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K&S agrees to sell WA business to Centurion

  • Posted on Wednesday 28th, August 2019.

Transport and logistics group, K&S Corporation, has reached an agreement with Centurion Transport for the sale of the business and certain assets of WA-based Regal General Freight.

An unconditional agreement has been executed by Centurion and K&S Corporation subsidiaries Regal Transport Group Pty Ltd (Regal) and K&S Freighters Pty Ltd (KSF) to give effect to the transaction.

After considering various options in relation to Regal General Freight, the Board of K&S Corporation elected to undertake this transaction to realise improved shareholder returns and provide ongoing certainty to the Regal General Freight employees and customers.

The transaction, according to K&S, will allow it to focus on its core competencies, including its Regal Heavy Haulage business which will continue to be operated and invested in by K&S Corporation.

K&S stated it will redeploy (or sell) assets that are not currently generating an adequate rate of return in the Regal General Freight business and the transaction will also release working capital of approximately $7 million.

Under the transaction, Regal will transfer to Centurion its rights and entitlement sunder customer contracts and Centurion will make offers of employment to the majority of the employees of KSF working in the Regal General Freight business.

With regard to the strategic rationale and benefits of the transaction, K&S has agreed (among other things) to: a nominal purchase price for the assets of the Regal General Freight business (largely customer contracts and intangible assets) to be acquired under the agreement; and provide access to Centurion, at commercial rates, to a number of its fleet to support the customer contracts for a transitional period.

The transaction is expected to be completed by 30 August 2019. The agreement is not subject to any conditions.

K&S’ 30 June 2019 financial statements are expected to include an after-tax charge of $5.1 million in relation to accounting adjustments, including impairment charges, as a result of the transaction.

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