Redow’s reveals £150m cash call and Harrow swoop
HOUSEBUILDER Redrow unveiled a £150m rights issue today and said it planned to buy land development company Harrow Estates.
The North West company, which is now back under the leadership of founder Steve Morgan, revealed plans for a 13 for 14 rights issue through the issue of 148,584,705 new shares to strengthen the balance sheet, reduce gearing and allow it to take advantage of cheaper land values.
The group is also cutting its bank debt from £425m to £250m, which will also give it the head-room to do more deals as covenants relating to land purchases and joint ventures have been relaxed.
Redrow said it plans to buy five freehold land assets with the option to acquire seven further strategic land assets, together with the employees of Harrow Estates and the ‘Harrow Estates’ name, for a total consideration of £15m.
Harrow is based in Preston Brook, Cheshire and is also owned by Mr Morgan.
He said today:”The proposed Rights Issue will strengthen Redrow’s balance sheet and position Redrow for growth.
“We are returning Redrow to its traditional focus on a great product in the market for family housing.
“We now need to enhance our ability to acquire land through selected acquisitions. This is all part of our strategy to steer the business back to delivering a much improved return on capital employed.
“I am very pleased to be supporting the proposed issue in full in respect of the 29.9% f the shares in Redrow which I control.”
Alan Jackson, deputy chairman and senior independent non-executive director, said: “The board of Redrow believes that the rights issue and the Harrow Estates transaction are two further important steps towards restoring Redrow to its rightful place as one of the market leaders in the sector.”
