February 23, 2021
HKScan sells land, buildings of Vantaa, Finland property
HKScan has recently sold the land and buildings of its Vantaa, Finland property to real estate investor Sagax Finland Asset Management, the company announced this month.
The transaction comes close to €77 million (US$93.7 million) and will have no significant impact on HKScan's result for the current year.
The lease agreed in connection of the transaction allows HKScan to continue and develop its business in Vantaa for the next 20 years. The agreement also includes an option for additional years.
"We purchased the Vantaa plot of land in the spring 2020 to secure the continuity of our operations since the unit's techno-economic life will continue well into the 2030s," said HKScan's CEO Tero Hemmilä. "We have been looking for expansion to the ownership base of the property and have reached the solution now announced, as it enables us long-term business development in Vantaa.
"The property sale also enables a significant reduction in the amount of HKScan's interest-bearing loans, which expands the financing base for the company's strategy implementation."
With the transaction, the structure of HKScan's financing will diversify.
However, lease liabilities of the long-term lease now agreed are recognised in the company's balance sheet as a lease liability debt in accordance with IFRS. As a result, the agreement will reduce the company's net debt by some €10 million (US$12.2 million) and net debt per share by 10 eurocents. The lease HKScan will pay for Vantaa will be some €5 million (US$6.1 million) a year.
Correspondingly, the company will not be subject to depreciations related to the Vantaa property and financial expenses will decline.
Hemmilä added: "The long-term lease allows long-term business development in terms of both new forms of food production and customer deliveries close to the growing consumer concentration in Finland's capital region. Shorter delivery distances will be increasingly important, considering environmental aspects. In addition, Vantaa's location and logistic ability provide an interesting platform for partnerships with other food companies."
HKScan's Vantaa unit makes some 50 million kilos of meals and processed meat products annually. Nearly 120 million kilos of products are delivered annually to customers through the logistics centre located in the area. Nearly 700 food industry professionals work in the Vantaa unit.
HKScan acquired the Vantaa plot of land in April 2020 from LSO Osuuskunta using the right of first refusal included in the land lease agreement.