Urban mixed-use developer City Lofts is de-listing from AIM and seeking private equity to fund further expansion.
The group, which listed on AIM in 2003, intends to cancel admission of shares on 26 February this year following the decision that the public market would not supply additional capital required for growth.
More than 75% of shareholders have already demonstrated support for the delisting, although official approval will be sought at an EGM on 19 February.
The group has also confirmed the purchase of five regional development sites valued at £475m.
A proposed sale of a 30.67% to a property fund owned by JER Real Estate Advisors (UK) and LB UK RE Holdings, itself owned by Lehman Brothers Holdings, is also awaiting shareholder approval.
The sale to Lara JV Luxembourg Sarl, for 122.5p per share, values the group at around £61.6m and will give the fund an initial 20.97% stake in the group
The completion of this sale, which is conditional upon shareholder approval, would trigger a deal for a further 4,877,992 shares for 122.5p per share from founder shareholders, increasing the fund’s shareholding to a 30.67% stake.
Three founding shareholders will retain ownership of a 58% stake.
The remaining 10% stake will be retained by three other shareholders and architectural and interior designers Conran and Partners, with whom the group has a formal partnership.
The offer price of 122.5p for each share represents a premium of 20.4% to the average closing price of 101.7p per share, and a premium of 11.9% to the closing price of 109.5p per share on 11 January 2007, the last business day prior to the date of this announcement.
The fund has received support from shareholders representing 24% of the 75% approval required to sanction the deal, which will become effective on 13 March 2007 if given the go-ahead.
The deal is not conditional upon the company de-listing.
The company has also entered into new financing arrangements comprising a three year £18m loan from Lara JV Luxembourg Sarl conditional upon the company de-listing from AIM.
The loan is not conditional upon the share deal becoming effective.
City Lofts (Sheffield), City Lofts (Half Tide Dock) and City Lofts (Brassington) have agreed a loan of £152.55m for development from Lehman Brothers Europe and Hypo Real Estate Bank International.
These companies have also agreed a £63.25m loan with Lehman Brothers Europe to finance land acquisitions.
City Lofts is expecting to begin work on developments at Half Tide Dock in Liverpool, St Paul’s in Sheffield and Park Point in Sutton Coldfield, which have a total gross development value of £166.1m, this quarter.
The group has six more developments, worth around £182m under construction, and a UK development pipeline worth around £1.1bn.
References: EGi News 12/01/07
