Morris Group to refinance £190m of loans
WILMSLOW-based housebuilder Morris Group is on the verge of completing a £190m refinancing deal which will see it extend the life of its existing loans for another three years.
Details of the proposed refinancing are contained in the company’s newly-filed accounts covering the year to March 31, 2010, which showed improved sales and profits with a caveat that the the trading environment remained tough.
The accounts show that business had £190m of bank loans that were due for repayment by the end of this month.
However, notes accompanying the accounts state that it has agreed to extend its current facilities with its existing RBS-led banking syndicate until March 31, 2014. The loans are secured over all of the company’s assets and attract an interest rate of 2.25-3% above LIBOR.
A note accompanying the accounts states that the legal documents relating to the refinancing “will be completed on or before March 31, 2011”.
Morris Homes’ manging director Mike Gaskell said: “We are currently close to finalising a new three-year facility with our current lenders which will enable the group to take advantage of new market opportunities.”
During the year ending March 2010, the company saw its sales increase by 12% to £126.1m as the number of sales completed increased by 30 to 681. The average sale price also increased by 9% to £183,800.
It also made a pre-tax profit of £1.3m, compared with a loss of £21.9m in 2009, when a restructuring exercise and write-downs in the value of its portfolio led to it declaring exceptional charges of £13.8m.
The value of the group’s net assets also increased in 2010 by £1.5m to £48.8m.
A statement accompanying the accounts prepared by directors said: “The business continues to operate in some of the most challenging conditions in the sector for many years.
“Restriction of availability of finance for buyers along with fragile consumer confidence continues to impact sales activity and the volume of housing transactions in the UK.
However, Gaskell said that since the 2010 year end conditions had continued to improve.
“New home reservations for the financial year to date are 25% ahead of the previous year and since the beginning of January sales have been 87% higher,” he said.
“Although this sharp increase can be attributed in part to poor weather affecting sales at the start of last year, it is a clear sign of improving underlying market conditions.
“We have seen a significant pick-up in demand for, and sales of, new homes across our sites in the north and midlands and we are continuing our programme of purchasing new land for development.
“Morris is currently actively developing 42 sites compared to 25 during the same period last year. This is a record high and is a sign of confidence in the quality of our product.
