Telford Homes Regulatory News (TEF)

Telford Homes Plc

 ("Telford Homes" or the "Company")

Placing to raise £7.5 million

Telford Homes Plc (AIM: TEF), the residential property developer in East London noted for regeneration projects within public sector partnerships, today announces the proposed placing of 9,375,000 new Ordinary Shares of 10 pence each at a placing price of 80 pence per share, proposed amendments to the Articles and the convening of a General Meeting 

Introduction

Your Board announced today that it proposes to raise approximately £7.5 million, before expenses, by way of a placing of 9,375,000 new Ordinary Shares at a price of 80 pence per share (the "Placing" or "Placing Shares", as appropriate). The net proceeds of the Placing (expected to be approximately £7.2 million) will allow the Group to develop open market housing on existing sites and to invest in further development opportunities. The Placing is conditional, amongst other things, upon Shareholders passing certain resolutions at a general meeting of the Company to be held on 5 March 2010 at 10.00 a.m. (the "General Meeting"). As a result, a circular (the "Circular") has been sent to Shareholders today containing information in relation to the Placing and the convening of the General Meeting.

The Placing, which has been arranged by Shore Capital Stockbrokers Limited pursuant to the terms of a placing agreement dated 16 February 2010 (the "Placing Agreement"), is also conditional upon admission of the Placing Shares to trading on AIM ("Admission").

A resolution will also be proposed at the General Meeting to amend the articles of association (the "Articles") of the Company by removing provisions formerly contained in the Company's memorandum of association and introducing a new article specifying the limited liability of members.

Background to and reasons for the Placing

Telford Homes is an established residential property developer primarily engaged in the regeneration of brownfield sites in East London. The Company has established beneficial local relationships including partnerships with affordable housing land owners and is also a grant partner of the Homes and Communities Agency with an agreed grant programme of approximately £73 million to deliver 534 affordable homes. The Company designs high quality developments, obtains planning permissions within a complex planning environment and constructs new homes, primarily one to four bedroom apartments.

Your Directors consider that the housing market has stabilised somewhat in recent months in East London and that a steady rate of new sales is being secured. In addition the Directors believe that the long term success of development in East London is underpinned by evidence of an ongoing shortage of supply of new housing including demand for rental properties in the area.

In the context of the ongoing regeneration of parts of East London, enhanced by the 2012 Olympics, improving transport connections and a shortage of supply of new housing, your Directors consider that the Company should take advantage of opportunities to begin construction of homes for sale in the open market. The Company owns two sites on which the affordable housing element is already under construction and intends to purchase and develop new sites within four additional estate regeneration projects through its partnership with EastendHomes, a local stock transfer organisation. All six opportunities benefit from resolutions by the planning authorities to grant detailed planning permissions. Construction is expected to take between 18 months and three years and your Directors consider that it is appropriate to commence construction during 2010.

The Directors have therefore decided to raise approximately £7.5 million pursuant to the Placing in order to provide the Company with additional funds to develop the open market housing on the two sites already within its ownership and to purchase and develop some of the sites on the four estate regeneration projects.

Whilst existing debt facilities are considered by the Directors to be sufficient to continue all developments currently under construction, new debt facilities will be required alongside the funds raised through the Placing to enable the further development and acquisitions described above. The Directors believe that this debt finance can be secured during 2010 and that a successful equity raising now will strengthen the Company's ability to secure that debt finance.

The Placing

The Company proposes to raise £7.5 million, before expenses, by the issue of 9,375,000 new Ordinary Shares at a price of 80 pence per share.

Certain Directors and/or their Connected Persons (as defined in Section 252 of the Companies Act 2006 (the "Act")) have agreed to subscribe in aggregate £130,000 for 162,500 Placing Shares. The balance of the Placing Shares have been conditionally placed by Shore Capital Stockbrokers Limited with institutional and other investors.

In addition, Furlong Homes Executive Pension Scheme, of which Andrew Wiseman and James Furlong are beneficiaries, has agreed to subscribe for 50,000 Placing Shares, equivalent to 0.1 per cent. of the Enlarged Issued Share Capital.

The Placing Shares represent approximately 18.8 per cent of the issued share capital following the Placing. The net proceeds of the Placing will amount to approximately £7.2 million.

The Placing Shares will rank pari passu with the existing Ordinary Shares and will rank in full for any dividends and distributions paid or made in respect of the Ordinary Shares. It is expected that definitive title to the Placing Shares will be delivered either under CREST on the date of their Admission where delivery is requested in uncertified form, or by first class post not later than 14 days after such date where delivery is requested in certificated form. No temporary documents of title will be issued.

Admission and dealings

Application will be made to the London Stock Exchange for the Placing Shares to be admitted to trading on AIM. It is expected that Admission to AIM will become effective and that dealings will commence on 8 March 2010.

The Placing Agreement

Pursuant to the terms of the Placing Agreement, Shore Capital Stockbrokers Limited has conditionally agreed to use its reasonable endeavours, as agent for the Company, to place the Placing Shares at the Placing Price with certain institutional and other investors. The Placing Agreement is conditional upon, inter alia, the proposed resolutions being duly passed at the General Meeting and Admission becoming effective which is expected to take place on or before 8.00 a.m. on 8 March 2010 (or such later time and/or date as the Company and Shore Capital may agree, but in any event by no later than 31 March 2010).

Amendments to Articles of Association

As a result of recently introduced changes in the Act, since 1 October 2009 most of the provisions of what was the Company's memorandum of association have been treated as provisions of the Company's Articles. English companies were formerly required, amongst other things, to have stated objects and an authorised share capital which limited the amount of shares which a company had available for allotment. These requirements have now been repealed but for a transitional period are treated as forming part of the Company's Articles. The proposed resolution to amend the Articles will have the effect of removing these restrictions. Your Board intends in due course to recommend to Shareholders of the Company new articles of association reflecting other changes in the Act and current practice.

General Meeting

A notice convening the General Meeting to be held at First Floor, Stuart House, Queensgate, Britannia Road, Waltham Cross, Hertfordshire EN8 7TF at 10.00 a.m. on 5 March 2010 is set out in the Circular.

Placing statistics

Expected timetable of principal events

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