23rd Feb 2006 15:44
FBD Holdings PLC23 February 2006 Public Announcement FBD Holdings plc ("FBD" or "the Group") Sale of land at La Cala Resort, Spain ("La Cala") and Intention to distribute cash to shareholders by special dividends, pursuant to completion of the land sale FBD is pleased to announce that its 100% owned Spanish property and leisuresubsidiary, Ranchos Reunidos S.A. ("RRSA") has entered into a conditionalagreement to sell a major portion of the building development land which it ownsat La Cala to Desarrollos Lar Sol MS. SL ("Lar Sol"). Subject to all of the terms, conditions and warranties relating to the agreementbeing fulfilled, the FBD Board intends to distribute the net cash proceeds ofthe sale to shareholders by way of special dividends. The net cash proceedsare estimated to amount to up to €120m. The signing of the land transfer deed is expected to be effected by 30 June2006. The total gross consideration is €201m. in cash. The payment schedule isdependent, inter alia, on obtaining final planning approval from the RegionalPlanning Authority ("the Authority") as summarised below. Following the transaction, RRSA will remain as majority owner and operator ofthe resort's leisure interests, in addition to completing and marketing itscurrent residential building projects. It will also continue to own a portionof development land at La Cala. Principal Terms & Conditions of Sale The sale of the land is to be effected pursuant to the sale and purchaseagreement that has been entered into. The agreement is subject to warranties andindemnities that are normal for a transaction of this nature, in addition toconditions regarding final planning approvals in relation to part of the land.Also, under the agreement, RRSA has undertaken to carry out certaininfrastructural works. The total gross consideration is €201m. in cash. The consideration isconstituted in two parts, apportioned between two tranches of land. Tranche I consideration amounts to €121m. and is payable as follows: - €100m. immediately on signing of land transfer deeds for all of theland (target date 22/6/06) - €21m. on 30/6/07 Tranche II consideration is subject to receipt of final planning approval fromthe Authority and amounts to €80m. payable as follows: (Provisional approval hasbeen obtained at local municipal level for this land) (a) If final planning approval as currently applied for on Tranche II land isobtained from the Authority before 30/6/07 - €50m. within 60 days of registration of approval. - €30m. on 30/6/07. or (b) If final planning approval as currently applied for on Tranche II land isobtained from the Authority after 30/6/07. - €80m. within 60 days of registration of approval. If planning approval as currently applied for, is not obtained within 3 years ofthe signing of the land transfer deed, FBD will not receive the second trancheconsideration. The title of the corresponding land would revert back to FBD whowould then review the planning process with the objective of maximizing itsdevelopment opportunities. Financial Effect of the Sale Subject to obtaining final planning approval as currently applied for, the termsand conditions of the agreement and the timelines outlined above, the sale willhave the following financial impact: • The net profit accruing to FBD from the transaction, i.e. afterdeducting land at carrying cost of €31m., infrastructural spend relating to landsold, costs of disposal, taxation etc., is estimated to be up €90m. • The impact on underlying earnings in 2006 and 2007 will be neutralas the land being disposed of is held as stock with no attaching earningsstream. • The net cash proceeds arising from the transaction are estimated tobe up to €120m. Special Dividend In the absence of any circumstances that would cause it to alter its decision,the Board of FBD intends to distribute the net cash proceeds of the transactionby way of two special dividends. The first special dividend will be paid within60 days of receiving the initial Tranche I consideration monies. The secondspecial dividend will be paid within 60 days of all remaining transaction moniesbeing received. The Board believes that returning all of the net proceeds toshareholders is the appropriate use for the monies generated and that itsdistribution will not inhibit the ongoing growth plans of the Group. Background to the Sale La Cala La Cala is located in Mijas, Costa del Sol, Spain. The 400 hectare residentialand recreational resort encompasses 3 championship golf courses, 5 star hotel,clubhouse, restaurant, leisure facilities, development land and residentialcommunities. The La Cala Estate was assembled in the late 1980s. In addition to developing and managing La Cala's golf and leisure facilitiesover the years, RRSA has successfully undertaken residential building projectsat the resort. RRSA is currently progressing two such projects which werecommenced in 2004/2005; these are not part of the transaction. Mr. Denis Foley has been Managing Director of RRSA since 1996. He and his teamhave established La Cala as one of the premier residential golfing resorts inSpain. Through judicious investment and strategic management over the years, thepotential identified originally at La Cala has been developed and substantialvalue has been created for FBD shareholders. A significant part of this value isnow being realised through the sale. The land being sold has a total surface area of 96 hectares. The developmentland being retained by RRSA has a total surface area of 13 hectares. The latterland borders the golf courses and further analysis is required before anydevelopment is undertaken. RRSA does not envisage building activity on thisland in the foreseeable future. FBD regularly reviews the options for all of its businesses in terms ofmaximising returns to stakeholders. It was in this context that the decision toaccelerate the realisation of the development land via a significant disposalwas taken. FBD considers the land sale to Lar Sol to be a favourable outcome.There are no plans to dispose of any other La Cala interests. Lar Sol The ultimate owners of Desarrollos Lar Sol MS, the purchasing company, are GrupoLAR SA (50%) and the Morgan Stanley controlled MSREF Atlantic Holdings BV(50%). Grupo Lar is one of the foremost real estate development, investment andmanagement companies in Spain having Lar Sol as a Strategic Business Unit fullyfocused on developing vacational residential real estate product. MSREF is a real estate investment fund controlled by Morgan Stanley Bank. Caja Madrid FBD was advised by the M & A team of Caja Madrid, one of Spain's top fivefinancial institutions. RRSA/Lar Sol FBD is confident that the collaboration which RRSA and Lar Sol will enter intoarising from this transaction will advance the ongoing development of La Cala asone of the premier residential and holiday golf resorts in Europe. Thetransaction opens up the La Cala project to the indigenous Spanish market whereLar Sol have particular strengths. ENDS 23rd February 2006 For Reference: Telephone No. FBD: 01 4093 208 Philip Fitzsimons, Chief Executive Andrew Langford, Finance Director Murray Consultants: 01 4980 300 Joe Murray This announcement has been issued through the Companies Announcement Service of the Irish Stock Exchange. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
FBH.L