operations.
"This alliance is another consequence of our use of Value Based Management to
guide our thinking. While long term rentals, often linked with maintenance
contracts, are an integral part of our business models, pure asset finance is
not our core business and is best dealt with by our global network of partnering
financial institutions such as CAT Financial, Hyster Capital, DaimlerChrysler
Services Truck Finance and WesBank," said Phillips.
Facilitating access to finance is a strategic component of Barloworld
Equipment"s product and service offering to mining and construction companies in
southern Africa. However this will now be done through the alliance with WesBank
when it is a pure customer finance deal. Barloworld will however continue to
finance the growth of its short and long term equipment rental business in
southern Africa. Pure finance leasing sales were R 207 million in 2003 out of
total revenues of R 5.3 billion in the southern African equipment business.
Barloworld, which is one of the world"s leading Caterpillar dealers, the world"s
largest independent lift truck dealer and one of the largest truck dealers in
the United States also has a UK-based leasing book of R2.7 billion which
primarily provides finance in the UK (materials handling products) and United
States (materials handling equipment and Freightliner trucks) Commenting on the
future of this book, Brandon Diamond, CEO of Barloworld Industrial Distribution
said," Most of our UK-based book is financing our own long term rental fleets
and the requirement to finance this ourselves will remain. Over time we will
seek to transfer the relatively small component that comprises pure financing
transactions into partnering financial institutions." Sandton
29 March 2004
Sponsor
Cazenove
For background information please contact Mark Drewell, Head of Corporate
Communication at Barloworld Limited ph +27 11 445 1204
email mdrewell@barloworld.com
or visit www.barloworld.com
Date: 29/03/2004 10:30:41 AM Produced by the JSE SENS Department
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