Motor home rentals operator Tourism Holdings (THL) has conditionally sold its 49 percent stake in InterCity Holdings Limited for $9.5m to its joint venture partners InterCity Group.
Tourism Holdings chief executive Grant Webster said the Intercity business, which operates the Fullers & Kings tourist boat operations, InterCity and Newmans bus networks was not "core to THL's operations".
"THL will book a loss on the sale of its shareholding in the order of $3.7m which will be included in the December half year results. This loss was anticipated at the earnings update given at the annual meeting in November," Webster said.
Webster said he expected cash from the sale to be paid over a 12 month period with $4m receivable immediately, with the proceeds from the sale used to reduce debt.
THL went into its joint venture deal with InterCity in November 2007 as it looked to drive further rationalisation in the tourism sector and to reduce its costs.
The joint venture with InterCity Group saw THL selling its Fullers Bay of Islands leisure cruising business and Great Sights coach tour operation to InterCity, with THL gaining a 49 per cent shareholding in InterCity Holdings and $16 million in cash.
InterCity is controlled by Masterton's Tranzit Group and Timaru's Ritchies Transport. Tranzit is owned by the Snelgrove family and Ritchies by the Ritchie family. Nelson bus operator SBL also has a small stake in InterCity.
For the half year to December 2007 THL made pre-tax operating profits of $7.4 million and after tax earnings of $4.9 million. But the company told shareholders at its annual meeting that it would slump to an operating loss for the first half this year, while there would be a small after-tax profit due to asset sales.
"Reported net profit after tax for the year will be well below last year's $14.3 million," chairman Keith Smith said at the annual meeting in November.