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2006-10-07 News Release

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Atlas Copco reduces ownership in equipment rental business

Atlas Copco AB sells majority interest to private equity firms and agrees to a minority stake in the best equipment rental company in North America.

Atlas Copco AB, Stockholm, Sweden, has agreed with private equity firms Ripplewood Holdings L.L.C. and Oak Hill Capital Management, LLC, to sell the majority of its construction equipment rental business, in a transaction with a total value of approximately BSEK 28 (BUSD 3.8) in cash and securities.

Find Information and Suppliers of equipment rentals.

The cash proceeds are estimated at BSEK 24 (BUSD 3.3). Upon completion of the transaction, Atlas Copco will have a 14.5% minority stake in the business and hold rights to notes of up to BSEK 3 (BUSD 0.4). Issuance of the notes is contingent upon the profit development of the business until the end of 2008. The estimated capital gain, net of taxes, is BSEK 8. The transaction is subject to customary closing conditions and regulatory approvals and is expected to occur before the end of 2006.

“We are very satisfied with the deal. It results in substantial cash proceeds, a capital gain and a minority stake in the best equipment rental company in North America,” says Gunnar Brock, Atlas Copco’s President and CEO.

Atlas Copco sells majority stake of the RSC equipment rental business. Click Go for larger image. photo: Atlas Copco AB

Commenting on the transaction, Tim Collins, CEO of Ripplewood Holdings, and Denis Nayden, Managing Partner of Oak Hill Capital, say: “RSC Equipment Rental has an extraordinary management team, committed employees and is well positioned in the industry. We are excited about this investment and believe the company’s strength gives us an opportunity to continue to grow the business profitably and create long-term value.”

RSC Equipment Rental (RSC), Scottsdale, AZ, is the second-largest construction equipment rental company in the U.S., with over 5,000 employees and 450 locations across the U.S. and in parts of Canada. For the 12 months ending June 30, the equipment rental sector company generated revenue in excess of $1.5 billion. RSC prides itself on helping its customers maximize productivity by its commitment to availability, reliability and service.

In the 12 months ending June 30, 2006, the divested business had revenues of MSEK 11 535 (MUSD 1 578), EBITDA of MSEK 4 847 (MUSD 663) and 5 100 employees in 450 rental stores throughout North America.

Atlas Copco’s strategic rationale for divesting is that the operating environment and the business characteristics of the construction equipment rental are very different from Atlas Copco’s industrial equipment operations and the possibilities to capture and develop synergies are limited.

“With three very strong, very profitable industrial business areas, all with leading market positions, Atlas Copco will have excellent opportunities for strong growth and value creation,” adds Gunnar Brock. The continuing operations had revenues of MSEK 47 048, in the 12 months period ending June 30, 2006.

The Board of Atlas Copco AB plans to propose to the 2007 AGM an adjustment of the Group’s capital structure to reflect the needs of the remaining businesses. The Board also plans to utilize the mandate to repurchase own shares when the current trading restrictions are lifted.

About Ripplewood
Based in New York, Ripplewood Holdings is a leading private equity firm established in 1995 by Timothy C. Collins. Through five institutional private equity funds managed by Ripplewood, the firm has invested over $3 billion in transactions in the U.S., Asia, Europe and the Middle East.

About Oak Hill
Oak Hill Capital Partners is a leading private equity firm with more than $4.6 billion of committed capital. Robert M. Bass is the lead investor. Since 1985, Oak Hill's professionals have invested in more than 50 significant private equity transactions.

Read a recent press release about - Atlas Copco has inaugurated Wuxitec a new production plant to manufacture screw compressor elements, the core component of compressors, in Wuxi, China.

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