LONDON (Alliance News) - Stobart Group Ltd on Thursday said it will save itself around GBP750,000 a year in rent after striking a deal to purchase a string of properties in the Speke area of Liverpool which the company is currently leasing, and it has conducted a share placing to fund the deal.
Stobart currently leases the properties from Towerbeg Ltd, which owns the freehold over the properties, and is purchasing them to save on rent costs and add value to the company.
The infrastructure and support services company will pay GBP14.5 million in cash for the main site, but has also exchanged contracts to acquire the adjoining site for another GBP2.3 million in cash. Both those sites are currently being used by tenants for storage purposes, and Stobart believes it can add value by striking new lease agreements with the existing tenants.
Stobart said talks to extend and improve the lease terms with the existing tenant are in the "advanced stage", but added six acres of the 53 acre site are not included in that lease agreement, meaning it can use it for other purposes to create additional value.
Purchasing the site also will save Stobart GBP750,000 per year in rent.
To fund the aggregate GBP16.8 million consideration, Stobart has issued shares to funds managed by Woodford Investment Management to raise around GBP18.0 million, with the extra funds to be used for capital expenditure and transaction costs.
Stobart issued 16.4 million shares from treasury at 110.0 pence per share, a 2% premium to its closing share price on Wednesday, to raise the GBP18.0 million. Those shares represent around 5% of Stobart's enlarged issued share capital following the transaction.
Stobart shares were trading up 1.3% to 109.37p on Thursday morning.
Stobart will now work on formally closing the acquisition, targeting to have it completed before Christmas.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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