Plastics Capital (AIM: PLA), the niche plastics products group, is pleased to announce that, following the acquisition of Flexipol Packaging Limited ("Flexipol") which completed on 21 November 2014, the Company has entered into a sale and leaseback agreement with Hornbuckle Mitchell Trustees Limited (“Hornbuckle Mitchell”) in respect of Flexipol's wholly owned property in Haslingden, Lancashire (the “Property”), for £1.4 million in cash. The net proceeds of the disposal will be applied towards the reduction of bank debt. The lease is for a 10 year term at an initial rent of £130,000 per annum.
Hornbuckle Mitchell is part owned by Ian Smith and Dermot Griffiths, the vendors of Flexipol. The sale and leaseback agreement was entered into following a comprehensive marketing exercise using an independent agent.
The current net book value of the Property is approximately £1.3 million resulting in a profit on sale (after associated costs) of approximately £0.1 million.
Commenting, Faisal Rahmatallah, Executive Chairman, said: "Following a comprehensive marketing process, we received an excellent offer for the Flexipol Property. We accepted the offer as we are able to deploy this capital more effectively in the long run to support growth. This transaction immediately reduces our net debt, thereby strengthening our balance sheet."