Sale and Lease Back Contract (8443F)

TIDMMRX

RNS Number : 8443F

Metalrax Group PLC

03 May 2011

 
For Immediate Release  3 May 2011

Metalrax Group plc

("Metalrax" or the "Group")

Sale and Lease Back Contract

Metalrax Group plc (AIM: MRX), the niche supplier of specialist engineering and consumer durable products, is pleased to announce that it has today exchanged on a sale and leaseback agreement with Johnson & Starley Property Limited. Completion is anticipated to occur on 17 May 2011. This transaction relates to the Group's property at Progress Works, Elm Street, Burnley, Lancashire, BB10 1PB where George Wilkinson, a Group subsidiary which manufactures consumer bakeware and other household products, is based. This is anticipated to be the final sale and leaseback completed by the Group in the UK and follows the earlier sale and leaseback of three of its' properties in December 2010 and January 2011.

The cash consideration receivable by the Group is GBP1,600,000, payable on completion and the Group has entered into a 15 year lease, with annual rent reviews. The commencing rent will be GBP200,000 per annum.

The proceeds from this sale and leaseback transaction will be used to reduce the Group's bank borrowings. The reduction in interest costs associated with this debt repayment will be c.GBP100,000 meaning that the net cash impact to the Group of this transaction will initially be in the region of GBP100,000 per annum. The property being disposed of has a net book value of GBP1,775,000 and therefore a loss on disposal of GBP175,000 will arise on completion of this transaction.

Andrew Richardson, Chief Executive of Metalrax, commented:

"We remain focused on reducing our gearing by cash generation from both operations and asset sales. Lower bank borrowings gives the Group more freedom to pursue its goals of superior return on investment and sustainable growth. This transaction is an essential part of this de-gearing strategy. "

For further information, please contact:

 
 Metalrax Group PLC 
 Andrew Richardson, Chief Executive    0845 030 3300 
 
 Arden Partners 
 Steve Douglas                         0121 423 8900 
 Jamie Cameron                         0207 614 5925

This information is provided by RNS

The company news service from the London Stock Exchange

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