Hungerford kitchen designer John Lewis proposes delisting and agrees sale-and-leaseback deal for HQ
- John Lewis from Hungerford is a kitchen designer headquartered in Oxfordshire
- The company said the cost of having its shares on AIM was “disproportionately high.”
- In its recent half-year results, the company more than doubled its losses
Transaction: John Lewis of Hungerford has agreed a sale and leaseback deal of his Oxfordshire factory
Hungerford-based John Lewis has agreed a sale-and-leaseback agreement for its factory and head office in Oxfordshire, alongside plans to delist.
The bespoke kitchen and furniture designer said he had exchanged contracts with TOF Corporate Trustees, Oxford University’s £6bn endowment fund, at Wantage’s headquarters and manufacturing site.
Under the agreement, the fund will pay £3 million for the property and lease it back to John Lewis for the first 15 years in exchange for an annual rent payment of £192,000.
Closing of the transaction is expected sometime in the next two weeks, after which the company will use part of the proceeds to pay off a loan taken out from the Devon & Cornwall Securities loan bureau.
John Lewis said the interest payments saved from selling and renting back the property would largely offset the rent it plans to pay on the new leaseback agreement.
It also plans to use some money from the deal for its strategic development plan, including capital equipment upgrades and an overhaul of its showrooms.
Kiran Noonan, chief executive and acting chairman of the company, said: ‘The sale and leaseback transaction with TOF Corporate Trustees secures a strong strategic partnership with a fund committed to the development of the Grove Business Park.
“As the business continues to grow, we look forward to working closely with TOF Corporate Trustees to develop our real estate requirements in the years to come.
The company further announced its intention to delist its shares due to the “disproportionate” cost of having them in the junior AIM market.
It said around £250,000 in direct costs have been incurred in connection with the group’s listing, including through adviser and brokerage fees, corporate governance and auditing.
Noonan claimed that John Lewis’ departure from AIM would “ensure that management time is focused solely on moving the business forward.”
In his most recent half-year results, John Lewis reported losses that more than doubled to £174,000, even though revenues were up 18 per cent on the previous year.
The losses were due in part to “substantial and sudden” increases in the cost of certain critical raw materials and the recognition of sales at the company’s former retail price levels.
However, the group said margins should improve in the second half of the fiscal year due to price increases and easing cost pressures.
John Lewis of Hungerford Stocks was down 8.5 percent, or 0.13 pence, to 1.35 pence late Thursday afternoon.