Perth-based Fleetwood Corporation has sold its struggling caravan manufacturing business, with the company forecasting an overall loss of up to $15 million on the deal.
Fleetwood said today it had agreed to sell the Coromal and Windsor caravan brands for $1 million to ASX-listed Apollo Tourism & Leisure.
It's the latest of several acquisitions by Queensland-based Apollo, which said it expected to achieve a more rationl market and improved margins.
Apollo's other acquisitions include the $9.1 million purchase of the assets of Perth dealership George Day Caravans in August last year.
Under the latest deal, Fleetwood will sell goodwill in the business to Apollo, and at the end of a transition period Apollo will purchase Fleetwood’s remaining raw material and finished goods stock.
The company said the combined impact of a discount provided to Apollo for residual stock, operating losses during the transition period, and lease and employee termination costs was expected to be between $12 million and $15 million.
The Perth manufacturing facility will be closed at the end of the transition period.
Fleetwood said that, in cash terms, the overall process was expected to be positive due to the recovery of goodwill, raw materials and finished goods.
In May, the company flagged subdued market conditions for its caravan business and said it was expecting a loss of about $13 million in that division.
Fleetwood also undertook a review of the RV business late last year and said it was considering all structural and corporate alternatives.
“Fleetwood’s operational management have done a tremendous job of reinvigorating the Coromal and Windsor product range over the last three years, and that has resulted in significant gains in market share,” managing director Brad Denison said.
“Ultimately though, the board sees the future of the business as being better served by being part of Apollo’s wider tourism and leisure platform.”
Shares in Fleetwood were up 12.6 per cent at $2.10 each at 2pm AEDT.
