Birmingham-based materials specialist Apollo Metals last week agreed a £6.28m sale and leaseback on its newly-acquired Preston warehouse – a move that will eliminate the debt incurred in tooling up for a 10-year British Aerospace supply contract.
Earlier this year Apollo signed the deal with BAe, worth £50m a year, to supply all the metals needed for BAe’s Military Aircraft and Aerostructures division.
Apollo will use part of the Preston warehouse and sublet the rest to third parties directly involved in BAe’s supply chain.
The sale and leaseback allows Apollo to pay off a £4.95m loan it took out to buy the premises.
After deducting the original purchase cost and other fees, Apollo will be able to credit a £500,000 exceptional item to its profits this year.
The company will pay £535,637 a year for a 20-year lease on the property, with rent reviews every five years.