Stobart Rail and Civils has been acquired by BAVARIA Industries Group.
The news comes a month after the Stobart Group announced it was withdrawing from the rail and civils business during the course of the next financial year.
That decision was made after the group said this side of the business was ‘impacted by continuing costs on a legacy contract and was unlikely to generate an appropriate return for shareholders given the risks associated to it’.
Shortly after that announcement @StobartRailLtd Tweeted: “It’s the start of an exciting chapter for us, we have a number of identified interested parties who are better placed to invest in our rail and civils division. It’s an evolving and exciting time and the potential investment will help stabilise and grow our business through these difficult times of COVID, lockdown and beyond. Exciting times ahead, watch out for further updates.”
Now it has been confirmed BAVARIA Industries Group, described as a family holding company that holds majority interests in companies showing clear potential for improvement or facing new challenges, has acquired the business.
A Tweet from @StobartRailLtd said: “We are delighted to announce that Stobart Rail & Civils has been acquired by BAVARIA Industries Group. Bavaria recognise we are an extremely innovative business with a great team of people and will continue to run Stobart Rail & Civils on a “business as usual” basis . #oneteam.”
In a statement the Stobart Group says the aviation and energy infrastructure group, announces that its wholly owned subsidiary Stobart Holdings Limited has divested of Stobart Rail Limited (which owns the Rail & Civils division) to Bavaria Industries Group AG (“Bavaria”) for an initial cash consideration of £1,000.
An additional cash consideration of up to £2.9 million may be received based on the outcome on conclusion of a single legacy contract. This follows the commitment made alongside the Group’s FY20 results to exit the Rail & Civils business by the end of FY21, following the continued losses within that business.
The agreement is on a debt free basis including the waiver of intercompany balances involving Stobart Rail and also includes the transfer of specialist plant and equipment in addition to a three-month Transitional Service Agreement for certain back office services to support Stobart Rail & Civils in the immediate term.
Warwick Brady, Chief Executive, Stobart Group, said: “In June we set out our strategy which will see the Group focus its investment on our aviation assets, particularly London Southend Airport. The sale of the Rail & Civils business removes the obligation for the Group to fund the expected ongoing losses of the Rail business and is a first step in achieving our goal of focusing our investment on aviation.”
The Transaction constitutes a Class 2 transaction for the purposes of the Financial Conduct Authority’s Listing Rules. As at 29 February 2020, Stobart Rail Limited has gross assets of £32.8million and net liabilities of £11.8million. The loss before tax for the year ended 29 February 2020 was £10.1million.
The transaction will result in an estimated loss on disposal of £9million after costs, before any additional consideration which may be received. The loss on disposal and the results of Stobart Rail & Civils up to the date of disposal, will be accounted for as discontinued operations and presented below profit after tax for the continuing Group. A total of 188 employees will transfer as part of the transaction.
Photo credit: Stobart Group
