Chamberlin has exchanged contracts on a sale and leaseback of its freehold property in Chuckery Road, Walsall with Heritage and Hill Investments.
Sale proceeds are £2.2mln in cash and Chamberlin has a 10-year lease for the property at an initial rent of £0.2mln per annum, with a rent review after five years.
The property had a net book value of £1.6m as of 31 May 2022.
Under IFRS 16, a right-of-use asset of approximately £1.1mln and associated lease liabilities worth approximately £1.5mln will be reflected on the castings group's balance sheet and approximately £0.4mln of the book profit will be deferred and recognised over the period of the lease.
Proceeds will be used to reduce the company's pension fund deficit by £1.1mln in satisfaction of the Chamberlin & Hill Life Assurance Scheme's charge over the property, said the statement.
Completion of the sale and leaseback is expected to occur on 16 June 2023, after which the pension fund deficit on the Trustees' basis is expected to amount to £1.2mln, Chamberlin added.