RNS Number : 4366T
Trafalgar New Homes PLC
17 July 2015
Trafalgar New Homes plc (the "Company")
Director Loans
On 27 June 2013, Christopher Johnson, the Company's Chief Executive, entered into an agreement with the Company's subsidiary, Combe Bank Homes (Oakhurst) Limited ("CBHO"), whereby he agreed to loan the amount of £1,421,255 to CBHO for the acquisition and development of properties at Oakhurst Lodge and Oakhurst Manor in Kent, now known as Oakhurst Park Gardens (and as disclosed in the Company's AIM Admission Document dated 27 June 2013) (the "CBHO Loan"). The CBHO Loan is repayable out of the net proceeds of sale of those properties, but only after the repayment of bank loans made in relation to those properties and the bank loans have now been repaid.
Of the 12 properties at Oakhurst Park Gardens, 11 were sold in the market, reducing the outstanding balance on the CBHO Loan accordingly. The properties at Oakhurst Park Gardens have been sold over a prolonged period since February 2014. In October 2014, the Company accepted an offer to purchase the final property ("Number 11") for £500,000, but the sale fell through. Since then a tenant has come forward to rent the house but the property still hadn't been sold at the proposed price of £525,000. Having considered these factors and accepting that £525,000 was the best price that could be achieved for Number 11 in the foreseeable future, the independent directors of the Company therefore decided that it was in the best interests of the Company to transfer Number 11 to Christopher Johnson for £525,000 in satisfaction of the outstanding balance on the CBHO Loan and part repayment of the CBH Loan (as defined below), which took place on 7 July 2015. The CBHO Loan has therefore now been repaid in full. The CBHO Loan carried interest at a rate of 5 per cent. per annum from 1 April 2013, payment of which has been waived by Mr. Johnson.
The transfer of Number 11 to Christopher Johnson and the waiver of interest payments on the CBHO Loan are related party transactions under the AIM Rules for Companies. Accordingly the independent directors of the Company consider, having consulted with Allenby Capital Limited, the Company's Nominated Adviser, that the transfer of Number 11 and waiver of interest on the CBHO Loan are fair and reasonable insofar as the Company's shareholders are concerned.
The transfer of Number 11 to Christopher Johnson is subject to section 190 of the Companies Act 2006 regarding substantial property transactions with directors. Accordingly, a resolution will be put to shareholders in the Company's forthcoming annual general meeting ("AGM") to affirm the transaction. Notice of the AGM will be posted to shareholders shortly, along with the Company's annual report and accounts.
In addition to the CBHO Loan, on 27 June 2013, Christopher Johnson entered into an agreement with the Company's subsidiary, Combe Bank Homes Limited ("CBH"), whereby he agreed to loan the amount of £2,614,136 to CBH for working capital purposes (and as disclosed in the Company's AIM Admission Document dated 27 June 2013) (the "CBH Loan"). Following repayments on the CBH Loan, the amount outstanding is currently approximately £2,000,000. The CBH Loan was repayable in full on or before 31 March 2015 and that repayment date has now been extended to 31 March 2017. The Company expects to make repayments periodically, depending on its working capital requirements. The CBH Loan is unsecured and carries interest at a rate of 5 per cent. per annum from 1 April 2013 and the interest is payable annually. Mr. Johnson agreed to forego the interest on the loan for the year to 31 March 2015. Interest was only paid on £2,000,000 of the loan for the year to 31 March 2014 and will also accrue on this amount for the year to 31 March 2016.
The extension of and waiver of interest payments on the CBH Loan is a related party transaction under the AIM Rules for Companies. Accordingly the independent directors of the Company consider, having consulted with Allenby Capital Limited, the Company's Nominated Adviser, that the amendments to the terms of the CBH Loan are fair and reasonable insofar as the Company's shareholders are concerned.
In addition, Mr. Johnson has confirmed to the Company that he will continue to support the Company for its anticipated needs and will not recall the balances owed to him for the next two years. This is deemed to be a related party transaction under the AIM Rules for Companies. Accordingly the independent directors of the Company consider, having consulted with Allenby Capital Limited, the Company's Nominated Adviser, that the confirmation of support from Mr. Johnson is fair and reasonable insofar as the Company's shareholders are concerned.
Enquiries:
Trafalgar New Homes Plc
Christopher Johnson
+44 (0)1732 700 000
Allenby Capital Ltd -
Jeremy Porter/James Reeve
+44 (0)20 3328 5656
Yellow Jersey PR Limited
Dominic Barretto
+44 (0)7768 537 739