In an effort to streamline its business WHK Group (WHK) has agreed to sell its 30 per cent interest in Next Financial Limited (Next) to Wilson HTM Group Limited (Wilson HTM) for $11 million.
"The sale enables us to concentrate on our core business and has freed up some cash and helped reduce debt on the balance sheet," WHK chairman Terry Power said.
"We wanted to get debt down to around $30 million by 30 June and we wanted to have the balance sheet looking strong."
Next contributed a net profit to WHK of $0.2 million in the six months to 31 December 2008, a result that was impacted by adverse market conditions.
The consideration is to be paid in two instalments, beginning with $7.4 million in cash at settlement and $3.6 million in cash or shares in Wilson HTM on or around 31 July 2010.
Wilson HTM has also announced plans to acquire 100 per cent of the issued capital in Next for an initial consideration of $21 million, which includes a combination of cash and scrip plus a deferred consolidation.
Wilson HTM said the acquisition of Next will be a strategic fit, allowing access to a range of tax-effective protected products.
"With its established income streams ... we believe the acquisition will enhance the value of our business for some time to come," Wilson HTM executive chairman Steven Wilson said.
Power said WHK would continue to work closely with Next, with a view to developing a broader business relationship with Wilson HTM.
"We haven't had anything to do with Wilson in the past, but this gives us the opportunity to explore possibilities where we might be able to do some business together going forward," he said.
