Metalrax agrees deal on another subsidiary

BIRMINGHAM based engineering group Metalrax has completed a further sale and leaseback agreement on one of its subsidiaries.

The company, which supplies specialist engineering and consumer durable products, has agreed a £880,000 deal with Audax Properties, which will allow the engineering company to repay some of its debt.

The transaction relates to the group’s property on Sedgwick Road, Luton, where Toolspec, a group subsidiary which manufactures sub assemblies for the off-highway and automotive sectors, is based.  

The deal follows the sale and leaseback of two further Metalrax properties in December 2010.
 
The group has entered into a 15-year lease agreement for the site, with yearly rent reviews.  The commencing rent will be £100,000 per annum.
 
The proceeds from the sale and leaseback will be used to reduce the group’s bank borrowings.

The reduction in interest costs associated with this debt repayment will be around £65,000, meaning the net cash impact to the group will initially be in the region of £35,000 per annum.  

Andrew Richardson, chief executive of Metalrax, said: “We remain focused on reducing our gearing by cash generation from both operations and asset sales.  The sale and leaseback of this property along with the additional sales, in January 2011, of two un-utilised sites has enabled further debt reduction since the beginning of this year in excess of £1.7m.”

Metalrax announces its preliminary results for the year ended December 31, 2010 on March 15.

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