St Modwen's delight as £102m share issue backed
Jun 9 2009 by Anna Blackaby, Birmingham Post
The Quinton-based regeneration specialist behind the £750 million redevelopment of Longbridge has seen a strong take-up of the £102 million share issue announced last month.
Eighty-five per cent of St Modwen’s shareholders took up the open offer, underwritten by JP Morgan Cazenove and Numis, and the remaining 15 per cent of the open offer shares were allocated to institutional shareholders and other investors.
The company said it needed the money to boost its finances as the recession eats away at the value of its property holdings.
The brownfield regeneration specialist also said the cash raised from issuing nearly 80 million new shares on a two for-one basis would help prevent it breaching its banking covenants, reduce debt and stave off the need for a fire-sale of assets. The shares were issued by way of a firm placing, placing and open offer at 135p a share.
St Modwen chief executive Bill Oliver said: “We are delighted with the level of support shown for the company by existing shareholders and new institutional investors which illustrates their long-term confidence in the business.
“We now look forward to operating from a position of financial strength and building on our reputation as the UK’s leading regeneration specialist.
“We will do this by pursuing appropriate opportunities to supplement our existing hopper, adding value to our portfolio of income producing assets and prioritising long term development projects.”
Shareholder approval for the firm placing, placing and open offer was given at an extraordinary general meeting held at Longbridge Technology Park in Birmingham yesterday.
In May the company said it had negotiated new terms for some of its banking facilities to relieve technical pressure on loan-to-value covenants, which it said combined with the share issue would reduce the need for asset sales at unattractive prices which might otherwise be required to avoid a breach of its loan terms following a 27 per cent crash in average commercial property values during 2008.
The firm lost £50.7 million in the 12 months to November 30th last year, a period chairman Anthony Glossop called “the most difficult for property in decades”.
St Modwen’s share issue came after a string of other UK property companies also tapped shareholders for funds. In February, Land Securities, British Land and Hammerson between them raised more than £2 billion of emergency cash.
Meanwhile the firm, which is also the developer behind the controversial planned eco-town in Warwickshire, has released further details of its plan submitted for the 478-acre Long Marston site in Warwickshire. Earlier this year St Modwen said it was applying for permission to build a holiday site on a former Royal Engineers depot at Long Marston near Stratford, an alternative development which could sound the death knell for the proposed 6,000-home new town Middle Quinton.
The developer last night held an exhibition for residents releasing more images and information from the masterplan which has been submitted to Stratford District Council. The exhibition coincided with the launch of St. Modwen’s website for the masterplan – www.longmarstonmasterplan.co.uk.
