Seven Group’s Coates Hire sale put on ice

Seven Group shareholders will be waiting awhile for any cash proceeds.

a woman

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Billionaire Kerry Stokes-controlled Seven Group (ASX: SVW) has announced that the strategic review which potentially could have led to a sale of the part-owned equipment hire firm Coates Hire has concluded with no transaction taking place and ownership to be retained in its current form.

There were some lofty valuations placed on Coates Hire that had investors expecting a big pay day for Seven Group. The announcement that cash will not be realised for the Coates holding anytime soon is unlikely to sit well with investors and the share price will likely come under pressure today.

The failure to sell Coates comes hot on the heels of heavy equipment leasing firm Emeco Holdings’ (ASX: EHL) profit downgrade. Emeco’s announcement, along with profit downgrades from numerous mining service firms including Calibre Group (ASX: CGH), will also have investors questioning how another division of Seven Group is performing, namely the Caterpillar franchise Westrac.

Foolish takeaway

Mining and resource-related companies are in a state of flux at the moment. Inventors need to be aware of the risks of investing in these sectors while at the same time not being blind to potential opportunities.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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