One of the largest developers in the North East is selling a stake in its flagship property company.
UK Land Estates has appointed King Sturge’s corporate finance team to find an equity investor to help recapitalise its £165m former joint venture with HBOS, now part of Lloyds Banking Group.
The jv, UK Land Estates Partnership, specialises in regeneration and development schemes that target small businesses as tenants.
Sources said that UK Land, which is chaired by Sir Ian Wrigglesworth, one of the founder members of the Liberal Democrat Party, was planning to sell a stake of between 25% and 50% in the partnership.
A source said: “The sale of the business is being led by its management – chief executive Chris Whitfield and managing director Michael Spriggs – in a bid to secure fresh investment to put its balance sheet on a better footing.”
The partnership has £158m of debt outstanding in the form of: a £74m senior debt facility from HSBC, Bank of Ireland and National Australia Bank; a £50m mezzanine loan from Lloyds Banking Group; and a £34m inter-company loan from the North East Property Partnership.
In January 2009, the company restructured its previous £130m of senior debt that had been provided by HBOS, and the bank’s equity stake was transferred to the company’s directors. The senior and mezzanine debt are both scheduled to mature in 2012.
Acquisitive opportunity fund managers, including Mountgrange Investment Management and Moorfield, are understood to have looked at the business, although talks with these firms have not progressed.
It is understood that the proceeds from a sale in the partnership would be used to pay down some or all of the Lloyds mezzanine facility – although the bank is not pushing the sale – and provide capital for expansion.
None of the parties involved would comment.
mike.phillips@estatesgazette.com
