K&S and STI reach binding agreement

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Owner/Driver  /  December 9, 2016

As announced in November, the ASX-listed K&S Corporation has been in negotiations with Scott’s Transport Industries (STI) to purchase the business, a deal of which has been struck.

Confirming a binding agreement today, K&S will merge STI into its business from January 30 2017, with the company to handle STI’s employees, ongoing contracts and staff entitlements.

According to K&S, the deal reached will provide it will access to a national fuel haulage arm and extra help with general and intermodal freight.

"STI operates a general freight division and a fuel cartage division and has a number of blue chip customers in the manufacturing, FMCG, and fuel sectors," an ASX statement says.

"K&S Corporation regards the proposed transaction as an excellent opportunity to further expand its K&S Energy division through the addition of significant fuel cartage operations.

"The transaction will also provide additional volume to K&S Corporation’s existing intermodal and contract logistics divisions.

"The transaction will lead to a more competitive and stronger combined business in an increasingly challenging environment."

From an STI point, the ASX statement says the transporter has agreed:

• to a "nominal purchase price" for its assets;

• to rent a number of vehicles to K&S at market rates for up to five years;

• to, without obligation, sell rented vehicles to K&S;

• to allow K&S to see STI’s business financials;

• and to produce license and lease agreement by land owners who are related parties of STI for the remainder of the transport terminals currently occupied by STI.

K&S predicts there will be a rationalisation of infrastructure to reduce operational costs and will undertake a review of STI’s current operations.

K&S did not need shareholder approval for the transaction.

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