FRM.L Regulatory News (FRM)

31 Aug 2007 18:34

Formation Group PLC31 August 2007 Formation Group plc ("Formation" or the "Group") Property Development Project Formation today announces that, in accordance with its previously statedstrategy of introducing bespoke property investment products for high net worthindividuals, it has acted as investment adviser to the Aldgate East PropertyCompany Limited ("Aldgate") raising £19.78million through the issue of juniorunsecured loan notes and subordinated junior unsecured loan notes (the "LoanNotes"). The monies raised from the issue of the Loan Notes, along with additionalbanking finance will be used by Julius Properties Limited ("Julius"), a companyincorporated in Guernsey, to support the development for a residential andcommercial property project at 1 Commercial Street, London. The development, ascurrently proposed, will comprise a 22 storey tower consisting of 217residential units, 93,166 sq ft of office accommodation and 11,684 sq ft ofretail use. The development project is estimated to be completed by the end ofFebruary 2010 and has a projected cost of approximately £118,125,000. Individual investors, including clients of the Group's asset management company,Kingsbridge Asset Management, have participated in the investment opportunityvia Aldgate. The Loan Notes provided to these investors, which will be issued from today, areunderwritten by Formation Group and a Guernsey Trust. In the event that thedevelopment at Commercial Street does not complete when the Loan Notes areredeemable, which is between 2 and 4 years from the date of issue, those partieswho have underwritten the issue of the Loan Notes will pay the Loan Note holdersback their original investment plus the relevant interest. Formation's maximumliability under the underwriting arrangement would be £11.6 million. In returnfor its role as Investment Adviser and for providing the underwriting facilitiesFormation will be entitled to an initial fee (calculated as approximately 9.5%of the Loan Note value) which is payable to Formation within two months of thedate the Loan Notes are issued and a further fee, payable on completion of thedevelopment, which is calculated by reference to the total profit from thedevelopment. Neil Rodford, Chief Executive, Formation Group plc, commented; "We are delighted to be able to announce this, our second bespoke propertyrelated transaction. Building on the success of the Whitechapel Property FundLimited, the first such scheme, we believe this scheme also provides anexcellent opportunity for our wealth management clients. Our wealth management clients have historically invested in the propertydevelopment arena. However, this opportunity allows them to access the market ata higher level of the supply chain." The information memorandum for the Aldgate East Property Company Limited, whichincludes more details about the Loan Notes, can be found under the Publicationsand Reports section of the Company's website at www.formationgroupplc.com For further information, please contact:Mike Wallwork, Communications Director, Formation Group plc - 0161 928 1210 David Youngman, W H Ireland Ltd - 0161 832 2174 This information is provided by RNS The company news service from the London Stock Exchange