Dorel Industries Inc. has announced that it has entered into a sale-leaseback transaction for its warehouse and manufacturing facility in Columbus that will bring the company $30 million.
Dorel Juvenile Group Inc., which is a business segment of Dorel Industries, sold the facility, located at 2525 State St., to 2525 State Po Lp for $30 million on Feb. 28, according to public real estate transfer records.
A sale-leaseback is a transaction in which a company sells an asset and then leases it back from the buyer, according to financial analysts. Companies often use leasebacks when they need to free up cash while continuing to use the asset itself for business operations.
Dorel Industries said it will use about $8 million from the sale of the Columbus facility to reduce debt, with the remaining proceeds being used to fund “the company’s ongoing operations.”
Dorel Juvenile Group will lease the facility from 2525 State Po Lp for an initial term of 10 years, with options for two renewal terms of five years each, the company said. The initial annual rent is approximately $2.9 million, subject to annual increases.
The company’s board of directors approved the transaction, stating in an announcement that board members had determined that “Dorel is in serious financial difficulty” and that “the transaction is designed to improve Dorel’s financial position.”
Dorel Industries has not responded to requests for comment from The Republic on what implications, if any, the transaction has for employment in Columbus.
However, Dorel Industries said in a statement that the transaction is part of its initiative to finance the growth of its Juvenile segment and the turnaround of its Home segment, which officials said last year was facing “significant challenges.”
“The company is diligently exploring additional opportunities to further enhance its financial position,” the company said.
Dorel Industries is headquartered in Quebec, Canada, and operates two business segments — Dorel Juvenile and Dorel Home, according to the company’s 2023 annual report.
Dorel Juvenile’s U.S. head office is in Massachusetts, though manufacturing and warehousing operations are based in Columbus, where car seat development is centralized.
Dorel Home markets a variety of furniture. One of its divisions, Cosco Home and Office, is located in Columbus, with the majority of its sales coming from folding furniture, step stools, hand trucks, specialty ladders and outdoor furniture, according to the report.
The company that bought the Columbus facility, 2525 State Po Lp, has the same address as a Toronto-based corporation called 2525 State Holdings Inc., according to Canadian public records and local real estate records.
Canadian records show that the corporation’s four officers all have ties to Dorel Industries, including three officers who are on the company’s board of directors.
The officers include Dorel Industries President and CEO Martin Schwartz, as well as Jeffrey Schwartz, the company’s vice president, chief financial officer and secretary; Alan Schwartz, executive vice president of operations; and Jeff Segel, the company’s vice president of sales and marketing.
An announcement from Dorel Industries acknowledges that those four individuals have an ownership stake in the company that bought the Columbus facility.
In November, Dorel Industries reported a net loss of $21.9 million in the third quarter last year, with revenue declining 1.5% compared to the same period in 2023.
Much of the revenue decline appears to be linked to Dorel Home, which saw a 14% decline in revenue during the third quarter, according to the company’s earnings report.
Dorel Juvenile, however, saw a 9% increase in revenue over the same period.
Company officials said in November that they had initiated cost-reduction initiatives for the Dorel Home segment as they “continue to right-size the business to current realities.”
On Jan. 30, Dorel Industries announced a “major restructuring” of its Dorel Home segment, including the closure of a manufacturing facility in Ohio, as well as plans to close a manufacturing facility in Montreal.
“This strategic move is part of the company’s efforts to realign its business model to current and anticipated future industry dynamics and the reality that revenue expectations for the Home segment require a much smaller footprint than in the past,” the company said.
Company officials said the furniture industry “has struggled with supply chain uncertainty, inflation and higher interest costs” since the end of the COVID-19 pandemic, leading consumers to reduce spending on home furnishings.
However, Dorel Juvenile is projected to achieve better earnings in 2024 compared to the previous year with market share gains in major markets, including North America, that is expected to continue into 2025, the company said.
Dorel Industries was expected to release its fourth quarter 2024 results Tuesday after markets close and hold an earnings call on Wednesday.