An extraordinary general meeting has been scheduled for Thursday 26 September to decide the future structure of agent Lambert Smith Hampton.
Shareholders will be asked to vote on a proposal still being thrashed out between LSH’s lender and 20% shareholder Sankaty Advisors and the agent’s management, led by chairman Clive Williams, chief executive Ezra Nahome and finance director Stephen Gaastra.
As reported in Estates Gazette this week, Sankaty is pushing to take full ownership of the business in return for writing off around half of its £53m debt.
Sankaty, part of private equity firm Bain Capital, proposes paying the firm’s 28 loan note holders nothing for their equity stakes in LSH, but will offer them a share in the upside if certain performance hurdles are cleared in the future.
It would also extend the term of loans due to expire next year.
Letters have now gone out to all loan note holders within LSH’s current management inviting them to informal meetings about the proposals on Tuesday 17 September and notifying them of the EGM.
A 75% majority is needed to push the deal through, meaning that Sankaty needs to win over shareholders representing at least 55% of the equity.
However, Sankaty’s proposal is understood to have caused significant disquiet as it renders the firm’s equity worthless. The support of Nahome, who is thought to own 20%, will be critical. He is among 25 shareholders within the business. The rest are former directors who still own close to 25%.
LSH’s debt pile dates back to the £46.5m management buyout of the firm in 2007, funded by Bank of Scotland. Loan notes were issued to investors in the MBO, stapled to their shares.
Sankaty bought most of LSH’s debt as part of a portfolio from Lloyds Banking Group in August 2012 and subsequently took control of the rest. Sankaty bought its equity stake in LSH from Caird Capital in April.
The national agent booked an operating profit of £4.9m on turnover of £64m last year, but this was largely eroded by £4.5m of debt and interest payments.
LSH’s client relationship management system has been earmarked for investment if capital is freed up.
Julia.Cahill@estatesgazette.com
