Builders and plumbers merchant group Wolseley have got rid of their loss-making US arm, Stock Building Supply Holdings, via a joint venture deal with investment firm The Gores Group.
Wolseley will still own a 49% interest in the joint venture, which will be put into pre-packaged Chapter 11 arrangement to enable it to be refinanced and restructured. The Gore Group have committed to further investment in the business.
Wolseley will provide a funding facility of up to $100m for the duration of the pre-pack process.
The next accounts will contain a pre-tax exceptional loss on the disposal of up to £175m. The construction loans business, which employs 54 people, has been excluded from the transaction and will be retained by Wolseley ahead of a sale later on.
Wolseley say the deal preserves its interest in the long-term potential of the business while deconsolidating losses and conserving cash.
Stock are the second largest providers of building materials and construction services to US home builders and contractors. The company was formed when Wolseley bought Carolina Builders in 1986. In the year to July 2008 Stock made a trading loss of $119m.