6th Mar 2014 10:02
LONDON (Alliance News) - Stobart Group Ltd Thursday said it will sell the majority of its iconic trucks business to an investment fund, using the proceeds to pay off debt, return some cash to shareholders and fund an expansion of the remaining air, rail and green energy infrastructure and support services businesses.
In a statement, the company said it will sell 51% of its transport and distribution business to investment firm DBAY in a cash and shares deal that values the operations being sold at about GBP280.8 million. DBAY is paying GBP195.6 million in cash and GBP44.2 million in shares, meaning Sobart Group will have a 49% stake in the purchasing company, with funds managed by DBAY holding the remaining 51%. DBAY will assume about GBP41.1 million in debt.
Stobart will retain the Eddie Stobart brand through a licensing deal, the biomass transport operations which make up about 8% of the vehicle fleet, and the majority of the freehold properties used by the transport and distribution division. The biomass transport operations will be combined with the Stobart biomass fuel supply business.
William Stobart, the grandson of Eddie Stobart, will leave the listed company's board and lead the new Eddie Stobart Logistics private company. The logistics business generated earnings before interest and tax of GBP25.6 million in the financial year to February 28, 2013, on revenue of GBP475.7 million.
"This is a further stage in delivering our strategy of creating and realising value for our shareholders. Moving forward, we are focussed on capitalising on the opportunities in our infrastructure and support services divisions, enhanced by investment in Stobart Green Energy," Stobart Group Chief executive Andrew Tinkler said in a statement.
The proceeds of the sale will be used to provide up to GBP55 million of investment in the green energy unit, and repay a GBP100 million loan from M&G, leaving it with minimal debt. It will return up to GBP35 million to shareholders through a share buyback over the next 12 months.
In particular, Stobart Group now wants to grow the energy business by investing in existing and new biomass-fueled plants. It will also focus on driving passenger growth at its Southend and Carlisle airports, while its rail business will focus on third-party contracts and supporting the green energy business.
Stobart Group shares were down 0.5% at 148.75 pence Thursday morning.
By Steve McGrath; [email protected]; @stevemcgrath1
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