TSB sells EuroDollar to its management: Sale nets bank pounds 60m, taking total raised from recent disposals to pounds 200m - New owners plan flotation

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TSB GROUP has sold EuroDollar, its loss-making car rental business, to its management for about pounds 60m.

The bank's latest move means it has raised more than pounds 200m from disposals in recent months. It received about pounds 58m for Swan National, the fleet car leasing business, pounds 110m for Noble Lowndes, the pension consultancy sold 10 days ago, and a reputed pounds 7m for Bell Lawrie White, the private client stockbroker. The EuroDollar deal also releases TSB from guaranteeing pounds 58.1m of car finance loans.

The management buyout is headed by Freddie Aldous, who 20 years ago founded Swan National for UDT, the credit finance firm that TSB bought in 1981.

Mr Aldous said he was '64 going on 45' and had no plans to retire. 'I am planning five years ahead. There is the exciting possibility that we will go public. I want to make sure that I can see us through this particular stage.'

EuroDollar's management owns 40 per cent of the company. The rest is held by venture capitalists, led by Prudential Venture Managers, which has invested pounds 20m. Charterhouse Development Capital, Electra Private Equity Partners and Morgan Grenfell Development Capital each put up pounds 13m.

Martin Clarke, a Prudential Venture Managers director, said EuroDollar could proceed to a flotation within two or three years. The company has good management and a very profitable UK business, he said.

However, start-up problems in France and Italy caused EuroDollar to suffer a pre-tax loss of pounds 7.9m in the six months to end March. This was in spite of UK profits of more than pounds 10m a year.

Mr Aldous said he expected to sell the French company next week, the new owner becoming a EuroDollar franchisee. He intends to eliminate the Italian losses in a similar way within the next few months.

EuroDollar employs about 1,170 people in the UK, renting 12,000 vehicles from 106 branches. It operates a further 40,000 vehicles in Europe and the rest of the world, mostly through franchises.

TSB said it had a lot of interest from other potential purchases. The success of the management's offer was helped by EuroDollar's assurances about the workforce.

Mr Aldous said there would be no redundancies: 'It sounds old-fashioned to think about the staff, but quite frankly it's true.' He said EuroDollar has already made substantial reductions in its overheads.

Lombard North Central, a National Westminster Bank company, has provided vehicle finance and working capital facilities, along with Forward Trust and UDT. Including the equity investment, Eurodollar said the buyout involved finance of pounds 192m.

Three-quarters of EuroDollar's business consists of providing short- term rentals to corporate customers.

Mr Aldous and Ian Mosley, his chief executive, have given undertakings not to enter the fleet leasing market in the next 18 months. This remains a possibility for EuroDollar in the medium term.

EuroDollar used to trade under the name Swan National. It changed it as part of a marketing agreement with Dollar, the fourth-largest car rental business in the US. Dollar operates in North and South America only.

Its UK business is run by John Leigh, and its finance director is Steve Westerby. Mr Clarke will also join the board.

TSB will receive cash of pounds 22m and pounds 37.9m in repayment of inter-company debt. At 31 March, EuroDollar had net assets of pounds 20.4m.

A bank spokesman said TSB was selling for strategic reasons rather than because of the price offered. The sale of Swan National had left EuroDollar 'somewhat isolated' within the group, according to Peter Ellwood, TSB's chief executive.

The sale of EuroDollar means Hill Samuel, the merchant bank, is TSB's only substantial business outside its core retail banking and insurance operations.

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