THE Automotive Holdings Group Refrigerated Logistics division, which stubbornly and repeatedly failed to find a new buyer despite years of attempts, has finally been sold.

AHG parent company AP Eagers Ltd this week announced that Refrigerated Logistics (RL) has been sold for $100 million to Sydney-based capital equity company Anchorage Capital Partners.

The price is about one third of what previous estimates placed on the refrigerated business that covers most Australian states.

Anchorage invests through private equity in companies that are deemed to have strong and established track records but are operating below their full potential. It has $810 million in capital invested in companies.

Its current investments control national contract cleaning services firm Facilities First and rail leasing and rail stock maintenance business CF Asia Pacific. It previously operated Dick Smith and Total Eden.

Anchorage sold one of its major investments, mining services company Contract Resources, to Perth-based Viburnum Funds and Houston-based SCF Partners in December last year for $200 million, freeing up funds for an asset such as RL.

In a statement to the Australian Securities Exchange (ASX), AP Eagers said the sale would reduce its debt by $95 million. It could also reap further funds when Anchorage later sells RL.

AP Eagers CEO and managing director Martin Ward said: “The sale of AHG’s RL division is consistent with our strategy to focus on our core automotive retailing business.

“The transaction follows an extensive sale process to find a buyer for the RL business on the optimal price and terms,” he said.

“Anchorage is the ideal owner for the RL business and has indicated a commitment to continue to invest and grow the business. We believe that the business will have a positive future under its new owners.”

RL assets are transport and warehousing operations under the names Rand, Harris, Scott’s and JAT.

Media speculation in July last year indicated that two parties – US logistics company Emergent Cold and Australian-listed Lindsay Australia – were close to buying RL for $250 million to $300 million.

GoAutoNews Premium reported at the time that its contacts said this price bracket was speculative and possibly based on a valuation from the aborted sale to China-based HNA International in 2018 for $280 million plus HNA’s carrying of the $120 million in lease liabilities.

AHG opened its involvement in the refrigerated transport industry in 1986 with the purchase of Rand Transport as part of a corporate diversification program. It bought Harris Refrigerated Transport in 2011, Toll Refrigerated in 2012 for $6.5 million then, in 2014, Scott’s Refrigerated Freightways for $116 million. It also purchased JAT in 2014 to operate the combined transport and warehousing company from the Australian coastline from Perth to North Queensland.

Funds from the sale of RL will repay finance leases and hire purchase liabilities associated with RL, which AP Eagers said would result in an expected reduction in net debt of about $95 million.

The sale involved UBS and Luminis Partners as joint financial advisers to AP Eagers and AHG (part of APE since the August 2019 sharemarket takeover) with Ashurst acting as legal adviser.

By Neil Dowling