For the betterment of the shareholders, CSR Limited (ASX: CSR) agreed with Crescent Capital Partners (Crescent) to divest one of its business Viridian Glass (Viridian) for $155 million approximately. The other reason which the company states is that the transaction with Cresent will enable them to operate more effectively as a standalone business. The transaction considers the Viridian property site at Dandenong, Victoria. The company will retain the other property of CSR at Ingleburn situated in NSW. The market valuation of this Ingleburn property of CSR is above $60 million.
Also, CSR has a long-term commercial term with its Ingleburn property. Once this transaction gets completed, CSR will begin its sales procedure and complete the divestment of all the assets of the Viridian. This transaction will enhance the cash flows of CSR by $215 million. CSR’s Viridian was into the business of manufacturing float glass in Australia and New Zealand. Earlier, in July 2018, after the strategic review, the board concluded that if the shareholders have invested in CSR’s core business, they could have received a much better return than Viridian.
Also, the terms and condition of the sale of CSR’s Viridian property are very limited and is expected to complete soon by the end of January 2019. Once the transaction gets complete, the company would also be able to realize its pre-tax loss in between $20 million - $30 million by the year ended 31 March 2019.
The initial cash inflow of $80 million is expected by 31 March 2019 and the remaining amount worth $75 million in the first half of financial year ending 2020.
Since the inception, the performance of the company was -30.75%. The performance of 5 years and ten years remain positive. The 5 years performance of the company was 8.42%. The ten years performance of the company was 6.35%. However, since past one year, the company has given a consistent negative performance. The one-year performance of the company was reported as -33.48%.
For the half year, period ending on 30 September 2018, the company’s net profit after tax was down by 31%. Although the revenue of the company was 6% high as compared to the HY2018, the company had to give a significant amount of tax worth $67 million which resulted in statutory net profit after tax go down by 77%. The EBITDA for HY2019 was reported to be $182 million. It has gone down by 28% as compared to HY2018. The operating cash flows which include the pre-tax, asbestos and other significant items was reported to be $125.6 million. It also went down by 27% as compared to HY2018. The operating cash flows post-tax and other significant items were $90.4 million. Here also, it went down by 22%.
By the end of the day, the market price of the share increased by 2.027%. When the market opened this morning, the share price was $3.010. It went as low as $2.905. The maximum price for the day was A$3.050 and finally closed at $3.020.