Höganäs Bjuf Fastighets AB (“HBF”), an indirect subsidiary of Borgestad ASA (the “Company” and, together with its consolidated subsidiaries, the “Group”) has today entered into a conditional agreement with Bjuv municipality in Sweden for a sale and leaseback transaction for two properties in Sweden where the Group’s production plant and other production facilities for refractory products are located (the “Transaction”).
The Group will sell the two properties, including the production facilities, to Bjuv municipality and then lease the production facilities back to continue its production of refractory products in line with previous practice. Prior to completion of the Transaction, the two properties will be transferred to a new wholly owned subsidiary of HBF, and the Transaction will be structured as a sale by HBF of the shares in such subsidiary.
The two properties are in the Transaction valued at SEK 145 million, and the purchase price will be approximately SEK 132 million after adjustment for tax values. The purchase price shall be settled in cash in three installments; 60% will be payable upon completion of the Transaction, 20% will be payable 12 months after completion and the remaining 20% will be payable 24 months after completion.
The Transaction will trigger a stamp duty of approximately SEK 3.8 million payable by HBF, resulting in a net cash effect for the Group of approximately SEK 128.2 million. The accounting gain associated with the sale, which will be recorded upon completion of the Transaction, is estimated to be approximately SEK 122 million.
The net proceeds from the Transaction are expected to be used to reduce the Group’s outstanding interest-bearing debt.
The exact size of the production facilities to be leased back is yet to be determined, but the Company expects it to be between 22,500 and 30,000 square meters. No rent will be payable for the first 24 months after completion of the Transaction. Thereafter, an annual rent of SEK 200 per square meter will be payable. The rental period will be maximum five years, with a unilateral right for HBF to terminate the lease at any time with six months’ notice.
The Group will also be granted an option from Bjuv municipality to purchase another property of 30,000 square meters located in the municipality for a price of SEK 150 per square meter.
Completion of the Transaction is subject to approval from the Municipal Council of Bjuv and certain other customary closing conditions, and is expected to take place in the first quarter of 2024.
“We are pleased to announce this value creating agreement with the municipality of Bjuv, which will enable us to realize the value of our properties, while right-sizing and optimizing the production facilities. After closing of the Transaction the group will start planning the future production for Höganäs Borgestad. We will seek to future-proof Höganäs Borgestad as a leading provider of high-value refractory solutions, and make sure to enable the most sustainable production, and allow for product development of future-oriented solutions,” says Pål Feen Larsen, Chief Executive Officer of Borgestad.
This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements pursuant to Section 5-12 the Norwegian Securities Trading Act.