UPDATE 1-Finning sells its Britsh rental business

* Sells Hewden for 110.2 mln pounds

* Buyer is an affiliate of Sun European Partners LLP

* Finning sees Q2 accounting loss of about C$247 mln

TORONTO, May 5 (BestGrowthStock) – Finning International (FTT.TO: )
the world’s largest Caterpillar (CAT.N: ) equipment dealer, said
on Wednesday it sold its British equipment rental business for
110.2 million pounds ($166 million) to an affiliate of Sun
European Partners LLP.

Finning said it would use proceeds from the sale of Hewden
which has 63 locations and 1,300 employees, to reduce debt.

It said the deal would add to shareholder return on equity,
but would result in a second-quarter accounting loss of about
C$247 million ($239.5 million) or C$1.44 per share.

The accounting loss includes the realization of C$101
million of foreign exchange losses, and a C$68 million charge
relating to the recognition of the unfunded pension liability
which the buyer assumed, the company said.

The balance of C$78 million, or 45 Canadian cents a share
is the loss on Finning’s net carrying value of Hewden, net of
tax.

Finning said it would report Hewden as a discontinued
operation in the second quarter of 2010.

“After a comprehensive review, we have determined that for
strategic and financial reasons, it is in our shareholders’
best interest to divest Hewden,” Mike Waites, chief executive
of Finning, said in a release.

“While we believe that Hewden’s broad product offering
combined with our recent restructuring and national accounts
focus will serve it well in the future, owning a large,
short-term rental business operating separately from our UK
dealership does not align with our strategic objectives.”

Finning said the deal was comprised of 90.2 million pounds
in cash, an interest bearing 5-year loan note receivable of 20
million pounds, and a 5 percent equity warrant subject to
certain conditions being met.

Waites said the deal was “the final step in rationalizing”
Finning’s British operations.

“Combined sale proceeds from this transaction, Hewden
Tools, and the dealership’s Materials Handling divisions total
almost C$600 million,” Waites said.

Finning UK will continue to operate 20 branches in Britain,
with 1,470 employees serving the construction, mining and power
systems markets.

Shares of Finning, which releases its first quarter results
next Thursday, were down 57 Canadian cents at C$18.56 on the
Toronto Stock Exchange on Wednesday morning.

Sun European Partners LLP, is the European adviser to
U.S.-based investment firm Sun Capital Partners Inc.

Investing Tools

($1=$1.03 Canadian) ($1=.6564 Pound)
(Reporting by John McCrank)

UPDATE 1-Finning sells its Britsh rental business