Stobart sells 3MG for 20% profit
The 528,000 sq ft chilled warehouse at Widnes run by Stobart for Tesco's fresh food arm has been sold for £61m cash, as part of a sale and leaseback of the inland port, to Legal & General Assurance.
The logistics giant said the funds raised would pay for future development at London Southend Airport and the next phases at Widnes.
Legal & General Assurance (Pensions Management) paid £61m rising to £62.5m on the satisfaction of further unidentified conditions. In a statement to the Stock Exchange Stobart said: "The asset disposal illustrates the fundamental strategy of the Stobart Group to invest in assets to develop existing and new customer relationships and then realise the value of the asset, at a profit, to reinvest elsewhere in the business.
"The disposal value will generate an initial return on investment in the region of 20% with the potential for further returns. This demonstrates the inherent value within the property assets held on the balance sheet of the group. The ongoing pre-tax profit impact of the asset disposals is neutral."
The bulk of the proceeds 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.
Widnes is currently only operating at 50% capacity and Stobart said it intends to increase trade at the Mersey port terminal when the site is fully operational and when the existing Valencia fresh produce rail service is extended to Widnes. Stobart Rail will transport fresh produce from Southern Spain to Northern England for Tesco by rail, delivering significant environmental benefits.
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.