Celestica, the manufacturer of end-to-end product lifecycle solutions, has entered into a $137-million agreement to sell the property on which its Toronto, Ont. corporate headquarters and manufacturing operations are located.
The property will be sold to a special purpose entity composed of real estate developers Diamond Corp., Lifetime Developments and Context Development Inc. which will work with the City of Toronto to develop a mixed-use community featuring office, retail and residential space.
Celestica will be paid an initial cash deposit of $15 million, with $53.5 million in cash paid after various conditions, including municipal approvals, have been met. Finally, the balance will be satisfied upon closing by an interest-free, first-ranking mortgage of $68.5 million for two years after the closing date.
As part of the agreement, Celestica will enter into an interim lease for its existing property on a portion of the real estate for a two-year term on a rent-free basis. This will be followed by a longer term lease for Celestica’s new headquarters, with no guarantee the transaction will be completed in two years.
According to a special committee formed by Celestica’s board of directors, comprised of independent directors that retained independent legal counsel, the purchase price for the property exceeded the value of the property given by an independent appraiser. It was judged that it was in Celestica’s best interest to complete the transaction, and the decision was unanimously approved by members of the special committee.