Marubeni Sells Unit to Element Financial for $300 Million

Marubeni Corp., Japan’s biggest trader of agricultural commodities, sold its U.S.-based CoActiv Capital Partners Inc. unit to leasing company Element Financial Corp. as it seeks to lower debt levels.

Element, based in Toronto, Canada, agreed to pay $300 million for all of Horsham, Pennsylvania-based CoActive Capital and assume the equipment leasing unit’s debt, Marubeni said today in a statement on its website.

Marubeni is selling some assets and may cut capital expenses to lower the Tokyo-based company’s debt to equity ratio to 1.8 points, Chief Financial Officer Yukihiko Matsumura said on Nov. 1. Marubeni’s debt to equity ratio increased by 0.09 points to 2.01 as of Sept. 30, compared with six months earlier. Marubeni has agreed to buy U.S. grain trader Gavilon Group LLC for $5.6 billion including debt, a deal which has yet to close.

The Japanese company’s credit-default swaps, used by investors as insurance against default on bonds, rose to 295 points in May, the most in six months, after the Gavilon purchase was announced. The swaps have declined to 189 points as of yesterday, the latest data available to Bloomberg.

Marubeni was the only one of six major Japanese trading houses to post a profit increase in the six months ending Sept. 30. Chief Executive Officer Teruo Asada said Nov. 6 that he was confident the company will meet its 200 billion yen annual profit goal and also lower debt.

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