6th Dec 2006 07:00
Mission Capital PLC05 December 2006 5 December 2006 Mission Capital plc ("Mission Capital" or "the Company") Proposed Investment and £36m Property Acquisition with Chelsfield Partners Mission Capital plc is pleased to announce the proposed investment in a BVIregistered joint venture, Athens Investments Holding Group Limited ("AthensInvestments") alongside Chelsfield Partners LLP. Athens Investments has been formed to acquire a portfolio of four properties(the "Portfolio") from CBRE Investors for a maximum consideration of £36million. Mission Capital proposes to invest £1.0 million from its existing cashresources, giving it a 20 per cent. holding in Athens Investments and thebalance of the consideration for the Portfolio will be funded by a combinationof senior, junior and mezzanine debt, recoursable to Athens Investments and thePortfolio. Mission Real Estate Limited, a wholly owned subsidiary of the Company, willmanage the Portfolio on behalf of Athens Investments and its subsidiaries inreturn for an annual fee. The proposed investment is classified as a reverse takeover pursuant to the AIMRules and is therefore conditional upon Shareholder approval at an ExtraordinaryGeneral Meeting of the Company to be held at 9.30 a.m. on 22 December 2006. The Directors and certain Shareholders have irrevocably undertaken to vote infavour of the Resolutions in respect of their holdings of 52,772,810 OrdinaryShares, representing in aggregate approximately 52.1 per cent. of the Company'sissued share capital. Completion and Re-Admission are expected to take place and dealings in theOrdinary Shares are expected to re-commence on AIM on 27 December 2006 Neil Sinclair, Chairman of Mission Capital commented, "We are delighted to announce our investment alongside Chelsfield in AthensInvestments in order to acquire the Portfolio. We identified this opportunity anumber of months ago and have spent considerable time investigating itspotential. One of the significant attractions of this particular portfolio isthat two properties are virtually let and whilst the other two are vacant, theydemonstrate considerable development potential. The investment continues our stated investment strategy to invest in or acquireproperties where active management could increase the value. This is asignificant transaction for the Company and we are delighted to have such a wellknown joint venture partner as Chelsfield." For further enquiries: Mission Capital plcNeil Sinclair (Chairman) Tel: 020 7917 2797Emma Sinclair (Managing Director) Tel: 020 7917 2799 Hudson SandlerMichael Sandler / Kate Hough Tel: 020 7796 4133 Arbuthnot SecuritiesTom Griffiths Tel: 020 7012 2000 Introduction Mission Capital is pleased to announce that it proposes to invest in a BVIregistered joint venture (the "Investment"), Athens Investments Holding GroupLimited ("Athens Investments") alongside Chelsfield Partners LLP ("Chelsfield").Athens Investments has been formed specifically to acquire a portfolio of fourproperties (the "Portfolio") from CBRE Investors, Strategic Partners UK Fund 1,("CBRE Investors") for a total consideration of £36 million. The Company hasconditionally agreed to invest a total of £1.0 million in Athens Investmentsgiving it a 20 per cent. holding in Athens Investments to be funded through itsexisting cash resources. The acquisition of the Portfolio (the "Acquisition")will be funded by the equity invested in Athens Investments by the Company andChelsfield and, subject to the satisfaction of certain conditions, a combinationof senior, junior and mezzanine debt recourseable to Athens Investments and thePortfolio. The 10 per cent. aggregate deposit for the Acquisition was funded by loans toAthens Investments by the Company and Chelsfield of £150,000 and £3,450,000respectively. Subject to the passing of the Resolutions at the EGM, these sumswill be applied in payment of a corresponding amount of the subscription moniespayable by the Company and Chelsfield to Athens Investments on Completion. Ifthe Resolutions are not passed at the EGM, Completion will not take place andthe £150,000 amount of the deposit funded by the Company will be retained byCBRE Investors. The £3,450,000 amount of the deposit funded by Chelsfield willbe returned to Chelsfield. The Portfolio comprises four freehold properties located in Maidstone,Haverhill, Tonbridge and Swindon respectively, consisting of a mix of officebuildings and warehouses. The Directors believe that each of the propertiesprovide significant opportunities which the Company intends to exploit throughactive management. The Investment is consistent with the Company's statedinvestment strategy, which is to focus on assets and businesses related to, orconnected with, property. Following completion of the Investment ("Completion"),Mission Real Estate Limited, a wholly owned subsidiary of the Company, willmanage the Portfolio on behalf of Athens Investments and its subsidiaries inreturn for an annual fee. The Investment is classified as a reverse takeover pursuant to the AIM Rules andis therefore conditional upon Shareholder approval at an Extraordinary GeneralMeeting of the Company to be held at 9.30 a.m. on 22 December 2006. Applicationwill be made to the London Stock Exchange for the Company's existing ordinaryshares to be re-admitted to trading on AIM and subject, inter alia, to thepassing of the resolutions at the EGM, Completion and re-admission are expectedto take place and dealings in the Ordinary Shares are expected to re-commence onAIM on 27 December 2006. Robert Burrow, a non-executive Director of the Company, is also a member of theboard of management of members of Chelsfield, and he and his family are, or maybe deemed to be, interested in Chelsfield. In accordance with the requirementsof the Companies Act and the Articles, Mr Burrow declared his interest in theInvestment and the Acquisition at a meeting of the Board and abstained fromvoting on the resolutions of the Board to approve the Investment and theAcquisition and the Company's entry into the Joint Venture Agreement (subject toShareholder approval). Accordingly he has not participated in the Directors'recommendation to vote in favour of the Resolutions to be proposed at the EGM. The Directors and certain Shareholders have irrevocably undertaken to vote infavour of the Resolutions at the EGM in respect of their beneficial holdings,which amount in aggregate to 52,772,810 Ordinary Shares, representingapproximately 52.1 per cent. of the Existing Ordinary Shares. Background to the Investment and the Acquisition Mission Capital's shares were admitted to trading on AIM on 5 December 2005.Mission Capital was then a newly formed public limited company established withthe primary objective of investing in property backed trading businesses,property related businesses and property where active management couldsubstantially increase value. It was the Board's stated intention at that timethat the Company would build a portfolio of property related investments whichwould provide both yield and capital appreciation to investors. The Directorshave considerable experience in corporate property, law and financial servicesand, by combining this with their extensive network of property market contacts,they believe that strong capital and yield returns can be achieved throughleveraged property related investment. On its admission to trading on AIM, the Company raised £3.0 million, by way of aplacing of new Ordinary Shares at 5 pence per share, to initiate its investmentstrategy, which is aimed at securing both cash generative and medium-to-highyield businesses and real estate in the UK. Details of the Company's investmentstrategy and the acquisitions made to date are set out below: Property related businesses with potential asset backing The Company seeks to identify and invest in property related businesses whichown and/or manage property, such as car parks or care homes, and which ownfreehold or long leasehold property generating cash flow. On 5 June 2006, the Company agreed to purchase Karspace Management Limited ("KML") for a total maximum consideration of up to £2.6 million. The initialconsideration payable was £1.9 million, which comprised £1.2 million in cash and£0.7 million through the issue of 10,370,370 new Ordinary Shares. The remainingconsideration of up to £0.7 million was deferred and subject to two conditions. The first condition relates to the resolution of an issue in respect of anexisting contract between KML and a local authority which, once concludedsatisfactorily, would trigger the release of up to £0.4 million, of which up to£0.2 million would be paid in cash and an equal amount would be satisfied by theissue of new Ordinary Shares at 6.75p per share to the KML Vendors.Subsequently, the Company announced on 2 November 2006, that sufficient progresshad been made with the local authority contract such that the Board authorisedan interim release of £0.2 million to be satisfied as to £0.1 million in cashand the balance through the issue of 1,481,481 new Ordinary Shares at 6.75 penceper share to the KML Vendors. The second condition relates to the level ofadjusted audited pre-tax profit of KML for the year ending 31 March 2007, anddepending on the level of such profit up to £0.3 million may be payable in cashto the KML Vendors. KML was founded in 1992 and is based in Tonbridge, Kent. It manages car parkingcontracts throughout the UK in both the public and private sectors, including anumber of local authority and NHS Trust contracts. As at 31 March 2006, KML'saudited net assets were £0.6 million. Properties where active management could increase the value The Directors believe that the current economic climate in the UK is notconducive to ready made, good value property investments as, in their opinion,there is not enough opportunity to add value. However, the Board has identifiedinvestment potential in certain corporate opportunities, as well as individualproperties that might currently be considered unfashionable. On 14 September 2006, the Company announced that it had exchanged contracts toacquire First Property Trading Limited ("FPT"), now called Mission Capital(Gloucester) Limited, whose principal asset is the freehold of Roebuck House,Brunswick Road, Gloucester, for an initial consideration of £518,000, comprising£0.4 million in cash from the Company's existing cash resources and the balanceto be satisfied by the issue of 1,685,714 new Ordinary Shares. On 28 September2006 the Company made a further announcement that all conditions under the FPTAcquisition Agreement had been satisfied and that completion had taken placethat day. Roebuck House, which is fully let, occupies a prominent corner position on thesouthern side of Gloucester city centre and comprises a small retail element onthe ground floor with three floors of offices providing a total net internalfloor area of approximately 10,560 sq. ft. The property produces a gross incomeof £96,250 per annum of which £60,000 per annum is from JLT Corporate Risks,part of The Jardine Lloyd Thompson Group plc. Significantly, the property islocated within 500 metres of the 2.46 hectares (6.08 acres) site, also inBrunswick Road, where English Partnerships and the Gloucester Heritage UrbanRegeneration Company are inviting submissions for more than 250,000 sq. ft. ofresidential development (approximately 400 units), 14,650 sq. ft. of commercial/retail floor space and a community/health care provision. The Company intends tolook into the possibility of securing planning consent for a residentialdevelopment and/or conversion of the Roebuck House site upon the expiry of theexisting leases or to grant renewals of those leases on appropriate terms andthen subsequently to consider a sale of the property. At the time of the acquisition of FPT, the Company stated that it was itsintention to purchase further properties or property companies where theopportunity exists to extract value. Cash generative property services businesses This covers property services based businesses, such as property agencies orsurveyors, specialist property insurance brokers, utilities consultants andproperty managers. At the time of the Company's admission to AIM in December 2005, the Companystated that it would also seek to acquire cash generative property servicesbusinesses. The Board has evaluated a number of such opportunities, but hasconcluded that the prospective prices were too high. The Company is thereforefocusing on acquisitions of property, property related and property backedbusinesses. Reasons for the Investment and the Acquisition As outlined above under "Properties where active management could increase thevalue", the Directors have focused on corporate opportunities or portfolios forpotential acquisition opportunities. One such opportunity was identified a fewmonths ago and the Board has subsequently been investigating its potential andassessing the opportunity. Initially, the Company was offered a portfolio ofthree properties, which has recently been increased to four. The Board hasprogressed discussions with CBRE Investors whilst simultaneously seeking out ajoint venture partner due to the size of the transaction. Chelsfield is a partnership representing the family interests of ElliottBernerd, Sir Stuart Lipton and the Bank of Scotland and others which invests inproperty and property related assets in the UK and elsewhere. Chelsfield is aLimited Liability Partnership incorporated in England and Wales (registerednumber OC314843), whose registered office is at 67 Brook Street, London W1K 4NJ.Robert Burrow, who is a non-executive Director of the Company, is also a memberof the Board of Management of Chelsfield, and he and his family are, or may bedeemed to be, interested in Chelsfield. The Investment and the Acquisition continue the Company's stated investmentstrategy. The Directors remain of the view that the economic climate in the UKis not conducive to ready made good value property investments as there is notenough opportunity to add value and competition for opportunities is intense.However, having identified the opportunity to acquire the Portfolio "off market"through private negotiations rather than on the open property market, theDirectors believe that each of the properties in the Portfolio provides anopportunity to add value through active management. Together with Chelsfield,the Directors are currently developing a management strategy for each property.This will depend on the individual circumstances and local market conditionsaffecting each site, but, where appropriate, will include taking active steps toincrease rental income through re-lettings and rent reviews and securingsatisfactory planning permissions. Information on the Portfolio The Portfolio comprises four freehold properties located in England. AthensInvestments has conditionally agreed to acquire the Portfolio for a totalconsideration of £36 million. The four properties in the Portfolio are locatedin: Maidstone, Kent This is a 1970's built retail and office building adjacent to Maidstone Eastrailway station and only a few hundred yards from County Hall, the headquartersof Kent County Council. It comprises approximately 87,000 sq. ft. of retail andoffice space plus basement parking for 33 cars. The current rent isapproximately £0.85 million per annum. In addition there is a 28 space car parkat Brewer Street within 500 metres of the building. Current tenants include KentCounty Council, Norwich Union (not in occupation) and Wetherspoon (J.D.) plc. Haverhill, Suffolk This comprises a number of vacant single adjoining warehouse buildings, part ofwhich was completed in the 1950's and 1960's with the balance constructed in the1980's with a total area of approximately 170,000 sq. ft. on a split-level siteof approximately 6 acres situated about 18 miles south east of Cambridge. TheDirectors believe that the front building of approximately 59,000 sq. ft. couldbe adapted for retail use subject to planning permission. Currently, there areapproximately 170 car parking spaces and 15 HGV parking spaces on site. The siteis located east of Haverhill town centre and benefits from a prominent cornerposition along the A143. Tonbridge, Kent This comprises three industrial office buildings totalling approximately 140,000sq. ft. located in the main commercial area of T. The main building, built inthe 1980's is approximately 116,000 sq. ft. with modern brick two storeyoffices. There are two older buildings built in the 1950's/60's on a sitetotalling approximately 8 acres. The property is let to Huntaven PropertiesLimited on a 25 year lease from 10 November 1993, subject to a five yearlyupward only rent reviews. The lease is guaranteed for the term at a currentpassing rent of £780,000 per annum by Hunting plc, a company whose shares arelisted on the Official List. Swindon, Wiltshire This is a 1980's brick built office building of approximately 53,000 sq. ft.,which is located on the south side of Swindon town centre and is directlyopposite the Brunel shopping centre. The building is currently vacant but theschedule of dilapidations has still to be finalised with the previous tenant. Athens Investments, the Joint Venture Agreement and the Acquisition Agreements Athens Investments is a newly created company incorporated in the BVIspecifically for the purpose of the Investment and the Acquisition. Theinvestment by the Company and Chelsfield in Athens Investments will be effectedon the terms and subject to the conditions of the Joint Venture Agreement,completion of which is conditional upon the Resolutions being passed. AthensInvestments has four subsidiaries, each of which was incorporated specificallyfor the purposes of acquiring one of the properties in the Portfolio. The Property Management Agreement The Property Management Agreement sets out the terms and conditions on whichMission Real Estate, a wholly owned subsidiary of the Company, will manage thePortfolio on behalf of Athens Investments and its subsidiaries. Pursuant to theProperty Management Agreement, with effect from the date of completion of theJoint Venture Agreement, Athens Investments and each of its subsidiaries appointMission Real Estate Limited to provide property management services in returnfor an initial fee of 0.35 per cent. of the aggregate purchase prices of each ofthe properties in the Portfolio by Athens Investments and its subsidiaries,payable quarterly. Re-Admission and Dealings Application will be made to the London Stock Exchange for the Ordinary Shares tobe re-admitted to trading on AIM. It is expected that the Investment and theAcquisition will be completed on 22 December 2006 and that Re-Admission willbecome effective and dealings in the Existing Ordinary Shares will re-commenceon 27 December 2006. Extraordinary General Meeting The Company proposes later today to despatch a Re-Admission document which willcontain a notice convening the EGM to be held at 9.30 a.m. on 22 December 2006at the offices of Speechly Bircham LLP at 6 St Andrew Street, London EC4A 3LX,at which the Resolutions will be proposed to approve, inter alia, the Investmentand the Acquisition. Irrevocable Undertakings The Directors and certain Shareholders have irrevocably undertaken to vote infavour of the Resolutions in respect of their holdings of 52,772,810 OrdinaryShares, representing in aggregate approximately 52.1 per cent. of the Company'sissued share capital. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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