Floorcoverings distributor Headlam has provided an update on its previously announced transformation plan, with the sale and leaseback of the Group’s Tamworth distribution centre.

The sale proceeds of £21.75 million represent a premium of 153% to the book value of £8.6 million and 43% to the last market valuation of £15.2 million. The profit generated from the sale of this property will be recognised as non-underlying income.

“The Tamworth distribution centre remains a core part of the Group’s distribution network and is integral to the Group’s growth plans over the coming years,” Headlam said. “Accordingly, the Group has entered into a 10-year leaseback, with the opportunity to extend further. This sale and leaseback transaction further optimises the Group’s mix of owned and leased distribution centres.

“The cost of the leaseback is equivalent to the Group’s cost of debt, meaning that this transaction is broadly neutral to the Group’s Underlying Profit Before Tax.

“£21.1 million of the sales proceeds have been received in cash following simultaneous exchange and completion, with the remaining £0.7 million retained by the buyer pending the Group’s completion of pre-agreed repairs and maintenance on the property.

“The sales proceeds will initially be used to reduce the Group’s drawdown on its revolving credit facility, providing further liquidity headroom whilst the Group implements its transformation plan.”