Listed house builder announces £16.4m share placing

Sheffield-headquartered house builder MJ Gleeson expects to raise £16.4m through a share placing revealed today.

It intends to issue up to 2,730,100 new ordinary shares of two pence each to existing shareholders and other high-quality institutional investors, including directors of the company, at a price of 600 pence per share.

The placing is being conducted through an accelerated bookbuild process. Liberum Capital is acting as sole bookrunner.

In an update this morning, MJ Gleeson explains: “Once the safe resumption of building is permitted, the net proceeds of the placing are intended to position the company for an early recovery of the first-time buyer market.

“The company will direct the net proceeds to accelerate the resumption of building on existing sites, accelerate the opening of sites already owned or contracted and secure the supply chain.”

On 25 March MJ Gleeson confirmed it was temporarily suspending its building activity due to the virus pandemic.

And on 6 April the firm said it was furloughing 76% of its workforce and introducing salary cuts of up to 30% for senior management.

Its latest statement adds: “The company believes that once COVID-19 restrictions are lifted, low cost homes and those sold to first-time buyers will be the segment of the housing market that will recover the fastest.

“A precursor to home ownership is the saving of a deposit of as little as £5,000. A significant proportion of the company’s customers are the key and critical workers who will be working overtime during the current health crisis and may emerge from this period having saved such amounts.

“To be able to meet the demand for its homes, building on current sites and opening of new sites will be concertinaed into a much shorter time scale, which will be more capital intensive than usual.

“The company is therefore proposing to raise additional capital by way of the placing to provide additional liquidity.

“The placing, together with actions taken by management to date, will also result in the company being well capitalised and better able to withstand a prolonged period of the COVID-19 restrictions being enforced.

“Post the placing the company will have cash on hand of c.£82.9m, with a monthly cash burn of £3.1m down from £4.9m pre the COVID19 restrictions.”