Transaction: John Lewis of Hungerford has agreed a sale and leaseback deal of its Oxfordshire factory
John Lewis of Hungerford has agreed a sale and leaseback deal on its Oxfordshire factory and head office, alongside plans to delist from the stock market.
The bespoke kitchen and furniture designer said it had exchanged contracts with TOF Corporate Trustees, the £6billion endowment fund of Oxford University, on its Wantage headquarters and manufacturing site.
Under the arrangement, the fund will pay £3million for the property and let it back to John Lewis for an initial 15 years in return for an annual rent payment of £192,000.
Completion of the transaction is expected sometime in the next fortnight, upon which the company will use part of the proceeds to repay a loan taken out with the Devon & Cornwall Securities loan agency.
John Lewis said the interest payments saved from selling and leasing back the property would mostly offset the rent it intends to pay on the new leaseback arrangement.
It also plans to use some money from the deal towards its strategic development plan, including upgrades to capital assets and a review of its showrooms.
Kiran Noonan, the firm’s chief executive and acting chairman, said: ‘The sale and leaseback transaction with TOF Corporate Trustees secures a strong strategic partnership with a fund committed to developing the Grove Business Park.
‘As the company continues to grow, we look forward to working closely with TOF Corporate Trustees to develop our property requirements over the coming years.
The business further announced its intention to delist its shares because of the ‘disproportionately high’ costs of having them on the junior AIM market.
It said around £250,000 in direct costs have been incurred in relation to the group’s listing through, among other things, adviser and broker fees, corporate governance and auditing.
Noonan claimed John Lewis’s departure from AIM would ‘ensure management time is exclusively focused on the progress of the company.’
In its most recent half-year results, John Lewis reported losses more than doubling to £174,000 even though revenues rose by 18 per cent on the previous year.
The losses were partly blamed on ‘substantial and sudden’ increases in the costs of certain critical raw materials and the recognition of sales at the firm’s former retail price levels.
However, the group said margins should improve in the second half of the financial year because of price hikes and easing cost pressures.
John Lewis of Hungerford shares had slumped by 8.5 per cent, or 0.13p, to 1.35p on late Thursday afternoon.
