Hanson set to float majority stake in Ertl

THOMAS the Tank Engine is to be quoted on the New York Stock Exchange following a decision by Hanson, the industrial conglomerate, to float a majority stake in Ertl Company, which manufactures die-cast models of the train.

The offer for sale, expected to take place in the autumn, is part of Hanson's sale of peripheral businesses to cut its pounds 3bn debt. It is selling 8.5 million shares, 63 per cent of its holding, at dollars 16 each to raise dollars 136m. Ertl will also repay some Hanson loans to bring the total proceeds to about dollars 200m.

That will take the amount raised from disposals close to pounds 1bn. In the six months to March, it sold businesses and assets worth pounds 817m - among them the housebuilding business of Beazer in the UK and US - cutting its gearing from 86 per cent of net assets to 69 per cent.

The debt was largely a legacy of last year's acquisition of Quantum, the US chemical company, for pounds 2.2bn. The effects were exacerbated by the unwinding of interest rate fixes, which is likely to push borrowing costs up to pounds 250m in the year to September compared with pounds 14m last time.

As well as Thomas the Tank Engine, Ertl manufactures John Dean tractors, plastic model kits and the Bumble Ball. Sales in the year to September were dollars 186m and its post-tax profits dollars 9.6m, putting the flotation on a multiple of about 21 times earnings.

Shares in Hanson, due to announce third-quarter results today, fell 1p to 264.5p.