Powerlan has managed to sell off its controlling stake in leasing and finance division Integrated Asset Management (IAM), selling off 65 per cent of the division to Ambridge Investments.
IAM has become a thorn in the side of Powerlan's balance sheet of late - in 2001 it made a loss of just over $3.1 million on the back of $8.1 million of revenues. During the earnings call for the 2001 results, Powerlan chief executive officer Theo Baker said he would like to divest the unit in the near future.
The negotiations with Ambridge Investments, a merchant banker cum private investment company, had already begun in May/June 2001. It is expected Ambridge, now with a 65 per cent stake and controlling interest in the leasing and finance company, will inject some of its working capital into the business.
Powerlan chief financial officer John George said that in the last few months the performance of IAM has been fairly flat. "It wasn't costing us an arm or a leg but it wasn't making a million either," he said.
But George said Powerlan is maintaining a 35 per cent stake in the business to enjoy some of the fruits of its labour in later years. Being a leasing and finance business, the cashflow tends to improve over time - at the end of operational leases, when the leased equipment is sold off or re-hired. George said Powerlan wanted to benefit from these gains at a later date, but did not want to focus on operating the business. George said that there were no significant contingencies or material liabilities being passed on to IAM.
Next on the list in Powerlan's divestment plans is its education and careers divisions. "Things are progressing on that front," said George. "Some divestments are ahead of schedule, some are taking some time. The timing is pretty lousy - everything comes to a halt in December. And when the economy is this flat, it isn't easy to sell a subsidiary that isn't exactly the flavour of the month."
"It's our intention to clean up our backyard in fiscal 2002 so we can focus on our core business," he said.