Description: New Brunswick Crown utility NB Power has entered a sale-leaseback transaction for its two head office buildings with Forum Asset Management of Toronto. The $39 million transaction was spoken of as a debt-reduction initiative. Since NB Power will continue to lease the larger of the two buildings, however, it was not clear from the article what the present-value of any net savings would be.
Date: February 7, 2024
Source: ctvnews.ca
Discussion points:
1) Have you studied sale-leaseback transactions yet in your business studies?
2) The story is rather thin on details. For example, it does not tell us the present value of savings from the transaction. Do you have interest in a career in business writing that might bring readers clarity to stories with accounting issues like this one?
3) Chapter seven of Wiley’s Managerial Accounting: Tools for Business Decision-Making educates us on the concept of relevant costs in making business decisions. What do you think would be the relevant costs NB Power should consider in choosing between the alternatives of keep versus sale/leaseback of their two head office buildings?
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