AAF sells US firm to repair losses

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The Independent Online
SHARES in AAF Industries climbed 11p to 49p after the troubled alloy wheels and prefabricated building group said it was selling a US business for about pounds 22m, writes Neil Thapar.

The disposal comes a month after AAF reported an pounds 11m pre-tax loss for the half year to 30 June due to severe problems at Premier, its Blackburn-based prefabs subsidiary.

As a result it has been forced to sell Diamond Engineered Space to General Electric of US to bolster its financial position. The buyer is paying, subject to asset valuations, dollars 18.4m cash, with the balance accounted for by a non-competitive agreement.

Diamond, based in Ohio, Cleveland, is a modular hire and sales business with 2,600 rental units operating from 10 branches in the east and south US. Last year it made dollars 1.9m taxable profit on sales of dollars 24m. Net assets amounted to almost dollars 31m.

AAF said it would receive about pounds 9m from the disposal after allowing for debts, other liabilities and costs of the deal. About half the proceeds will be used to reduce group debts, which amounted to nearly pounds 25m at the half year. The balance will be applied as working capital.

The company said although Diamond had been consistently profitable problems in the UK meant the group's interests were best served by a disposal.