Chandaria brothers sell Orbit assets then lease them back

Chandaria brothers sell Orbit assets then lease them back

  • Sachen and Dirchen Chandaria have sold the assets of Orbit Products Africa Limited (formely Orbit Chemicals).
  • The assets were sold for a cash offer of Ksh.5.9 billion.

Sachen and Dirchen Chandaria have sold the assets of Orbit Products Africa Limited (formely Orbit Chemicals) for a cash offer of Ksh.5.9 billion ($53.6 million) to the Grit Real Estate Income Group.

The brothers have however leased back the assets which include a manufacturing plant and warehousing facilities from the buyer as they view the ‘sale and lease back’ option as a way of unlocking funding to expand their manufacturing business.

As such Orbit Products Africa will remain of the same premises on a 25 year lease which has an extension option of up to 10 years.

“At a time when finance is a strained issue everywhere in the world after the unprecedented economic shock delivered by the Covid-19 pandemic, and with our own East African banking system working hard to contain its risk through restructuring existing lending, ‘sale and lease back’ opens a new path to cash injections and finance for manufacturing expansion,” said Orbit Products Africa Limited (OPAL) CEO Sachen Chandaria.

OPAL has however not disclosed the lease terms including the price it will pay for the quarter century lease.

Even so, the ‘sale and lease’ back option has been taken as a subsititute for a bank facility which the company views as expensive by global standards.

The buyer- Grit Real Estate Income Group is a Pan-African real estate company with assets un select African countries.

The Group’s portfolio features high-quality assets underpineed predominantly in dollar and euro denominated leases.

Further, the Group is listed on the London Stock Exchange (LSE) primary bourse and has a secondary listing in Mauritius.

The company’s Kenyan portfolio includes the Ksh.2.8 billion valued Imperial Warehouse which is occupied by Imperial Heal Sciences.

Additionally. Grit holds a 50 per cent take in Naivasha’s Buffalo Mall.

Over half of its latest purchase or Ksh.3.2 billion has been financed by the World Bank private financing arm-the International Finance Corporation (IFC) with the balance arising from a corporate bond issue.

The buyer is now expected to expand the manufacturing facilities creating room for an additional 100 employees.

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