Residential development company AVJennings Ltd (ASX:AVJ) has agreed to sell its contract building division to Japan’s Sekisui House.
AVJennings says it will receive payments under the arrangements equivalent to the net asset value of the business on the completion date.
This is anticipated to result in the company receiving payments of around $18.5 million at completion.
AVJennings will retain ownership of the AVJennings brand and continue to use this brand for its development operations.
It will also license to Sekisui House the AVJennings brand and associated trade marks for use in the contract building business in return for a cash royalty based on the revenue and profit of the business for an initial three year term.
CEO Peter Summers says the sale of the contract building division now allows AVJennings to fully focus on its core land and integrated housing businesses and the development of residential communities.
AVJennings fell into the red in fiscal 09 reporting a loss after profits the two years before.