FRM.L Regulatory News (FRM)

5 Mar 2007 10:29

Formation Group PLC05 March 2007 Formation Group plc ("Formation Group" or the "Company") Property Development Project Update Following the announcement made on 30 November 2006, the Company confirms thatthe short term loan of £2,000,000, which was advanced by the Company toRocquefort Properties Limited ("Rocquefort"), has been repaid in full withinterest. As previously outlined, the purpose of the loan was to enable Rocquefort toacquire land situated in 52, 54-58 Commercial Road, Algate, London for thepurposes of a residential and commercial property development project ("Commercial Road"). Formation Group is the investment advisor to The Whitechapel Property FundLimited ("Whitechapel") which was created to provide an opportunity for high networth individuals to invest in the development at Commercial Road. The objectiveof Whitechapel is to raise money to lend to Rocquefort to part fund thedevelopment at Commercial Road. Bank funding will provide the balance. The investment opportunity provided by Whitechapel is by way of the issue ofjunior unsecured loan notes (the "Loan Notes") with a fixed compounded return.The Loan Notes will be in issue for a minimum period of two years or maximum offour depending on the build programme and success of the scheme (seewww.formationgroupplc.com for the information memorandum setting out the termsof this scheme). Whitechapel have now issued £5,400,000 worth of Loan Notes (being the maximumnumber of Loan Notes it intends to issue) and the Loan Notes were admitted totrading on the Official List of the Channel Islands Stock Exchange on 28thFebruary 2007. The Loan Notes are underwritten by two parties, namely Formation Group and theBalchan Management Trust Limited as Trustee of The Impala DiscretionarySettlement. In the event that the development at Commercial Road does notcomplete when the Loan Notes are redeemed, those parties who have underwrittenthe issue of the Loan Notes will pay the Loan Note holders back their originalinvestment plus the relevant interest. Formation's maximum liability under theunderwriting arrangement would be £4 million. In return for providing theunderwriting facilities, however, Formation will be entitled to a introducer'sfee (calculated as approximately 40% share of any residual profits earned byRocquefort on conclusion of the development at Commercial Road). Currentestimates would lead the Board to believe that the introducer fee could be inexcess of £2 million. Further updates on this project will be provided in due course. For further information, please contact: Neil Rodford Formation Group plc 01625 539832 David Youngman/ Katy Mitchell WH Ireland Ltd. 0161 832 2174 Katie Tzouliadis Biddicks 020 7448 1000 This information is provided by RNS The company news service from the London Stock Exchange