Steel & Tube agrees to $21.1M sale-and-leaseback on Christchurch's Blenheim Rd

Friday 22nd June 2018

Steel & Tube Holdings said it agreed to a $21.1 million sale-and-leaseback deal of its Blenheim Road property in Christchurch, a key distribution hub for the company, as part of its restructuring efforts to raise working capital and pay down debt.

The transaction, which is expected to be completed on June 29, will allow the Lower Hutt-based manufacturer and distributor of steel building supplies to recognise a gain on sale of about $1.3 million in the financial year ending June 30, the company said in a statement.

Its latest earnings guidance, provided on May 23, did not include any gain on sale, the company said, without offering further details. On May 23, the company warned it expects to post a 2018 loss before interest and tax of about $38 million and breach its banking covenants after a restructuring that will see it write down the value of its assets by $54 million.

“This arrangement allows us to retain our successful operations in the newly upgraded Blenheim Road distribution hub under favourable lease terms, while freeing up capital to pay down debt,” chief executive Mark Malpass said in the statement.

Steel & Tube’s established operations, long term plans and recent investment into the property made it an attractive acquisition with interest from multiple parties, the company said.

The stock, which has suffered a drop of more than 30 percent in the past year, was unchanged at $1.55 today.

(BusinessDesk)

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