ABB has signed an agreement to sell most of its Structured Finance business to GE Commercial Finance for total cash proceeds, including equity and debt, of about $ 2.3 billion. ABB’s net debt will be cut by the same amount.
‘The sale of Structured Finance is an important step in our ongoing program to strengthen the balance sheet, and allows us to cut net debt by $2.3 billion,’ said JÃ¶rgen Centerman, president and CEO of ABB.
Centerman reaffirmed ABB’s targets for 2002 of an EBIT margin of 4-5 percent and flat revenues.
ABB said it will use the cash from the sale to repay scheduled debt maturing in the fourth quarter of this year – including its bank facility, commercial paper and bonds – of about $ 1.2 billion. The remainder of the cash will be used to repay other debt maturing mainly next year.
The Structured Finance portfolio being divested includes global infrastructure financing, equipment leasing and financing businesses.
ABB will retain some $ 0.9 billion in leasing assets related to its core businesses, representing about 15 percent of the total Structured Finance business area assets.
Not included in the sale are the ABB Export Bank, ABB’s 35 percent equity stake in the Swedish Export Credit Corporation, and the aircraft leasing business. ABB is in negotiations to divest some or all of these businesses, whose total book asset value was about $ 0.9 billion at the end of June 2002.
The divestment of Structured Finance is subject to customary regulatory approvals.