Stockholm, Sweden-based Atlas Copco has decided to write down to zero the value of the group’s rights to notes, which were a conditional extra payment in the 2006 divestment of its U.S. construction equipment rental business, RSC Equipment Rental. The charge, approximately SEK 850 million (U.S. $128.8 million), will be booked in the fourth quarter, as a financial cost without cash-flow effect.
Issuance of the interest-bearing notes is contingent upon RSC Equipment Rental reaching certain agreed EBITDA levels during the period 2006-2008. The analysts’ average estimates indicate an increase in EBITDA in 2007 over 2006 and a further increase in 2008, but the EBITDA is not anticipated to reach the threshold levels that would require RSC Holdings to issue notes to Atlas Copco.
Atlas Copco also owns approximately 11.5 percent of the shares in RSC Holdings Inc. The market value of the shares, as per Dec. 19, 2007, is approximately SEK 950 million (U.S. $144.0 million), which exceeds the initial book value by approximately SEK 570 million (U.S. $86.4 million). This unrealized value increase has been recognized directly in equity during the year. In the event of a sale of the shares, the realized result would be recorded in the income statement.
Atlas Copco offers products and services ranging from compressed air and gas equipment, generators, construction and mining equipment, industrial tools and assembly systems, to related aftermarket and rental.
