Finning International, the world’s largest Caterpillar dealer, this week sold Hewden, its U.K. equipment rental business to an affiliate of Sun European Partners, a London-based private equity group, for about £110.2 million (about U.S. $164 million). Finning said it will primarily use the proceeds to reduce its debt.

Sun European Partners is affiliated with Florida-based Sun Capital Partners.

“After a comprehensive review, we have determined that for strategic and financial reasons, it is in our shareholders’ best interest to divest Hewden,” said Mike Waits, president and CEO of Finning International. “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 U.K. dealership does not align with our strategic objectives. Finning remains fully committed to the U.K. Caterpillar dealership and its employees who are strongly positioned to serve the construction, mining, and power systems markets.”

The impact of the transaction will be accretive to shareholder return on equity, but will result in a second-quarter accounting loss of approximately CA $247 million of $1.44 per share, Finning said. The $247 million loss includes the realization of $101 million of foreign exchange losses relating to the investment in Hewden, and a $68 million charge relating to the recognition of the unfunded pension liability the buyer has assumed.

“Going forward, Finning’s U.K. dealership will continue to work closely with our plant hire customers to place Caterpillar equipment into the U.K. rental market,” said Andy Fraser, managing director of Finning UK Group.

“This is a continuation of our journey towards a new Finning and the final step in rationalizing our U.K. operations,” added Waits. “Combined sale proceeds from this transaction, Hewden Tools and the dealership’s Materials Handling divisions [sold in recent years] total almost $600 million.”

Hewden has 63 locations in the U.K. Its existing Hewden commercial center in Manchester is likely to become Hewden’s new head office. The Finning U.K. dealership will continue to operate 20 U.K. branches with headquarters in Cannock, Staffordshire.

Finning is scheduled to announce its first-quarter results next week.

Finning is based in Vancouver, B.C., Canada and is Caterpillar dealer for western Canada, the U.K., Argentina, Chile, Bolivia and Uruguay. The company is No. 11 on the RER 100.