AusGroup to sell and leaseback Australian property

INTEGRATED services provider AusGroup is proposing a sale and leaseback of its property at 15 Beach Street, Kwinana Beach, Western Australia for A$16.2 million (S$15.7 million).

The proposed sale has a lease agreement tied to the completion, where the company will have a 10-year lease on the property commencing from the completion date. The property will have an annual commencing rent of A$1 million, and is subject to increases on each anniversary of the commencement date.

In a bourse filing after markets closed on Friday (Jun 17), AusGroup said that the property has been solely used as a fabrication and assembly facility by other group subsidiaries.

The board of directors believe that the sale will allow the company to realise the value of the property, giving AusGroup A$13.4 million in available cash for working capital and assist with debt management. After deducting about A$200,000 in transaction-related expenses, the remaining A$2.6 million will be utilised for bank guarantees relating to the lease.

The sale will aid in the obligation of the multi-currency notes due on De 3, 2022, and aid in reduction in interest obligations of AusGroup.

Independent property valuer CBRE Valuations had valued the property on a vacant possession basis of A$13.9 million as at Jun 10, 2022, based on a capitalisation and direct comparison method.

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The pro forma financial effects of the proposed sale will raise the AusGroup’s net tangible assets from A$15.5 million to A$25.1 million if the sale was completed on Jun 30, 2021. The company expects to recognise a net gain of about A$5 million from the proposed sale.

An extraordinary general meeting will be convened to seek approval for the proposed sale.

Shares of AusGroup closed down 5 per cent or S$0.001 to S$0.019 on Friday.