Stobart Group sells loss-making rails & civils division for £1k
Stobart Group has sold its loss-making rail and civils division for £1,000 to Bavaria Industries Group.
However, the Carlisle-based group, which is focusing on the aviration and energy infrastructure sectors, could receive a further £2.9m, depending on the outcome of a single legacy contract.
The divestment follows the commitment made alongside Stobart Group’s 2020 results to exit the rail and civils business by the end of fiscal year 2021, following the continued losses within that business.
The agreement is on a debt-free basis, including the waiver of intercompany balances involving Stobart Rail and also includes the transfer of specialist plant and equipment in addition to a three-month Transitional Service Agreement for certain back office services to support Stobart Rail & Civils in the immediate term.
Stobart Group chief executive, Warwick Brady, said: “In June we set out our strategy which will see the group focus its investment on our aviation assets, particularly London Southend Airport.
“The sale of the Rail & Civils business removes the obligation for the group to fund the expected ongoing losses of the rail business and is a first step in achieving our goal of focusing our investment on aviation.”
As at February 29, 2020, Stobart Rail Limited has gross assets of £32.8m and net liabilities of £11.8m.
The loss before tax for the year ended February 29, 2020 was £10.1m.
The transaction will result in an estimated loss on disposal of £9m after costs, before any additional consideration which may be received.
A total of 188 staff will transfer as part of the transaction.
Bavaria Industries Group is an industrial holdings company which was founded in Germany in 2002.
It specialises in the takeover and re-organisation of earnings-poor and/or unprofitable enterprises.
In the process, it says it pursues three key objectives: Cutting costs, developing new sources of turnover revenue, and preserving as many jobs as possible.