Tandem Group plc (AIM: TND), designers, developers, distributors and retailers of sports, leisure and mobility equipment, announces the acquisition ("Acquisition") of freehold land adjacent to its Birmingham headquarters.
The Company has exchanged contracts on the Acquisition of the freehold on approximately 3.23 acres of land adjacent to its existing site in Castle Bromwich, Birmingham for cash consideration (before expenses) of £2.85 million ("Consideration"). Completion is expected to take place by April 2021.
The Consideration is to be satisfied by means of a new term loan of £1.43 million provided by the Company's bankers with the intention of repaying over 10 years and the balance from existing cash resources. Interest on the term loan will be charged at a rate of 1.99 percent above base rate.
Following the Acquisition, the Company plans to construct a warehouse and distribution facility which will link to its existing premises. The construction is expected to cost approximately £3.50 million and will be financed by means of a new property term loan envisaged to be approximately £2.35 million, also with the intention of repaying over 10 years, and the balance funded from cash resources. Interest on the term loan will be charged at a rate of 1.99 percent above base rate.
Construction is projected to be completed by June 2022. The new building will more than double existing warehouse capacity in Birmingham to approximately 160,000 square feet. The project is also expected to deliver an immediate annual overhead saving of £0.2 million and therefore be earnings enhancing for the Group.
In addition, the Company is currently implementing a new ERP and finance system across the Group which is expected to significantly improve operational efficiency and distribution speed from order intake to despatch.
Commenting on the Acquisition, CEO Jim Shears stated "I'm delighted that we have exchanged contracts on the site. The new warehousing and distribution facility will expand our existing operation and, coupled with the implementation of the new ERP system, will help us to further grow domestic business and enhance warehousing and distribution efficiency."