TIDMTED
RNS Number : 1207H
Ted Baker PLC
23 March 2020
23 March 2020
Ted Baker Plc
("Ted Baker" or the "Group")
Sale and Leaseback of Ted Baker's Headquarters, Additional Loan
Facility and COVID-19 Update - Amended for UK and E.U. Stores
Following the announcement in December 2019 that the Board of
Ted Baker was launching a strategic asset review, the Group is
pleased to announce that it has today exchanged contracts with a
wholly owned subsidiary of British Airways Pension Trustees Limited
(the "Purchaser" ) in respect of the sale (the "Sale" ) of the
entire issued share capital of Big Lobster Limited ("Big
Lobster").
Big Lobster is a wholly owned subsidiary of Ted Baker, which
owns, as its sole asset, the Group's registered and head office,
The Ugly Brown Building (6a St Pancras Way, London NW1 0TB - the
"Property"), which Big Lobster currently leases to the rest of the
Group.
The consideration for the Sale is GBP78.75 million (subject to
completion of a customary completion accounts adjustment mechanism)
and will be paid in cash on completion, which is expected to take
place in June 2020. The net proceeds of the Sale of at least GBP72
million will be applied to repay existing indebtedness to
significantly de-lever the Group.
In connection with the Sale, Ted Baker has entered into a
short-term lease of the Property for a period following completion,
and at completion will enter into an option with the Purchaser to
take a long-term lease of part of the adjacent newly developed
property, to be known as Bowline, Tribeca, St Pancras Way
("Bowline") (the "Leaseback" and together with the Sale, the "Sale
and Leaseback"). Further details on these arrangements are set out
below.
The Sale and Leaseback is the last step of the Group's strategic
asset review.
The Sale constitutes a Class 1 transaction for Ted Baker under
the Financial Conduct Authority's Listing Rules. Completion of the
Sale is therefore conditional on approval by a simple majority of
shareholders of Ted Baker.
The Group has received an irrevocable undertaking from Ray
Kelvin, who holds voting rights in respect of 15.5 million shares
(representing 34.87% of the issued share capital of Ted Baker), to
vote all the shares he is able to vote at the time of the relevant
general meeting in favour of the Sale.
The Group will send a circular to shareholders in due course,
setting out further details of the Sale along with notice of a
general meeting of Ted Baker shareholders.
The consideration of GBP78.75 million represents a premium of
approximately 39.1% to the last published book value of the
Property as at 26 January 2019 of GBP56.6 million. An updated
valuation of the Property will be included in the circular to be
sent to shareholders.
Other transaction details and timing to completion
- Under the terms of the Sale and Leaseback, Ted Baker will
continue to occupy the Property for an annual rent of GBP3.25
million (the "Short-Term Lease") until Bowline is fully fit for
purpose as the Group's headquarters. Accounting for the Short-Term
Lease under IFRS 16, a right of use asset worth GBP9.2 million will
be reflected on Ted Baker's balance sheet, along with an associated
lease liability of GBP9.2 million.
- Ted Baker has the option to sign an agreement for a lease of
part of Bowline until 1 June 2021.
- If the option is exercised, the lease of Bowline would last
for 10 years from the commencement of Ted Baker's occupation.
Following an initial 21-month rent-free period, an annual rent of
up to GBP4.2 million (based on likely square footage required)
would apply and be reviewed at the end of the fifth year (the
"Long-Term Lease").
- If Ted Baker does not exercise its option over the Long-Term
Lease, the Short-Term Lease will expire on 31 March 2023, or on 3
months' notice after 1 June 2022.
- Ted Baker is also entitled to a rent-free period on Bowline
equating to a capital sum of GBP8.0 million. If the Group exercises
its option on the Long-Term Lease, it will benefit from this sum of
GBP8.0 million which will be catered for, following expiry of the
21 month rent-free period under the Long-Term Lease, by way of a
discounted rent over the remaining period of the first five years
of the 10-year term. If the Group does not exercise its option over
the Long-Term Lease, this will be paid as a cash sum on the expiry
of the Short-Term Lease and vacant possession of the Property being
granted to the Landlord.
Additional Loan Facility
Ted Baker also announces that its lending bank syndicate
continues to be supportive and has agreed to increase the headroom
under the Group's facilities by GBP13.5 million until 18 December
2020. The availability of this additional funding provides further
financial flexibility while the Group implements its transformation
programme, more details of which will be given at Ted Baker's full
year results which are expected to be announced in May 2020 .
COVID-19 Update
The situation in regard to COVID-19 is rapidly evolving which
creates uncertainty across many of the Group's markets. Visibility
around how international public policy will develop is low but Ted
Baker continues to monitor and respond to Government advice to best
serve employees, customers and wider stakeholders, across its
trading markets.
The Group is in ongoing dialogue with Government, both directly
and through relevant trade associations, about the further support
required for workers and businesses in the retail industry during
these difficult and uncertain times.
The Group is also not hesitating and is acting now to take a
series of steps to reduce costs and protect cashflow, including
suspending all non-essential capital expenditure, stopping
discretionary operating expenses, and severely restricting travel.
All available opportunities to agree rescheduling or reduction of
payments are being explored with parties such as HMRC, where the
Government has already signalled flexibility, landlords, and
suppliers. This is in addition to the actions on cost and people
reductions that the Group announced on 26 February 2020.
The 100% business rates holiday for the next 12 months, which
was announced by the UK Government to support retail businesses, is
welcomed and the Group awaits further clarification of the details
of this policy. Ted Baker paid UK business rates of GBP6.2m in FY
2020.
To date, there has been minimal disruption to the Group's supply
chain, with the significant majority of its factories in China now
operational. The Group does not currently envisage supply
disruptions and inventory levels are sufficient.
The vast majority of the Group's retail stores and concessions
are now closed (384 locations closed out of a total 416 locations
globally). These represented approximately 68% of Ted Baker's
Global Retail sales in FY2020.
Ted Baker's eCommerce channel has proved much more resilient and
the performance in the financial year to date (last 8 weeks) has
been up 16% on last year, albeit with some variability across
recent weeks. The eCommerce service continues to operate for
customers as normal, and is a channel the Group will be intensively
managing during this period of store closures.
At this stage, it is too early to provide meaningful guidance
for FY 2021 and the Group will update investors with the FY 2020
results in May. In line with prior guidance, the Group anticipates
underlying pre-tax profit to be within the GBP5-10m range for the
year ended 26 January 2020.
Rachel Osborne, Acting CEO, said:
"The sale and leaseback of the Ugly Brown Building and future
relocation of our head office are significant developments
resulting from the broad asset review we have undertaken in recent
months.
This transaction and the agreed additional financing provides
further headroom and flexibility, which will support the delivery
of our transformation strategy.
The spread of COVID-19 has led to some unprecedented events
around the world and uncertainty for our business and our people.
We welcome the support packages so far announced by Governments and
continue to focus on keeping our customers and employees safe and
all of our stakeholders informed. By doing this, and by continuing
to transform the way the business operates guided by our strategic
priorities, we remain confident we can realise Ted's exciting,
long-term potential."
This announcement contains inside information. The person
responsible for arranging the release of this announcement on
behalf of the Group is Peter Hearsey-Zoubie, Company Secretary.
Ted Baker Tel: +44 (0) 20
7255 4800
Rachel Osborne, Acting Chief Executive
Officer
David Wolffe, Acting Chief Financial Officer
Tulchan Communications Tel: +44 (0) 20
7353 4200
Jonathan Sibun/Michelle Clarke
Enquiries and further information:
www.tedbaker.com
www.tedbakerplc.com
Media images available for download at:
www.tedbakerplc.com/ted/en/mediacentre/imagelibrary
Cautionary statement regarding forward-looking statements
This announcement contains certain forward-looking statements.
These forward-looking statements include matters that are not
historical facts or are statements regarding the Group's
intentions, beliefs or current expectations concerning, among other
things, the Group's results of operations, financial condition,
liquidity, prospects, growth, strategies, and the industries in
which the Group operates.
Forward-looking statements are based on the information
available to the Directors at the time of preparation of this
announcement, and will not be updated. The Directors can give no
assurance that these expectations will prove to have been correct.
Due to inherent uncertainties, including both economic and business
risk factors underlying such forward looking information, actual
results may differ materially from those expressed or implied by
these forward-looking statements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDSEDESEESSEID
(END) Dow Jones Newswires
March 23, 2020 03:00 ET (07:00 GMT)
Ted Baker (LSE:TED)
Historical Stock Chart
From Jun 2024 to Jul 2024
Ted Baker (LSE:TED)
Historical Stock Chart
From Jul 2023 to Jul 2024