The Eclipx Group Ltd (ASX: ECX) share price has rocketed higher this afternoon after the fleet management company made a major announcement.
At the time of writing the Eclipx share price is up a massive 28% to $1.64.
What was announced?
This afternoon Eclipx announced the sale of both its GraysOnline and AreYouSelling businesses to Quadrant Private Equity for $60 million. This represents an EV/EBITDA of 7.5x based on the combined rolling 12 months EBITDA to March 2019.
According to the release, the transaction also includes a distribution arrangement which will allow Eclipx to continue to benefit from the utilisation of Grays Auto as one of its channels for the disposal of end of lease vehicles.
Management expects the transaction to complete on July 31, subject to a number of conditions including FIRB approval.
If the transaction completes, the net proceeds of the sale will be applied to the reduction of Eclipx's corporate debt facilities.
It will also result in an accounting non-cash loss of approximately $100 million, which will be recognised in the company's second half accounts. Pleasingly, Eclipx's lenders have agreed to remove the implications of this non-cash loss from covenant testing at the next test date on September 30.
Eclipx's CEO, Julian Russell, said: "The management team is intensely focused on progressing our simplification strategy. The sale of both Grays and AreYouSelling is an important early step. The sale contributes to the key objectives of our plan, materially reducing both group complexity and corporate debt. We are also seeing progress on the other non-core and sub-scale businesses."
In addition to this sale, the company has announced the appointment of an acting chief financial officer.
Replacing the retiring Garry McLennan will be Jason Muhs, the company's former Head of Business Strategy and Investor Relations. He will assume the role of acting chief financial officer until a permanent appointment is made.
Today's gain makes Eclipx the best-performer on the ASX 200 ahead of oOh!Media Ltd (ASX: OML) with its 6.5% gain and Harvey Norman Holdings Limited (ASX: HVN) which has seen its shares charge 4% higher this afternoon.
