LONDON (Alliance News) - Formation Group PLC said Thursday it has sold 16,497,258 treasury shares, approximately 7.48% of its issued share capital, to related party, Kennedy Private Trust Company.
Formation shares were sold at 1.90 pence per share - the market close price March 24, 2014 - resulting in a cash receipt of GBP313,447.90. The construction and property development and management business said it will use the funds raised for working capital purposes, as it awaits funds owed by Redrow Homes Limited.
Last week Formation Group said an agreement had been reached between Julius Properties Ltd and housebuilder Redrow over a title issue relating to a mixed use development near Aldgate East tube station, London. The dispute cast doubt upon Julius' ability to repay JV Finance Ventures Ltd's investment into the site. Formation holds a 36.9% stake in JV Finance Ventures. The agreement for 1 Commercial Street means first three instalments due under the agreement have been received by JV Finance.
Under AIM rules, due to the buyer's relationship with the Chairman and CEO of the Company David Kennedy who, together with certain related parties, holds a majority shareholding in Formation, the share sale constitutes a related party transaction, said the firm. Independent directors consider, having consulted with Zeus Capital, state that the terms of the transaction are fair and reasonable insofar as shareholders of Formation are concerned, said the firm.
Following the deal, Kennedy Private Trust now holds 25,320,787 ordinary shares, approximately 11.48% of the issued share capital.
Shares in Formation were trading 2.44% higher at 2.1 pence per share Thursday.
By Alice Attwood; aliceattwood@alliancenews.com; @AliceAtAlliance
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Redrow (RDW)