BT trims debt mountain with property deal

BT's deal to sell and lease back almost all of its property estate will cut its debt mountain to below £15bn.

Telereal is paying BT £2.4bn for its telephone exchanges, offices, vehicle depots and call centres.

BT will rent back the 6,700 properties under the 30-year agreement, which does not cover the BT Tower or BT Centre, the firm's corporate headquarters in the City of London.

The telecoms group will pay Telereal more than £350m in rent and fees each year, but has the right to vacate up to 35% of the property at no extra cost.

BT announced it was preparing to outsource its property in January in an effort to reduce its debt, which had spiralled to more than £28bn.

The group has sold off its directories business Yell; raised £5.9bn on the stock market; and demerged its mobile phone business mmO2.

At its half-year results earlier this month, BT said it had cut its debt down to £16.5bn - in sight of achieving its target of between £15bn to £17bn by March.

Telereal, a joint venture set up by Land Securities Trillium and the Pears Group, was selected as a preferred bidder in April.

BT says the sale and leaseback deal should be completed by December 14, with 350 of its property staff transferring to the property venture.

Sir Christopher Bland, chairman of BT Group, says: "This transaction is another important step in our restructuring and debt reduction programme."