(Reuters) - Connect Group Plc (CNCTC.L) does not expect the sale of some properties of its freight business Tuffnells to be completed before the end of the year, as proposals did not meet its expectations, affecting its debt reduction plans for the year.
The company’s shares were down 6.9% at 35 pence.
The newspaper distributor and parcel delivery company said on Tuesday its overall performance since May has been slightly below market expectations, hurt by a slower turnaround at Tuffnells, which operates out of 37 depots.
The company has been looking for a potential sale and leaseback, of up to 16 free-hold and long-lease Tuffnells properties, which was expected to raise up to 35 million pounds before tax in a bid to cut debt.
Tuffnells, which delivers parcels and freight, serves about 5,000 small and medium sized enterprises in the UK.
“However, due to the current market conditions and outlook, the proposals received did not meet the Board’s expectations in respect of value, economic return and timings,” the company said, adding that net debt was expected to remain flat.
The company said the lack of a sale meant it would not cut its net debt in the current financial year.
Connect Group, which has a market value of 92.8 million pounds had net debt of 77.5 million pounds at the end of February.
Reporting by Tanishaa Nadkar and Noor Zainab Hussain in Bengaluru; Editing by Shounak Dasgupta