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(Sharecast News) - Sports, leisure and mobility equipment distributor and retailer Tandem Group announced the acquisition of freehold land next to its Birmingham headquarters.
The AIM-traded firm said it had exchanged contracts on the acquisition on about 3.23 acres of land adjacent to its existing site in Castle Bromwich for £2.85m cash, before expenses/
It said completion was expected to take place by April.
The board said the consideration would be satisfied through a new term loan of £1.43m provided by its bankers, with the intention of repaying over 10 years, and the balance from existing cash resources.
Interest on the term loan would be charged at a rate of 1.99% above base rate.
Following the acquisition, Tandem said it planned to construct a warehouse and distribution facility which would link to its existing premises.
The construction was expected to cost about £3.5m, and would be financed through a new property term loan envisaged to be around £2.35m, also with the intention of repaying over 10 years, and the balance from cash resources.
Interest on that term loan would also be charged at a rate of 1.99% above base rate.
Construction was projected to be completed by June 2022.
The company said the new building would more than double its existing warehouse capacity in Birmingham to approximately 160,000 square feet.
It said the project was also expected to deliver an immediate annual overhead saving of £0.2m, and thus be earnings enhancing for the group.
In addition, Tandem said it was currently implementing a new enterprise resource planning and finance system across the group, which was expected to "significantly improve" operational efficiency and distribution speed from order intake to dispatch.
"I'm delighted that we have exchanged contracts on the site. The new warehousing and distribution facility will expand our existing operation and, coupled with the implementation of the new ERP system, will help us to further grow domestic business and enhance warehousing and distribution efficiency."
At 1532 GMT, shares in Tandem Group were up 1.1% at 530.8p.
9 Mar 2016 09:03