Car dealership Dixon Motors Plc has announced plans for a £34 million sale and leaseback of property.

The deal will involve 17 of its freehold and long leasehold properties and is due to be completed by January 26 next year.

A company spokesman said the companies formed to buy the sites would have to pay £24.6 million in cash to Dixon upon completion of the transaction.

Each of the properties involved is currently either part of fully occupied by the car chain and total rent on them is expected to reach £2.2 million.

The spokesman said: "Dixon Motors has continued to develop over the last 18 months.

"Significant investments during this period have included the acquisition and subsequent integration of Motorcycle City, the commissioning of a new distribution and fulfilment centre and the acquisition or development of a further 12 retail dealerships.

"The majority of this recent investment has been funded by increasing the group's debt and the board believes this transaction will give the group greater financial flexibility to pursue investment and growth opportunities."

The plan has to be put to an extraordinary general meeting to seek shareholder approval.

The spokesman added that it board does not expect the transaction to have a material impact on the group's continuing profit before tax as the cost of renting is expected to be offset by losses which would have occurred through asset depreciation.

As part of the transaction, Dixon will lend the buying companies £5 million to help cover the purchasing cost, a loan which will be repayable in 60 monthly instalments starting from the end of next January.