Stobart Group is selling part of its Inland Ports asset to Legal & General Assurance (Pensions Management), for £61 million, rising to £62.5m on the satisfaction of further conditions.
A key part of the sale is a 528,000 sq ft, sustainable distribution centre, developed by Stobart, which was recently introduced as the new northern hub for Tesco’s fresh operations.
The deal goes hand-in-hand with the news that Stobart has been confirmed as Tesco’s transport provider for the North, and will operate from the same hub.
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.”
The disposal value will generate an initial return on investment of some 20 per cent, with the potential for further returns.
The £61m will be paid in cash; of which the majority will be used to repay existing borrowings with RBS and Barclays, and will reduce the core debt in the company balance sheet to some £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.
Stobart also expects to increase the throughput of the Inland Port terminal (currently only 50 per cent utilised) when the site is fully operational and when the existing Valencia fresh produce rail service is extended to Widnes. This next phase of the Stobart Rail service will enable 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.