Inchcape to raise pounds 380m from testing division sale

Inchcape, the international marketing and car distribution group, is poised to complete a key element in its restructuring by selling its testing services division to a consortium led by Charterhouse Development Capital, the venture capital arm of Charterhouse Bank, for pounds 380m.

The leveraged buyout is expected to announced before Inchcape reports its interim results on 23 September and the proceeds will be used to reduce the group's debts, which currently stand at pounds 463m.

The testing services management team, led by chief executive Richard Nelson, are not thought to be taking part in the buyout but they will be retained by the new owners. Bankers Trust is also thought to be providing finance.

Inchcape's new chairman, Sir Colin Marshall, and chief executive, Philip Cushing, put the business up for sale in March as part of a wide-ranging overhaul of the troubled group, which has seen the loss of 2,000 jobs. The sale is expected to be followed by the pounds 200m demerger of its insurance business, Bain Hogg.

The division produced an operating profit of pounds 28m last year on sales of pounds 284m and provides testing services in more than 50 countries. Its 240-strong network of testing centres employs 6,700 and checks everything from crude oil to football boots.

The group has had a torrid time in the last two years, culminating in a collapse in profits from pounds 228m to pounds 17.4m last year.