Metalrax signs sale and leaseback deals on two subsidiaries
BIRMINGHAM based engineering group Metalrax has completed on a sale and leaseback agreement with The Scottish American Investment Company relating to two of the group’s properties.
The move is part of the company’s long standing strategy to remove itself from the high volume, low margin engineering sector to concentrate on new high growth markets.
The properties being disposed of have a net book value of £1.97m and the disposal is expected to result in an asset impairment of £0.15m.
The two sites are: Park Farm Industrial Area, Redditch, which houses group subsidiary Weston Body Hardware, a sub-assembly manufacturer for the power generation, off-highway and green energy sectors, and Northfields Industrial Estate, Market Deeping, Peterborough, home to Advanced Handling, a group subsidiary which manufactures handling solutions.
The group, which will receive £1.82m on completion of the deal, has entered into 15 year leases, with yearly rent reviews. The combined commencing rent will be £207,000 per annum. The reduction in interest costs associated with the debt repayment will be around £108,000, meaning the net cash impact to the group of this transaction will be in the region of £100,000.
The firm said the proceeds from the sale and leaseback transaction would be used to reduce the group’s borrowings.
Andrew Richardson, Chief Executive of Metalrax, commented: “Reducing debt has been a key focus for the management team throughout this year. The disposal of these properties enables significant debt reduction.
“This transaction, along with several recent non-core property sales, will result in debt repayments of over £2.9m. Coupled with growth in profits announced in our interim results, these debt repayments demonstrate a continuing strengthening of the group.”
