The market may have tumbled lower on Thursday, but that didn't stop the AP Eagers Ltd (ASX: APE) share price from charging higher.
The automotive retailer's shares ended the day 6% higher at $9.01. This made it the second best performer on the ASX 200 ahead of A2 Milk Company Ltd (ASX: A2M) and behind only Adelaide Brighton Ltd (ASX: ABC).
Why did the AP Eagers share price charge higher?
Investors were buying the company's shares on Thursday after it announced a major asset divestment.
According to the release, the company has entered into a binding agreement to sell Automotive Holdings Group's struggling Refrigerated Logistics division to Anchorage Capital Partners, a Sydney based private equity firm.
The Refrigerated Logistics division comprises all of the transport and warehousing operations, and associated employees, of Rand, Harris, Scott's and JAT.
The company advised that this sale achieves its objective post the acquisition of Automotive Holdings Group to divest the Refrigerated Logistics division as soon as commercially possible at a reasonable price.
On completion, AP Eagers will receive cash proceeds of approximately $100 million for the assets. These funds will be used to repay all finance leases and hire purchase liabilities associated with Refrigerated Logistics, resulting in an expected reduction in net debt of approximately $95 million.
Martin Ward, CEO and Managing Director of AP Eagers said: "The sale of AHG Refrigerated Logistics is consistent with our strategy to focus on our core automotive retailing business. The transaction follows an extensive sale process to find a buyer for the Refrigerated Logistics business on the optimal price and terms."
"Anchorage is the ideal owner for the Refrigerated Logistics business and has indicated a commitment to continue to invest and grow the business. We believe that the business will have a positive future under its new owners," he added.
The deal with Anchorage also includes the potential for additional cash proceeds if the private equity firm exits the business in the future. This depends on certain financial outcomes.
Completion remains subject to a number of conditions precedent, but does not contain any regulatory conditions. As part of the Share Sale Agreement, AP Eagers has provided warranties and indemnities and has agreed not to own or operate a business in the refrigerated logistics sector for a period of 5 years.
