PE Tech Report

NEWSLETTER

Like this article?

Sign up to our free newsletter

Stobart realises GBP61m from two asset disposals

Stobart Group, a UK provider of transport and logistics solutions, has agreed to dispose part of its Inland Ports asset to Legal & General Assurance Pensions Management for GBP61m rising to GBP62.5m on the satisfaction of further conditions. 

A key element of the sale is a new 528,000 square feet sustainable distribution centre developed by Stobart Group. 

This was recently announced as the new northern distribution centre for Tesco’s fresh operations. In addition, Stobart was confirmed as the transport contractor for Tesco from this distribution centre.

The disposal value will generate an initial return on investment in the region of 20 per cent with the potential for further returns. The ongoing pre-tax profit impact of the asset disposals is neutral.

The GBP61m is satisfied by a cash payment of which the majority will be used to repay existing borrowings with RBS and Barclays, significantly reducing the core debt in the balance sheet of the company at 28 February 2010 to around GBP45m.  This will allow the group flexibility in securing the optimum debt structure for future asset developments, including the commenced capital expenditure programme at London Southend Airport.

Stobart also expects to increase the throughput of the Inland Port terminal, which is currently only 50 per cent used, when the site is fully operational and when the existing Valencia fresh produce rail service is extended to Widnes. The next phase of the Stobart Rail service will allow Tesco to transport its fresh produce from Southern Spain to Northern England by rail.

In addition to the disposal of the fresh produce distribution centre, the Stobart Ports division has entered into a 25 year sale and leaseback arrangement on the Inland Port terminal. Following this, the group expects to develop further phases on the remaining 95 acres of the Inland Port in response to customer demand.

Andrew Tinkler (pictured), chief executive of Stobart Group, says: “This asset disposal illustrates a fundamental strategy of our group which is to invest in assets in order to develop existing and new customer relationships and then realise the value of the asset, at a profit, to reinvest elsewhere in the business. At Widnes this has enabled us to gain a long-term distribution contract for Tesco and to increase the utilisation and support development of the next phases of the inland port facility. The proceeds from this asset sale, will allow the group flexibility in securing the optimum debt structure for future asset developments, including the expansion programme at London Southend Airport."

Like this article? Sign up to our free newsletter

MOST POPULAR

FURTHER READING

Featured