Stobart releases £61 million in asset disposal
01 March 2010
Transport and logistics provider Stobart Group has agreed to dispose sell part of its inland ports assets in Widnes, Cheshire to Legal & General Assurance Limited for a possible £62.5 million.
A key element of this sale is a new 528,000 square feet, state-of-the-art sustainable distribution centre developed by Stobart Group. This was recently announced as the new Northern distribution centre for Tesco’s fresh operations.
The disposal value will generate an initial return on investment in the region of 20% with the potential for further returns.
The £61m 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 £45m. 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.
In addition to the disposal of the fresh 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.
Stobart was confirmed as the transport contractor for Tesco from this distribution centre.
Andrew Tinkler, Chief Executive of Stobart Group, said: “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."