Australia“s Amcor Ltd. (A.AMC) said on 19 July that it plans to undertake a sale and lease back of some properties in its Australian portfolio, to raise about A$174.5 million.
The lease will be for …
Australia“s Amcor Ltd. (A.AMC) said on 19 July that it plans to undertake a sale and lease back of some properties in its Australian portfolio, to raise about A$174.5 million. The lease will be for a minimum of 10 years, Amcor said, noting that property rentals for the leased sites imply a rate of interest over the life of the agreement that“s competitive with other sources of 10-year debt. Amcor managing director Russell Jones said the money raised would eventually be used for acquisitions. “Amcor continues to look at opportunities to grow in its chosen market segments,” Jones said in a statement. “While the funds will initially be used to repay debt, ultimately they will be invested in new projects and acquisitions.” The sale and leaseback will allow Amcor to reduce its exposure to property assets, improving the return on capital employed and enabling the company to use the proceeds for higher-yielding investments, the company said. “This is another important step in optimizing returns for our shareholders,” said Jones. “One of the largest programmes undertaken in Australia for industrial properties, it demonstrates our determination to develop all opportunities to improve returns,” he said. He said the sale and lease book also has the benefit of lengthening Amcor“s loan book and diversifying its funding sources. The banks current funding is medium term debt sourced from a combination of banks and the capital market.