/ 15 October 2002

Barloworld says to sell auto finance unit

South African diversified industrial group Barloworld said on Tuesday it would sell its motor vehicle finance book to Wesbank for around R830-million.

”We decided to dispose of this business because it was neither generating sufficient returns as a stand-alone business unit due to a lack of economies of scale, nor was it a strategic component of our product and service offering in motor vehicle distribution,” the group said.

Shares in Barloworld trotted two percent higher at the start of trade in Johannesburg, to R57, outperforming a 1,1% gain in the broader market.

The deal will be effective on the first day of the month following the granting of approval by South Africa’s Competition Tribunal. Proceeds from the sale will be used to retire the external debt used to fund the group’s leases.

”While the transaction 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,” it said in a statement.

Barloworld said it would retain its construction and capital equipment distributorships and planned to expand these services in the United Kingdom, the United States and Spain.

Wesbank is the motor vehicle financing unit of big bank FirstRand.

Barloworld is one of the world’s leading dealers in Caterpillar construction equipment and one of the largest truck dealers in the United States. – Reuters