14 Dec 2012 14:58
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR THE UNITED STATES OF AMERICA OR TO US PERSONS. THIS DOCUMENT IS AN ADVERTISEMENT FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER OR INVITATION TO PURCHASE OR ACQUIRE ANY TRANSFERABLE SECURITIES, NOR SHALL IT FORM THE BASIS OF ANY CONTRACT FOR THE SALE OF ANY INTEREST IN A TRANSFERABLE SECURITY OR A SOLICITATION, INDUCEMENT, ADVICE OR RECOMMENDATION TO EFFECT ANY TRANSACTION OF ANY KIND WHATSOEVER. POTENTIAL INVESTORS SHOULD READ THE RELEVANT PROSPECTUS (WHICH WILL BE PUBLISHED IN DUE COURSE FOLLOWING APPROVAL BY THE UK LISTING AUTHORITY) CAREFULLY BEFORE ANY INVESTMENT DECISION IS MADE.
INLAND HOMES PLC
("INLAND" or "the Company" or "the Group")
brownfield regeneration specialists and home builders
Date: Friday, 14 December, 2012 | Immediate release |
Inland ZDP PLC to raise £8.1m (net)
to finance
the expansion of the Group's Development portfolio
The Board of INLAND is pleased to announce that it has entered into a Placing agreement with Libertas Capital Corporate Finance Limited ("Libertas") to raise up to £8,500,000 (gross) to finance the expansion of the Group's portfolio of brownfield development projects.
Key highlights:
·; A new wholly owned subsidiary, Inland ZDP PLC ("ZDPCo"), has been formed to issue 8,500,000 zero dividend preference shares ("ZDP Shares") at 100p each |
·; ZDP Shareholders will be entitled to receive Final Capital Entitlement of 155.9p per ZDP Share |
·; The ZDP Shares have a redemption yield of 7.3 per cent. per annum and will be repaid on or before 10 April 2019 |
·; Flexibility in security to be provided including unconsented properties |
·; The transaction will maintain flexibility to pay future dividends should the Board so determine unless there is a substantial decline in the value of the Group's assets |
"Since its incorporation, the Group has sold a total of 926 building plots on 26 sites and 68 completed units on two sites. As at 12 December 2012, the Group owned or controlled over 1,300 building plots with planning permission and over 450 potential building plots. INLAND's Board continually reviews potential additions to its development portfolio and is currently working towards the possible purchase of certain sites where, by applying the Operational team's expertise in planning and development, the Board sees opportunities to achieve attractive returns for INLAND and its shareholders."
"The INLAND Board considers that this is an opportune time to seek additional finance to allow the business to capitalise on a number of attractive future development opportunities in the marketplace. We believe that the Group's future outlook and its ability to improve returns to shareholders will be enhanced as a result of having raised this flexible medium term funding, and we have therefore concluded that, the Placing is in the best interests of all shareholders."
Terry Roydon, Chairman, Inland Homes PLC
Editor's Note:
INLAND identifies land in the South of England where it considers it to hold excellent potential for residential and mixed use development including commercial space. It then seeks to enhance its land value by obtaining planning permission before selling consented land onto housebuilders. It also develops some of its own plots for private sale.
Further information: | |||
Inland Homes PLC Stephen Wicks, Chief Executive Nishith Malde, Finance Director Paul Brett, Land Director
Tel: +44 (0) 1494 762450
Email: info@inlandplc.com www.inlandplc.com Ticker: LSE: AIM: INL | Libertas Capital Corporate Finance Limited Financial Adviser & Broker to the Placing Corporate Finance: David Floyd Sales: Paul Glover Sandy Jamieson, Director Tel: +44 (0) 20 7569 9650 | finnCap Nomad & Broker to INLAND Corporate Finance: Matthew Robinson or Rose Herbert Corporate Broking: Simon Starr Tel:+44 (0) 20 7220 0500
| TooleyStreet Communications IR & media relations consultants Fiona Tooley, Director Tel: +44 (0) 7785 703523 or Graeme Cull, Consultant Tel: +44 (0) 7976 228397 Office: +44 (0) 121 309 0099 |
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN OR INTO AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR THE UNITED STATES OF AMERICA OR TO US PERSONS.
THIS DOCUMENT IS AN ADVERTISEMENT FOR INFORMATION PURPOSES ONLY AND DOES NOT CONSTITUTE AN OFFER OR INVITATION TO PURCHASE OR ACQUIRE ANY TRANSFERABLE SECURITIES, NOR SHALL IT FORM THE BASIS OF ANY CONTRACT FOR THE SALE OF ANY INTEREST IN A TRANSFERABLE SECURITY OR A SOLICITATION, INDUCEMENT, ADVICE OR RECOMMENDATION TO EFFECT ANY TRANSACTION OF ANY KIND WHATSOEVER. POTENTIAL INVESTORS SHOULD READ THE RELEVANT PROSPECTUS (WHICH WILL BE PUBLISHED IN DUE COURSE FOLLOWING APPROVAL BY THE UK LISTING AUTHORITY) CAREFULLY BEFORE ANY INVESTMENT DECISION IS MADE.
INLAND HOMES PLC
("INLAND" or "the Company" or "the Group")
The Group is pleased to announce that it has entered into a Placing Agreement with Libertas Capital Corporate Finance Limited to raise approximately £8.08 million (net of expenses) by issuing 8,500,000 new ZDP Shares in Inland ZDP PLC ("ZDPCo"), a newly formed wholly owned subsidiary of Inland) at a price of 100p each. ZDPCo will be wound up on or before 10 April 2019, when ZDP Shareholders will be entitled to receive 155.9p per ZDP Share ("Final Capital Entitlement"), which is equivalent to a gross redemption yield of 7.3 per cent. per annum.
Background to the Placing
The Group has a residential and mixed-use property development business which specialises predominantly in buying brownfield sites and enhancing their value, primarily for residential and mixed-use development. The Group seeks to acquire properties with development potential and apply its knowledge and experience in planning to win consents and approvals and either selling consented land to house building companies or working with its associated company, Howarth Homes PLC or another main contractor to build, market and sell homes.
Since its incorporation the Group, up until 12 December 2012, has sold a total of 926 building plots on 26 sites and 68 completed units on two sites. As at 12 December 2012, the Group owned or controlled over 1,300 building plots with planning permission and over 450 potential building plots. INLAND's Board continually reviews potential additions to its development portfolio and is currently working towards the possible purchase of certain sites where, by applying the Operational team's expertise in planning and development, the Board sees opportunities to achieve attractive returns for INLAND and its shareholders.
One of the principal constraints for INLAND in progressing its business has been the lack of bank finance available to the sector in which INLAND operates and in particular those at the small-mid-cap range. As a consequence, and as shareholders are aware, the Group has been seeking finance from alternative lending sources, particularly longer term finance, which the Board believes is better suited to the period of time that can elapse between the buying of unconsented land and the obtaining of the requisite planning consent.
The INLAND Board considers that this is an opportune time to seek additional finance to allow the business to capitalise on a number of attractive future development opportunities in the marketplace. It believes that the Group's future outlook and its ability to improve returns to shareholders will be enhanced as a result of having raised this flexible medium term funding and the Directors of INLAND have therefore concluded that, the issue of ZDP Shares (the "Placing") is in the best interests of all shareholders.
Proposed issue of ZDP Shares
A ZDP Share is not an equity share and does not entitle the holder to any dividends, but it offers the holder a capital payment on a fixed date at a higher price than the initial subscription price, giving the holder a fixed return. The amount due to holders of ZDP Shares, which accrues over time, is accounted for as a liability rather than as share capital.
Application has been made for the standard listing of the ZDP Shares on the Official List and for these to be admitted to trading on the London Stock Exchange's Main market for listed securities.
It is expected that admission will be effective and dealings will commence on Thursday, 20 December 2012 and, that the payment of the Final Capital Entitlement to ZDP Shareholders will be effected by winding up ZDPCo on the Final ZDP Payment Date in April 2019.
Key information about the ZDP Shares:
Expected admission date | Thursday, 20 December 2012 |
ZDP Final Payment Date | 10 April 2019 |
Issue price per ZDP Share | 100 pence |
Final Capital Entitlement per ZDP Share | 155.9 pence |
Redemption Yield at the Placing Price | 7.3 per cent. per annum |
Initial Cover | 2.9 times |
Hurdle rate to receive the Final Capital Entitlement | -15.5 per cent. per annum |
Hurdle rate to receive the initial subscription price | -18.9 per cent. per annum |
ISIN | GB00B99R1Q79 |
SEDOL Code | B99R1Q7 |
Ticker | INLZ |
Terms of the ZDP Share issue and security arrangements
The ZDP Shares have been allotted by ZDPCo, subject inter alia to their admission to listing and to trading on the London Stock Exchange's Main market for listed securities, which is expected to take place at 8.00 am. on Thursday, 20 December 2012.
The ZDP Shareholders will receive no dividends, but are entitled to receive 155.9p per ZDP Share in just over six years' time, on 10 April 2019, when ZDPCo will be wound up. This equates to a gross redemption yield of 7.3 per cent. per annum.
ZDPCo will lend the Placing proceeds of £8,500,000 (gross) to INLAND which has entered into a Loan Note and Contribution Agreement with ZDPCo whereby INLAND is committed to pay all ZDPCo's costs and expenses and satisfy the Final Capital Entitlement of £13,251,794 (assuming 8,500,000 ZDP Shares are in issue at that time) on the ZDP Final Payment Date. The Board will react to opportunities and conditions in the development property market, credit markets and capital markets to plan for the financing of the ZDP Shares well ahead of the repayment date. It is anticipated that the Final Capital Entitlement may be repaid in a number of ways, including: an issue of new zero dividend preference shares; by replacement bank debt; out of the proceeds of an issue of ordinary shares or, by selling some ofINLAND's property interests.
The full terms and conditions relating to the ZDP Shares and ZDPCo are set out in the Prospectus issued by INLAND in connection with the issue. Some of the key terms are as follows:
·; ZDPCo will have the benefit of INLAND's commitment to ensure that ZDPCo has the ability to pay its creditors and ZDP Shareholders' Capital Entitlements. These obligations will be secured by first charges over (i) cash held in a designated bank account ("Pledged Cash") and (ii) other tangible assets held by INLAND ("Pledged Assets"). The capital value of the ZDP Shares, as it accrues over time, must be covered by a combination of the Pledged Cash and Pledged Assets, such that the Pledged Assets must have a value of 120 per cent. of the accrued balance due to ZDPCo shareholders, net of the Pledged Cash. This value will be tested quarterly, based on book values under IFRS.
·; If the Pledged Asset cover falls below 120 per cent., then unless INLAND provides security over cash or further property assets within three months to remedy any shortfall, ZDPCo will convene a class meeting of ZDP Shareholders to consider proposals for the continuation of ZDPCo. If such proposals are not approved by ZDPCo Shareholders by special resolution, ZDPCo will be wound up and ZDP Shareholders will be entitled to receive their accrued Capital Entitlement at the winding up date (assuming INLAND has sufficient resources to meet such entitlement).
·; Whilst ZDP Shareholders will have the protections afforded to them by virtue of the class rights attaching to the ZDP Shares, INLAND will control all the voting shares in ZDPCo. Provided the 120 per cent. asset cover is maintained, INLAND will have the ability to substitute the properties that ZDPCo has a first charge over. At present, INLAND has some unencumbered sites which may be pledged to ZDPCo to fulfil its obligations to satisfy the 120 per cent. cover requirement described above.
·; The Contribution Agreement and Loan Note include certain covenants. The Cover Ratio covenant is designed to prevent dividends to INLAND Ordinary Shareholders being paid by INLAND if the Cover Ratio falls below 1.8, which could happen if there should be a substantial decline in the value of the Group's assets. To set this in some context for shareholders, INLAND's (non-consolidated) financial statements as at 30 June 2012 showed distributable reserves of approximately £6.27 million. If the Cover Ratio restriction described above had been in place at that time, the Cover Ratio as at 30 June 2012 would have been 2.9 times, which would have resulted in INLAND being in a position to consider paying dividends to Ordinary shareholders of up to £23.10 million, which is considerably more than INLAND would have been legally permitted to distribute as at that date.
·; The Gearing Ratio covenant is intended to limit ZDP Shareholders' exposure to a fall in asset values (ie the value of houses and building land), not to restrict the completion of existing development and building projects. This restriction on increasing the Group's borrowings does not apply to new borrowings incurred to complete the development of existing sites; borrowings for other pre-existing financial liabilities and working capital purposes; or debt incurred for the purpose of returning cash to ZDP Shareholders or other financial liabilities as it may be necessary or desirable to complete development and other work before marketing assets for sale to reduce borrowings.
Effect of the Placing on INLAND and use of proceeds
The effect of the Placing on the financial statements of INLAND is to show the obligation to ZDP Shareholders (initially £8.5 million and increasing over time) as a long term debt. In the short term, the net proceeds of the Placing, estimated at up to £8.08 million, will be held by the Group as cash balances, pending their use to invest in inventories or settle liabilities to vendors. If the Placing had been effected on 30 June 2012 and the £8.08 million net proceeds of the Placing had all been invested in inventories, the overall assets and borrowings (net of cash) in the Group's financial statements would have both been up to £8.08 million greater. The costs of the Placing are treated as a prepayment in the Inland Homes PLC's Group financial statements and amortised over the period to the ZDP Final Payment Date. Accordingly, the Placing would have no initial impact on INLAND's consolidated net assets, which would subsequently be reduced by the £0.42 million estimated costs of the Placing as they are amortised over the period to the ZDP Final Payment Date. The effect on the Group's Income statement is to record the cost of the ZDP Shares (which would have been £0.7 million comprising the 7.3 per cent. accruing to ZDP Shareholders for the year to 30 June 2012 and the amortising of Placing costs, if the Placing had taken place at the beginning of that financial year) and the return on investment generated from the net proceeds of the Placing. The latter will initially comprise interest receivable on these proceeds pending the purchase of new sites or interest saved by paying deferred consideration to vendors.
The Group expects to apply some of the Placing proceeds in due course to acquire new brownfield sites. The effect of this on Inland Homes PLC's Consolidated financial statements would be to show the assets acquired as an increase in inventories and (as stated above) the liability to ZDP Shareholders will be shown as debt.
Directors of ZDPCo
The first three Directors of ZDPCo will be Stephen Wicks, Nishith Malde and Paul Brett, who are all Executive directors of Inland Homes PLC ("INLAND"). ZDPCo's Articles provide that no remuneration is payable to any ZDPCo directors who are also directors of INLAND and as such, there will be no variation to any directors' emoluments as a result of the Placing.
Publication of the Prospectus
A Prospectus has been published today in respect of the new ZDP Shares (the "Prospectus"). Copies of the Prospectus have been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/nsm.
A copy of the Prospectus can also be viewed or downloaded from INLAND's website:
www.inlandplc.com or via the following link: http://www.inlandplc.com/investor_relations/zdp_plc
or for collection from:
Inland ZDP PLC, 2 Anglo Office Park, 67 White Lion Road, Amersham, Bucks, HP7 9FB; and
Libertas Capital Corporate Finance Limited, 17c Curzon Street, London W1J 5HU").
Libertas Capital Corporate Finance Limited ("Libertas") which is authorised and regulated by the Financial Services Authority, has given and have not withdrawn its written consent to the publication of this announcement containing references to its name in the form and context in which they appear. Libertas is acting exclusively for INLAND and ZDPCo and not for any other person in relation to the matters referred to in this announcement and will not be responsible to any other person for providing the protections afforded to customers of Libertas in relation to the matters referred to herein.
Definitions:
The following expressions have the meanings set out below when used in this announcement:
"Admission to Listing" | the admission to listing on the Official List (by way of a standard listing under Chapter 14 of the Listing Rules) of the ZDP Shares |
"Admission to Trading" | the admission to trading on the London Stock Exchange's Main market for listed securities of the ZDP Shares |
"Admission" | Admission to Listing and Admission to Trading and a reference to Admission becoming "effective" is to be construed in accordance with the Listing Rules or the Standards (as applicable) |
"Articles of Association" or "Articles" | the articles of association of ZDPCo as adopted on Friday, 14 December 2012 conditional on Admission |
"Assets" | in the context of the Gearing Ratio and the Cover Ratio, Assets means the net sum of (i) consolidated gross assets of the Inland Group; (ii) less intangible assets; (iii) less cash; (iv) less trade creditors payable before six months following the ZDP Final Payment Date; and (v) less deferred consideration payable for sites purchased by INLAND Group companies other than (a) any Excess Deferred Consideration and (b) any deferred consideration payable after six months following the ZDP Final Payment Date |
"Capital Entitlement" | the amount accrued to each ZDP Share to the date of receipt of cash on the winding up of ZDPCo |
"Cover Ratio" or "Cover" | the ratio of (i) Assets to (ii) the sum of the Financial Indebtedness and the ZDP Liability as at the ZDP Final Payment Date |
"Excess Deferred Consideration" | deferred consideration due to a vendor by the Inland Group in respect of any site which represents more than 60 per cent. of the initial purchase price of such site excluding amounts payable after six months following the ZDP Final Payment Date and excluding amounts in respect of which the vendor has no recourse to the assets of the Inland Group other than the asset sold by such vendor |
"Final Capital Entitlement" | 155.9 pence per ZDP Share |
"Financial Indebtedness" | the net sum of (i) bank and other borrowings less any cash of the INLAND Group and (ii) Excess Deferred Consideration; other than any such indebtedness which is repayable after six months following the ZDP Final Payment Date |
"Gearing Ratio" | the gearing ratio of (i) the sum of the Financial Indebtedness and the ZDP Liability to (ii) Assets |
"Group" or "Inland Group" | Inland and its subsidiaries and subsidiary undertakings, from time to time (including, for the avoidance of doubt, ZDPCo) |
"Hurdle Rate" | the minimum rate of return per annum on Assets at which the Final Capital Entitlement is paid in full or, where it is expressed in relation to the Issue Price, the minimum rate of return per annum on Assets at which the Issue Price is returned on the ZDP Final Payment Date |
"IFRS" | International Financial Reporting Standards |
"Initial Cover" | the Cover Ratio as at 30 June 2012 on the basis that the Placing was effected and the net proceeds invested in inventories on that date |
"Inland Ordinary Shares" or "Ordinary Shares" | ordinary shares of 10 p each in the capital of Inland |
"ISIN" | international securities identification number |
"Libertas" | Libertas Capital Corporate Finance Limited and, where the context so requires, its registered representatives |
"Placing" | the Placing of up to 8,500,000 ZDP Shares with the Placees |
"Pledged Assets" | all interests in assets of INLAND which are the subject to first charges in favour of ZDPCo, save for the Pledged Cash |
"Pledged Cash" | cash held by INLAND in the Secured Account subject to a charge in favour of ZDPCo |
"Secured Account" | a bank account to be opened by INLAND to hold cash which is subject to a first legal charge in favour of ZDPCo |
"ZDPCo" | Inland ZDP PLC, a wholly-owned subsidiary of INLAND |
"ZDP Liability" | for the purposes of the Cover Ratio means the total amount due to ZDP Shareholders on the ZDP Final Payment Date and for the purposes of the Gearing Ratio means the total accrued capital value of the ZDP Shares as at the calculation date of the Gearing Ratio |
"ZDP Final Payment Date" | 10 April 2019 |
"ZDP Shareholders" | holders of ZDP Shares |
"ZDP Share(s)" | zero dividend preference shares of 10 pence each |
IMPORTANT INFORMATION
This press release appears as a matter of record only, it is an advertisement and does not constitute an offer to sell or a solicitation of an offer to purchase any security.
The distribution of this Announcement in certain jurisdictions may be restricted by law. No action has been taken by Inland, ZDPCo or Libertas that would permit an offering of the ZDP Shares or possession or distribution of this Announcement or any other offering or publicity material relating to such shares in any jurisdiction where action for that purpose is required. Persons into whose possession this Announcement comes are required by Inland, ZDPCo and Libertas to inform themselves about, and to observe, such restrictions.
The information presented herein is not an offer for sale within the United States of any equity shares or other securities of Inland or ZDPCo. Neither Inland nor ZDPCo has been nor will it be registered under the US Investment Company Act of 1940, as amended (the "Investment Company Act"). In addition, the ZDP Shares have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") or any other applicable law of the United States. Consequently, the ZDP Shares may not be offered or sold or otherwise transferred within the United States, or to, or for the account or benefit of, US Persons (as defined in Regulation S under the Securities Act), except pursuant to an exemption from the registration requirements of the Securities Act and under circumstances which will not require Inland or ZDPCo to register under the Investment Company Act. No public offering of the ZDP Shares is being made in the United States. The ZDP Shares may only be resold or transferred in accordance with the restrictions set forth in the Prospectus and related subscription documents. This communication should not be distributed, forwarded, transferred, reproduced, or otherwise transmitted, directly or indirectly, to any persons within the United States or to any US Persons unless it is lawful to do so.
This Announcement is for information purposes only and does not constitute an invitation to subscribe for or otherwise acquire or dispose of securities in Inland or ZDPCo in any jurisdiction. The information contained in this Announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this Announcement or its accuracy or completeness. This announcement does not constitute or form part of any offer to issue or sell, or any solicitation of any offer to subscribe or purchase, any investments nor shall it (or the fact of its distribution) form the basis of, or be relied on in connection with, any contract therefor. Investors should not purchase or subscribe for any transferable securities referred to in this announcement except on the basis of information contained in the Prospectus. No reliance may or should be placed by any person for any purpose whatsoever on the information contained in this Announcement or on its completeness, accuracy or fairness. The information contained in this Announcement is subject to change.
This announcement may include certain "forward-looking statements". These statements are based on the current expectations of Inland and ZDPCo and are naturally subject to uncertainty and changes in certain circumstances. Forward-looking statements typically include statements containing words such as "intends", "expects", "anticipates", "targets", "plans", "estimates" and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are various factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, changes in economic conditions, changes in the regulatory environment, fluctuations in value of real estate, interest and exchange rates, the outcome of litigation and government actions. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Neither Inland nor ZDPCo undertakes any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.
All investments are subject to risk. Past performance is no guarantee of future returns. The value of investments may fluctuate. Results achieved in the past are no guarantee of future results. This document is not intended to constitute legal, tax or accounting advice or investment recommendations. Prospective investors are advised to seek expert legal, financial, tax and other professional advice before making any investment decision. Statements contained in this document that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Inland and ZDPCo. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. Additionally, this document contains "forward-looking statements". Actual events or results or the actual performance of Inland may differ materially from those reflected or contemplated in such targets or forward-looking statements.