Trafalgar New Homes Plc

February 09, 2012 10:03 ET

Proposed Disposal of Completed Properties

9 February 2012

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

                               Proposed Disposal of Completed Properties
                               Completion of Financing of Oakhurst Manor

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
£285,000  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

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

The  aggregate  book  value of the Properties is £1,129,301.  The aggregate  rental  income  from  the
Properties  is  approximately  £50,400  per  year.  There are  aggregate  borrowings  secured  on  the
Properties of £644,400, the interest on which is currently £40,275 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 £40,275 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.

Oakhurst Manor

The Directors are also pleased to announce the completion of the financing of the development of Combe
Bank's  site  at  Oakhurst  Manor, Bank Lane, Hildenborough, Kent. The  4.2  acre  site  has  planning
permission  for  the construction of twelve residential units. A facility agreement has  been  entered
into with Banif-Banco Internacional Do Funchal S.A., providing for a maximum loan of £3,478,000 to  be
made available at an interest rate of 3.75 per cent over three month libor. The funding to be provided
under  the  agreement will repay all existing borrowing relating to the property and will provide  100
per cent of the build cost of the project.




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

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

Contact Information

  • Trafalgar New Homes Plc