STOBART GROUP plc is getting out of the rail infrastructure business, selling its loss-making Rail & Civils division to Bavaria Industries Group. The initial cash payment for the sale was £1,000, but Stobart may receive additional consideration of up to £2.9 million based on the outcome of a single legacy contract. The business has 188 employees.
The disposal agreement is on a debt-free basis including the waiver of intercompany balances involving Stobart Rail and includes the transfer of specialist plant and equipment in addition to a three-month Transitional Service Agreement for certain back-office services.
‘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,’ said Stobart Chief Executive Warwick Brady, adding that the company would be concentrating its attention on the development of London Southend Airport.
As of 29 February 2020, Stobart Rail had gross assets of £32.8 million, net liabilities of £11.8 million and posted a full-year loss before tax of £10.1 million. The firm said the transaction will result in an estimated loss on disposal of £9 million after costs.
To save confusion with the logistics company, the rump aviation and energy company will be changing its name. Eddie Stobart Logistics has acquired the ‘Eddie Stobart’ and ‘Stobart’ brands from the Stobart Group and as part of this agreement Stobart Group plc will change its name from March 2021.