HSS Hire Group (LON: HSS) shares are rallying Thursday after the company confirmed it has entered into an unconditional agreement to sell All Seasons Hire Limited to Cross Rental Services.
All Seasons Hire is HSS's heating, ventilation and air-conditioning hire solution provider.
Cross Rental will pay £55 million in cash with the proceeds used by HSS to accelerate the repayment of its debt.
HSS stated the sale will significantly decrease leverage and materially strengthen its balance sheet.
“This balance sheet strength is expected to enable the Group to refinance its current facilities on attractive terms, supporting improved free cash flow generation,” the company said in a statement.
In addition, as part of the transaction, HSS has entered into a commercial agreement with Cross Rental for the cross-hire of heating, ventilation and AC equipment and services.
All Seasons represented £18 million of HSS revenues and £6 million of operating profit in 2020.
Steve Ashmore, CEO of HSS, commented: “Over the last four years HSS has undergone a radical transformation to become a modern, agile, digitally-driven business. During this time, we have continued to deliver against the strategic goals we set out in 2017 – to Delever the Group, Transform the Tool Hire business, and Strengthen our Commercial proposition – and today's announcement marks the completion of one of these goals.
“With leverage at around 1.0x post this disposal, we have materially exceeded our previously stated targets. Going forward the Group will target leverage remaining between 1.0-1.5x.”
Investors have been encouraged by the announcement, with HSS shares currently trading at 19.9p, up 13.71% from Wednesday's close.
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