Ted Baker has agreed terms for the sale of its London headquarters, the Ugly Brown Building, with a British Airways Pension Trustees unit.
Following the announcement of a strategic asset review in December, Ted Baker has today exchanged contracts with British Airways’ pension fund and the deal, worth £78.8m, is expected to be completed in June 2020.
The net proceeds of the sale of at least £72m will be applied to repay existing debts. The group announced last month it was selling its London headquarters to bolster its balance sheet amid an accounting crisis.
Ted Baker founder Ray Kelvin, who holds voting rights in respect of 15.5m shares, voted in favour of the sale.
Acting chief executive, Rachel Osborne, said: “This transaction and the agreed additional financing provides further headroom and flexibility, which will support the delivery of our transformation strategy.”
Meanwhile, the retailer has closed the vast majority of its stores and concessions, which account for 68 per cent of its global sales, due to the coronavirus outbreak. Ted Baker has closed 384 locations out of its total 416 locations globally.
However, the retailer said it had seen “minimal disruption” to its supply chain as the majority of its factories in China are now operational. It “does not currently envisage supply disruptions and inventory levels are sufficient”, but is suspending all non-essential capital expenditure and restricting travel to reduce costs.
Shares are down 10.84 per cent.
Sophie Lund-Yates, equity analyst at Hargreaves Lansdown said:
“The problem for Ted Baker is trading has been rocky for a while, meaning it’s more vulnerable than most. It’s doing the right thing by taking steps to cut costs and preserve cash, but we don’t yet know what the fall out of these closures is going to be and it could make for ugly reading when we do find out.”
“The other thing to keep in mind is Ted Baker’s higher prices. If the current pandemic results in a long-term economic slump once shops start to reopen, we worry people will be less inclined to part with the sums its price tags demand. The group is already struggling with increased discounting in the retail sector, and a spooked consumer base has the potential to make that problem even worse.”