Private equity firm Anchorage Capital Partners is believed to be proceeding with the acquisition of the AHG Refrigerated Logistics division from AP Eagers despite the current adverse market conditions.
The Australian-based buyout fund agreed to acquire the operation last month for $100m. While there is an option for Anchorage to walk away from the deal, it is understood that it has chosen to proceed.
Supply chains for food are likely to be in stronger demand than ever amid the coronavirus crisis, with shoppers flocking to supermarkets to stock up, and no doubt the buyout fund sees good value at the agreed price.
This would be good news to AP Eagers at a time when the coronavirus crisis has sent its share price reeling.
It is also a plus for advisers who worked on the deal: UBS, Luminis Partners and law firm Ashurst.
The market value of AP Eagers has declined to $800m or about $2.88 per share from almost $2.6bn or $10 a share at the start of this year.
The company is seen by the market as among those hard hit by the crisis due to the fact that fewer people will now be buying new cars at a time that new car sales were down on a historical basis anyway.
In 2019, car sales fell 7.8 per cent alone, according to data from the Federal Chamber of Automotive Industries, and AP Eagers issued two profit downgrades last year.
The automotive group has borrowings of $1.3bn, according to its accounts.
Nick Politis, a successful dealership owner and Sydney Roosters chairman, holds a 27 per cent stake in the compnay.
At the time the transaction was agreed upon, AP Eagers said the sale would reduce AP Eagers’s net debt by about $95m.
Refrigerated Logistics comprises all of the transport and warehousing operations of Rand, Harris, Scott’s and JAT.
AP Eagers inherited the business following its $2.4bn merger last year with Automotive Holdings Group.
The conditions could soon offer a happy hunting ground for distressed debt funds like Anchorage Capital Partners and others such as Allegro Funds. However, they are unlikely to start sifting the market for opportunities for some months until a clearer picture emerges on the outlook.
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