3rd Nov 2009 14:08
CLOSE HIGH INCOME PROPERTIES PLC (the "Company")
Market Update
The Board of Directors would like to update the market regarding any future potential merger of the Ordinary Shares with the "D" Ordinary Shares in issue.
Article 4.6 of the Articles of Association of the Company (the "Articles") indicates that the D Ordinary Shares shall be converted into Ordinary Shares on 31 March 2009. The Articles do not permit conversion on any later date, nor do they require Shareholders' consent for such conversion to take place. The conversion does not happen automatically pursuant to the Articles, as the Directors of the Company are required to take certain steps to implement the same.
Due to an administrative oversight, the conversion described above did not take place.
Despite this administrative oversight, the Directors believe that it is highly unlikely that the conversion would have been effected due to the circumstances that existed at that time. These circumstances are set out below.
On 8 January 2009 the Board announced that, following the receipt of the independent valuation from DTZ Debenham Tie Leung ("DTZ") dated 31 December 2008, the value of the Ordinary Share and "D" Ordinary Share property portfolios had fallen to a point where the Company and its subsidiaries (the "Group") were in breach of their loan to value ("LTV") covenants with Bank of Scotland Plc ("HBOS") and Nationwide Building Society ("Nationwide").
This independent valuation also stated that 'abnormal' market conditions prevailed giving rise to a greater than usual degree of uncertainty in respect of the figures being reported and that the situation was likely to remain until the number and consistency of comparable transactions increased.
At the time of the required conversion of the "D" Ordinary Shares into Ordinary Shares on 31 March 2009 the Group remained in breach of its loan facilities with its lending banks. As a result of the continued material uncertainty surrounding the Group's funding, as noted in the annual audited report and financial statements for the year ended 31 December 2008, and in the valuation figures being reported, the Directors believe that it is highly unlikely that it would have been in the interest of all shareholders for the conversion to take place as at 31 March 2009 as required in the Articles.
The Group remained in breach of its loan facilities with Nationwide and HBOS as noted in the interim report and financial statements for the period ended 30 June 2009. The table below shows the current position following the independent valuation prepared by DTZ as at 30 September 2009.
|
Current LTV |
LTV Covenant Status |
Lender |
|
|
Ordinary Shares |
|||
|
CHIP (One) Limited |
75.77% |
Currently in breach |
HBOS |
|
CHIP (Two) Limited |
71.52% |
Waived until 1/04/10 |
Nationwide |
|
CHIP (Three) Limited |
75.14% |
Currently in breach |
HBOS |
|
CHIP (Four) Limited |
72.32% |
Currently in breach |
HBOS |
|
CHIP (Five) Limited |
75.38% |
Currently in breach |
HBOS |
|
"D" Ordinary Shares |
|||
|
CHIP (Six) Limited |
94.14% |
Waived until 1/10/10 |
Nationwide |
On 19 October 2009, the Board of Directors of the Company announced that it had successfully refinanced the funding of its loan facilities with Nationwide in respect of its subsidiaries CHIP (Two) Limited and CHIP (Six) Limited.
The Company's subsidiaries CHIP (One) Limited, CHIP (Three) Limited, CHIP (Four) Limited and CHIP (Five) Limited remain in breach of their loan facilities with HBOS although they have been provided with indicative terms dated 13 October 2009 that are subject to formal Lloyds Banking Group Plc Credit Committee approval.
The Directors of the Company are considering the options available to the Company as the conversion did not take place on 31 March 2009 as required and will make a further announcement in due course.
The Ordinary Shares and "D" Ordinary Shares remain validly admitted to the Official List and to trading on the London Stock Exchange market for listed securities.
For further information contact:
Peter Roscrow or Steven Oliver
Close Investments Limited
020 7426 4000
Related Shares:
IMPT.L