LXB.L Regulatory News (LXB)

LXB Retail Properties Plc

(the "Company" or the "Group")

Portfolio Update, Revised NAV Guidance, and Proposed Return of Cash

The Board of LXB Retail Properties Plc ('the Company') is pleased to update shareholders on progress with implementing the shareholder mandate which is expected to result in the Company's dissolution. The Group remains on course to complete all third-party business by 31 March 2019, and the Board plans to seek an order of the Jersey Court for the Company's dissolution shortly afterwards.

The Board considered a provisional dissolution plan at its meeting on 12 December 2018 and plans to meet again on 18 February 2019 to finalise proposals. The agenda for that meeting is expected to include announcement of results for the financial year ended 30 September 2018 and consideration of circulars to shareholders convening the Annual General Meeting and an Extraordinary General Meeting. It is anticipated that the circular for the Extraordinary General Meeting will describe plans for the Group's remaining subsidiaries and arrangements for the dissolution of the Company together with details of any final proposed cash distribution to shareholders. In line with the Company's regulatory obligations, the circular will also ask shareholders to approve the cancellation of trading in the Company's shares on AIM and their de-listing from TISE. Assuming all necessary approvals are forthcoming, it is anticipated that de-listing and dissolution will both occur shortly thereafter.

The Company's last announcement on 5 October 2018 noted that the Group was expecting the final amount due under the Biggleswade forward funding agreement and c£3m was received recently. The Group believes another (much more modest) amount is also recoverable in connection with Business Rates and discussions continue. Additionally, a final settlement with The Crown Estate in relation to Phase 3 of Rushden Lakes is expected to shortly result in a receipt of c£3m. 

Discussions have also been concluded recently in connection with defects under the building contract for Brocklebank Retail Park in Greenwich. That enables the Group to finalise matters under the forward funding agreement; whilst that will not unlock a significant cash receipt, it will permit the affairs of the two subsidiaries associated with that former investment to be finalised.

The Group is also in advanced discussions for the sale of its two remaining investments, the retail units at Sutton and Higher Newham Farm in Truro. Whilst there is no certainty, the Board hopes that both will be sold by the end of the current calendar year or, if not, that contracts for sale will have been exchanged by that time. Shareholders will be updated about all material developments.

If the sales of Sutton and Truro complete, the Group's only significant remaining external business will be to oversee completion of remedial works to the Multi Storey Car Park at Stafford and completion of outstanding matters relating to Rushden Lakes.

The Stafford works are scheduled to be carried out in early January 2019, although this project has been dogged by delays so the Group remains cautious about the specific timings. Final sign-off of these works are not anticipated to have any material financial implications, but it will again facilitate progress in finalising administration of the Group's affairs.

At Rushden Lakes, two principal areas remain outstanding. Discussions continue with Highways England regarding the final cost of works which were undertaken on the surrounding major roads and have been in use since Q2 2017. The other outstanding matter is the outcome in connection with Phase 2, the leisure block. This is discussed further below.

The reduced scale of the Group reflects the progress that has been made in preparing for the Company's dissolution. At today's date, 22 companies remain including the Company itself and it is anticipated that only ten companies will ultimately be transferred pursuant to the Company's scheme of arrangement to continuing ownership prior to dissolution.

The last guidance on the Board's expectations for the final NAV outcome was issued on 14 August 2018. That indicated an expected end NAV of 26-28 p per share (before adjustment for the returns of capital of 7.5p per share announced on 3 July 2108, and 4p per share announced on 17 August 2018), an adjusted range of 14.5p - 16.5p per share.

The markets in which the group operates remain tough and, in particular, the investment market for secondary retail is weak. As a result, a sale of the remaining retail at Sutton on the terms currently under discussion will give rise to a shortfall against previous expectations of c1.5 p per share. The occupier market in leisure has also suffered from several well publicised Company Voluntary Arrangements as the consequence of over-expansion and weakening consumer spending become clear. This has impacted directly on the Group's ability to let the remaining space at Phase 2 of Rushden Lakes. The Group is in discussions with The Crown Estate about the final arrangements for the completion of the leisure scheme and it is hoped that these will be finalised early in 2019.

In consequence of these adverse trends, the Board has reconsidered its guidance on the Group's final cash NAV and now anticipates that it will be in the range of 11.5 - 13.5 p per share (before adjustment for the proposed Return of Cash outlined below).

The Board has approved a Return of Cash of a further 6p per share (approximately £10.1m) again proposed to be implemented by means of a B share scheme. The formal documentation is expected to be posted to shareholders shortly, and it is anticipated that the cash will be returned before the end of January 2019. Following that, the Board's NAV guidance above will be amended to between 5.5 and 7.5 pence per share.

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