Telford Homes Regulatory News (TEF)

28 Sep 2006 14:11

Telford Homes PLC28 September 2006 Telford Homes Plc Placing of 5,769,230 new Ordinary Shares at a price of 260 pence per share Proposed adoption of the Share Plan and Employee Trust Introduction The Company announces today that it proposes to raise £15.0 million, beforeexpenses, by way of a placing of 5,769,230 new Ordinary Shares at a price of 260pence per share. The net proceeds of the Placing will allow the Group to investin further land opportunities for development. The Placing is conditional, interalia, upon the Company obtaining Shareholders' approval. In addition, the Company is proposing to adopt the Share Plan and Employee Trustin order to provide suitable incentives to existing and new employees of theGroup. Background to and reasons for the Placing Telford Homes is a successful London-based housebuilder specialising in thedevelopment of brownfield sites within residential areas principally in Northand East London. The Company participates in the regeneration of these areas andworks closely with housing association partners targeting gross margins of 20per cent on new developments comprising principally one and two bedroomapartments with an average selling price of around £250,000. The Directors believe they have well-established relationships with a wide rangeof specialist sub-contractors which assists in enabling the Company to buildhigh quality homes delivered in accordance with agreed construction schedules.As a result of its significant expertise in processing planning applicationsthrough local authorities, the Company has grown strongly over the previous fiveyears. At the Annual General Meeting of the Company held on 6 July 2006, AndrewWiseman, Chief Executive, made the following comments: "Telford Homes has had an excellent start to the new financial year. We recentlyheld the first major sales launch of the year at OneStratford, our developmentin High Street, Stratford. We have exchanged contracts on 134 of the 179 privatehomes with 35 of the remaining 45 sold, subject to contract. Along with the success of the Stratford launch the local market in East Londonhas remained strong and sales across all of our developments are in line withour expectations for the first quarter. In total to date, due to contractsexchanged and properties sold, subject to contract, we have 237 private homesand 35 affordable homes contributing to our results for the year to 31 March2007. Interest in Queen Mary's Gate, our major development in South Woodford,remains high ahead of the launch later this year. On 23 May 2006 I reported that, due to our position as a local specialist andour close relationships with the affordable housing sector, Telford Homes waswell placed to benefit from an increasing number of development opportunities inEast London. This remains the case and we have the capacity to extend ourdevelopment pipeline in the next few months. Our trading performance in the first quarter, and our expectations for thefuture in East London, support us in believing that we will meet marketexpectations for continued growth in the year to 31 March 2007 and beyond." On 5 September 2006, the Company issued the following trading update for theyear ending 31 March 2007: "The Directors are pleased to announce that the strong start to the yearreported at the time of our Annual General Meeting on 6 July 2006 has continuedwith sales progressing well. In particular, all 179 private homes at ourdevelopment in High Street Stratford, OneStratford, are now sold with 175contracts exchanged and the remaining four proceeding to contract. In addition, we have secured an enhanced planning consent at our majordevelopment in South Woodford, Queen Mary's Gate, increasing the number of homesin the development from 441 to 498. Although we have not yet begun marketing ofthe private apartments (the launch is at the end of September), we have alreadyregistered enquiries from more than 800 prospective purchasers, indicating verystrong interest in this development. We have already sold 14 of the 16 privatetownhouses that form the first phase of the development. New land opportunities are continuously being appraised as we seek to extend ourdevelopment pipeline; we have recently exchanged contracts to acquire anothersite close to the future Olympic Park which we hope to develop in the mediumterm. As a result of successful trading to date, the Directors expect the interimresults to be very strong with profits weighted towards the first half of theyear. In addition, we are confident that our results for the year ending 31March 2007 will exceed current market expectations." The Directors consider that, in the specialised areas of the market in whichTelford Homes operates, the housing market remains strong and they intend toacquire further sites for residential development. It is the Directors'intention that these will be either previously undeveloped sites within urbanareas or existing built-on industrial, commercial or residential sites. TheDirectors' skills and experience enable the Company to acquire sites which mayrequire planning approvals or sites where the Directors believe that existingplanning consents can be improved upon so as to generate a greater return forthe Company. In addition, the Directors believe that there are significant developmentopportunities upon social housing estates which will be redeveloped to provide amix of new open-market housing and improved social housing, supported by marketforecasts of increased demand for new homes. As a result, the Directors have decided to raise £15.0 million by means of thePlacing in order to provide the Company with sufficient net funds to invest inattractive opportunities as they arise. The Placing The Company proposes to raise £15.0 million, before expenses, by the issue of5,769,230 new Ordinary Shares at a price of 260 pence per share. Certain Directors and/or their Connected Persons (as defined in Section 346 ofthe Act) have agreed to subscribe in aggregate £174,200 for 67,000 PlacingShares. The balance of the Placing Shares have been conditionally placed byShore Capital Stockbrokers Limited with institutional and other investors. ThePlacing Shares represent approximately 16.0 per cent of the issued share capitalfollowing the Placing. The net proceeds of the Placing will amount toapproximately £14.4 million. The Placing Shares will rank pari passu with the existing Ordinary Shares andwill rank in full for any dividends and distributions paid or made in respect ofthe Ordinary Shares. It is expected that definitive title to the Placing Shareswill be delivered either under CREST on the date of their Admission wheredelivery is requested in uncertified form, or by first class post not later than14 days after such date where delivery is requested in certificated form. Notemporary documents of title will be issued. Application is expected to be made on 23 October 2006 for the Placing Shares tobe admitted to trading on AIM. It is expected that dealings in the PlacingShares will commence on AIM on 27 October 2006. The Placing Shares represent16.0 per cent of the issued share capital of the Company as enlarged by thePlacing. The Placing Agreement Pursuant to the terms of the Placing Agreement, Shore Capital has conditionallyagreed to use its reasonable endeavours, as agent for the Company, to place thePlacing Shares at the Placing Price with certain institutional and otherinvestors. The Placing Agreement is conditional upon, inter alia, theResolutions being duly passed at the EGM and Admission becoming effective whichis expected to take place on or before 8.00 a.m. on 27 October 2006 (or suchlater time and/or date as the Company and Shore Capital may agree, but in anyevent by no later than 30 November 2006). Share Plan and Employee Trust The Directors are seeking Shareholders' approval at the Extraordinary GeneralMeeting to establish the Share Plan and Employee Trust, being a deferred paymentshare purchase plan and an employee benefit trust for the benefit of employeesof the Company with Abacus Corporate Trustee Limited, acting as trustee of theTrust. The Company wishes to introduce the Share Plan and Employee Trust to encourageits senior executives to invest in the Company's shares whilst minimising theaccounting costs and to ensure that, over the long term, the interests of theCompany's executives will be even more closely aligned with Shareholders'interests. The Directors intend to issue initially up to 550,000 new Ordinary Shares underthe Share Plan and Employee Trust at market price to key employees which will befinanced through interest-free loans. The underlying shares will be held by thetrustee on behalf of the participants until the earlier of the end of thevesting period and the date of cessation of employment (if the participant is a'good leaver', as defined in the Share Plan and Trust rules). The source ofshares for the satisfaction of these awards will be new shares which will besubscribed for by participants. PLACING STATISTICS Placing Price 260 penceNumber of Ordinary Shares in issue prior to the Placing 30,343,055Number of Placing Shares being placed on behalf of the Company 5,769,230Estimated proceeds receivable by the Company, net of expenses £14.4 millionNumber of Ordinary Shares in issue following the Placing 36,112,285Number of Placing Shares as a percentage of the enlarged issued share capital 16.0 per cent EXPECTED TIMETABLE OF PRINCIPAL EVENTS Latest time and date for receipt of Forms of Proxy 10.00 a.m. on 21 October 2006Extraordinary General Meeting 10.00 a.m. on 23 October 2006Admission and dealings in the Placing Shares expected to commence on AIM 27 October 2006Expected date for CREST stock accounts to be credited for the Placing Shares 27 October 2006in uncertificated formExpected date for posting of share certificates for the Placing Shares 3 November 2006 Press enquiries Telford Homes PlcAndrew Wiseman, Chief Executive 01992 809 800Jon Di-Stefano, Financial Director Shore CapitalGraham Shore 020 7408 4090Alex Borrelli This information is provided by RNS The company news service from the London Stock Exchange