GE Money buys BSL finance business for $8.5 million

By James Wells

BRISBANE: Betta Stores Limited (BSL) announced today it has signed an agreement to sell the Retail Mortgage Services (RMS) interest free debtor book to consumer finance specialist, GE Money, for $8.5 million.

RMS was acquired by BSL in the purchase of South Australian retailer, AK Truscotts Investments, for $22.676 million on 1 December, 2004. RMS will continue to manage the debtors book on GE Money’s behalf, guaranteeing repayment as received.

At the time, BSL claimed the interest-free debtors book was worth over $10 million. Trustcotts was the first retailer to introduce interest-free finance to Australia

BSL has had a preferred supplier agreement with GE Money for several years that provides the retail group with the opportunity to offer products such as interest bearing and interest free consumer finance. The deal with GE Money was negotiated when BSL recently renewed its preferred supplier agreement.

According to BSL CEO Guy Houghton, the sale of the business is expected to be completed on 20 April and is in line with the company’s strategy to focus on core franchising and retail services.

“The BSL board wants to focus on our core business and that is franchising. That’s what we do best. Do we need a consumer finance business located in South Australia? The answer is no. Providing consumer finance products is not a core service we need to supply when you have a business like GE Money who specialise in the field.

“Over the last few years, we have acquired a few businesses including a retail and finance business and the market was very different to what it is today. The board has decided that we do not need to be in that space by offering finance. By offering finance, we are in effect going head to head with GE."

According to a statement issued today to the Newcastle Stock Exchange, the funds received from the sale will be utilised to retire bill facilities currently held by the BSL Group.

The deal includes GE Money’s provision of interest free and interest bearing products to all BSL members, supported by tactical marketing programs targeted at both retailers and consumers. The transaction will also allow the BSL Group to access GE Money’s professional training and professional development programs as well as the finance specialist’s quality methodology.

Houghton commented on the recent trading halt of the company’s shares on the Newcastle Stock Exchange, which was caused by a change in auditor to KPMG. BSL has since appointed IBM to undertake a systems integrity check of the business.

“We have been through such massive growth over the last few years. It’s time to take a breath and realign the business for the future,” Houghton said.

BSL is expected to report a loss of between $1.8 million and $2.3 million for the half year to 31 December, 2005.

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