US-based soft drinks company Reed's has entered into a sale-leaseback transaction on two buildings in Los Angeles in a bid to cut debt.

The company has entered into a long-term lease agreement with the buyer covering the premises, which are used for the Reed's West Coast brewery operations, its corporate offices, and warehouse space.

Reed's, which supplies private label soft drinks to US retailers, said today (23 June) that the transaction will "dramatically improve" the company's balance sheet, with the proceeds being used to pay off US$1.8m of long-term debt. It will also provide $1.4m of additional working capital.

"We had previously announced that we were looking at alternative methods of funding, focusing on the least dilutive mechanisms possible," said Chris Reed, founder and CEO. "This transaction provides the company with the working capital necessary to expand production and marketing activities as we enter our busy season, and protects value for our existing stakeholders."

He added: "It also enables us to proceed with planned business initiatives into areas such as new product development, and new forms of marketing and distribution of our products, including our new energy drink, the Reed's Natural Energy Elixir."