7th Oct 2008 08:40
Wichford P.L.C. ("Wichford" or "the Company")
STATEMENT RE. RELATIONSHIP WITH LEHMAN BROTHERS
The Directors of Wichford plc., the specialist property investment company that invests in property occupied by central government departments in the UK and Europe, consider that the Company should clarify Wichford's current position with regard to Lehman Brothers and its trading entities ("Lehman").
The group has loans totaling approximately £344m which were initially provided by Lehman but were transferred to three securitisation companies established by Lehman as part of certain securitisation transactions. These companies (known as "Windermere") are funded by bonds listed on the Dublin Stock Exchange and which have maturities that extend at least until the maturity of the Wichford loans. As such Lehman is no longer directly providing this funding to Wichford.
Lehman Brothers Special Finance ("LBSF") is the counterparty to certain hedging arrangements with Windermere and Lehman Brothers Holdings, Inc. ("LBH") is a guarantor of LBSF in relation to these arrangements. Lehman Brothers International (Europe) ("LBI") is the security trustee and agent under the loan agreements but Hatfield Philips on behalf of LBI has undertaken its functions since each of the relevant securitisation transactions were implemented.
Wichford understands that LBI and LBH have been put into administration and Chapter 11 protection respectively. It is advised that LBSF is not in administration.
The Company has been advised that these events do not constitute an event of default by the relevant Wichford subsidiary under the loan agreements, which continue. Importantly, the absence of any loan-to-value covenants remain. There may be implications on the interest setting mechanism and the interest rate hedges that have been put in place. As last reported, on 31st March 2008 the value of these hedges was £1.8 million. After discussion with the Company's auditors, the Board of Wichford intends to make a full provision for this amount in the accounts for the year to 30th September 2008.
The Board of Wichford is working with its advisers to clarify the status of the relevant financial instruments between Windermere and Lehman and confirm whether any further implications exist for Wichford in relation to the interest setting mechanism and the interest rate hedges.
In light of the uncertainty mentioned above and of prevailing economic conditions, the Board intends to recommend to Shareholders that future dividends paid by the Company will be rebased to a level that is sustainable going forward. Its current expectation is that the total dividend for the year to 30th September 2008 will be in the range of 7p to 8p per share.
A further announcement will be made in due course.
For further details, please contact:
Wichford P.L.C.
Philippe de Nicolay 00 33 1 40 74 42 79
Wichford Property Management Ltd
Jamie Hambro 020 7747 5678
Philip Cooper 020 7495 7111
Michael Watters 020 7811 0100
Citigate Dewe Rogerson
George Cazenove / Hannah Seward 020 7638 9571
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