Further Re: Sale of Land
February 23 2006 - 10:44AM
UK Regulatory
RNS Number:8663Y
FBD Holdings PLC
23 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 leisure
subsidiary, Ranchos Reunidos S.A. ("RRSA") has entered into a conditional
agreement to sell a major portion of the building development land which it owns
at La Cala to Desarrollos Lar Sol MS. SL ("Lar Sol").
Subject to all of the terms, conditions and warranties relating to the agreement
being fulfilled, the FBD Board intends to distribute the net cash proceeds of
the sale to shareholders by way of special dividends. The net cash proceeds
are estimated to amount to up to Euro120m.
The signing of the land transfer deed is expected to be effected by 30 June
2006. The total gross consideration is Euro201m. in cash. The payment schedule is
dependent, inter alia, on obtaining final planning approval from the Regional
Planning Authority ("the Authority") as summarised below.
Following the transaction, RRSA will remain as majority owner and operator of
the resort's leisure interests, in addition to completing and marketing its
current residential building projects. It will also continue to own a portion
of development land at La Cala.
Principal Terms & Conditions of Sale
The sale of the land is to be effected pursuant to the sale and purchase
agreement that has been entered into. The agreement is subject to warranties and
indemnities that are normal for a transaction of this nature, in addition to
conditions regarding final planning approvals in relation to part of the land.
Also, under the agreement, RRSA has undertaken to carry out certain
infrastructural works.
The total gross consideration is Euro201m. in cash. The consideration is
constituted in two parts, apportioned between two tranches of land.
Tranche I consideration amounts to Euro121m. and is payable as follows:
- Euro100m. immediately on signing of land transfer deeds for all of the
land (target date 22/6/06)
- Euro21m. on 30/6/07
Tranche II consideration is subject to receipt of final planning approval from
the Authority and amounts to Euro80m. payable as follows: (Provisional approval has
been obtained at local municipal level for this land)
(a) If final planning approval as currently applied for on Tranche II land is
obtained from the Authority before 30/6/07
- Euro50m. within 60 days of registration of approval.
- Euro30m. on 30/6/07.
or
(b) If final planning approval as currently applied for on Tranche II land is
obtained from the Authority after 30/6/07.
- Euro80m. within 60 days of registration of approval.
If planning approval as currently applied for, is not obtained within 3 years of
the signing of the land transfer deed, FBD will not receive the second tranche
consideration. The title of the corresponding land would revert back to FBD who
would then review the planning process with the objective of maximizing its
development opportunities.
Financial Effect of the Sale
Subject to obtaining final planning approval as currently applied for, the terms
and conditions of the agreement and the timelines outlined above, the sale will
have the following financial impact:
* The net profit accruing to FBD from the transaction, i.e. after
deducting land at carrying cost of Euro31m., infrastructural spend relating to land
sold, costs of disposal, taxation etc., is estimated to be up Euro90m.
* The impact on underlying earnings in 2006 and 2007 will be neutral
as the land being disposed of is held as stock with no attaching earnings
stream.
* The net cash proceeds arising from the transaction are estimated to
be up to Euro120m.
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 transaction
by way of two special dividends. The first special dividend will be paid within
60 days of receiving the initial Tranche I consideration monies. The second
special dividend will be paid within 60 days of all remaining transaction monies
being received. The Board believes that returning all of the net proceeds to
shareholders is the appropriate use for the monies generated and that its
distribution 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 residential
and recreational resort encompasses 3 championship golf courses, 5 star hotel,
clubhouse, restaurant, leisure facilities, development land and residential
communities. The La Cala Estate was assembled in the late 1980s.
In addition to developing and managing La Cala's golf and leisure facilities
over the years, RRSA has successfully undertaken residential building projects
at the resort. RRSA is currently progressing two such projects which were
commenced in 2004/2005; these are not part of the transaction.
Mr. Denis Foley has been Managing Director of RRSA since 1996. He and his team
have established La Cala as one of the premier residential golfing resorts in
Spain. Through judicious investment and strategic management over the years, the
potential identified originally at La Cala has been developed and substantial
value has been created for FBD shareholders. A significant part of this value is
now being realised through the sale.
The land being sold has a total surface area of 96 hectares. The development
land being retained by RRSA has a total surface area of 13 hectares. The latter
land borders the golf courses and further analysis is required before any
development is undertaken. RRSA does not envisage building activity on this
land in the foreseeable future.
FBD regularly reviews the options for all of its businesses in terms of
maximising returns to stakeholders. It was in this context that the decision to
accelerate the realisation of the development land via a significant disposal
was 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 Grupo
LAR SA (50%) and the Morgan Stanley controlled MSREF Atlantic Holdings BV
(50%).
Grupo Lar is one of the foremost real estate development, investment and
management companies in Spain having Lar Sol as a Strategic Business Unit fully
focused 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 five
financial institutions.
RRSA/Lar Sol
FBD is confident that the collaboration which RRSA and Lar Sol will enter into
arising from this transaction will advance the ongoing development of La Cala as
one of the premier residential and holiday golf resorts in Europe. The
transaction opens up the La Cala project to the indigenous Spanish market where
Lar 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 Exchange
END
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