Proposed Disposal of Completed Properties
Posted by tnhat 00:00, February 9 2012.

9 February 2012

Trafalgar New Homes Plc ("TNH" or the "Company")

Proposed Disposal of Completed Properties



As set out in the Company's PLUS Admission Document dated 8 November 2011, the Company through its wholly owned subsidiary company, Combe Bank Homes Ltd ("Combe Bank"), owns a small number of completed residential properties (the "Properties") which are let pending sale. At the time of their development it had not been the intention of the Directors of Combe Bank that the Properties be developed for letting purposes, but in the current economic climate the decision was taken that their sale should be delayed until such time as sale prices which, in the opinion of the Directors of TNH (the "Directors")
more properly reflected their value, could be achieved. The Properties were, therefore, let on terms reflecting a return in excess of Combe Bank's then borrowing cost.

The Directors of Combe Bank have been advised that if Combe Bank continues to hold the Properties for letting there is a danger that HM Revenue and Customs will seek to regard the Company as a property investment company, with a consequent detrimental effect on Combe Bank's VAT status. In addition, the financing arrangements for certain of the Properties are shortly due for renewal and, in the opinion of the Directors, the re-financing terms which have so far been offered to Combe Bank are less than advantageous, and the financing available for the Properties as investment properties would be some GBP285,000 less than the current borrowings on those Properties. For these reasons, the Directors consider that it will be in the best interests of the Company if these Properties are now to be sold.

The Directors believe that a sale of the Properties on the open market in the current economic climate would almost certainly realise a significant loss against book value. An agreement in principle (the "Agreement") has therefore been entered into between Combe Bank and Mr Christopher Johnson, the Executive Chairman of and a controlling shareholder in, the Company. Under the terms of the Agreement, it is proposed that Mr Johnson will acquire the properties for an aggregate consideration of GBP1,090,000.

As Mr Christopher Johnson is a director of the Company and a controlling shareholder of the Company, the proposed disposal of the Properties is classified as a related party transaction under the PLUS Rules.

The aggregate book value of the Properties is GBP1,129,301. The aggregate rental income from the Properties is approximately GBP50,400 per year. There are aggregate borrowings secured on the Properties of GBP644,400, the interest on which is currently GBP40,275 per year.

All of the Properties are located in Dover and are freehold and residential. The Properties comprise: an end of terrace three bedroom property, two maisonettes, a former public house which has been converted into four flats and a detached cottage.

The Directors have received independent confirmation from a leading firm of valuers that the purchase consideration for the Properties is, in their opinion, in excess of, their current estimated market value. The aggregate purchase consideration will be settled in cash, which will be applied principally towards reducing existing bank indebtedness. The disposal of the Properties will reduce interest payable on bank loans by some GBP40,275 per year, although the Group would also lose the benefit of the rental income.

Under the provisions of S190 Companies Act 2006 the proposed disposal of the Properties to Mr Johnson will require the approval of the shareholders of TNH in general meeting. A circular will therefore today be despatched to shareholders giving full details of the proposed transaction and containing a notice convening a general meeting.

Mr Johnson has an interest in 87.14% of the issued ordinary share capital of the Company, and is party to a relationship agreement with the Company pursuant to which neither he nor his son Alexander Johnson will vote on the Resolution relating to the disposal of the Properties.
 


THE DIRECTORS OF TRAFALGAR NEW HOMES PLC ACCEPT RESPONSIBILITY FOR THIS ANNOUNCEMENT.

---ENDS---


Enquiries:

Trafalgar New Homes Plc
Christopher Johnson
+44 (0)1732 700000

PLUS Corporate Adviser
Peter Ward/Alex Brearley
+44 (0)20 7638 5600



Trafalgar New Homes Plc

(END) Dow Jones Newswires

February 09, 2012 10:03 ET (15:03 GMT)