London-focused urban regeneration specialist Quintain Estates and Development (LSE:QED) is to acquire 40% interest in Greenwich Peninsula Regeneration Limited (GPRL). The developer of the Greenwich Peninsula has entered in a new joint venture that will create approximately 29,000 jobs, sending the company’s share price at the top of the London Stock Exchange board in early morning trading.
In a statement released to the public, Quintain said the transaction will secure £300 million of “new financing in relation to viable development at Greenwich Peninsula at competitive rates” and provide “substantial liquidity” to the company estimated at £150 million over the next six years “before development profits”.
The 190-acre Greenwich Peninsula is being developed into a new residential-led mixed-use community that will be comprised of 10,000 new homes and a variety of shops, schools, hotels, and other commercial and public establishments along 1.4 miles of property fronting the Thames River.
Subject to shareholder approval to be decided in July 2012, the Board of Quintain agreed on a new joint venture with Hong Kong-based business tycoon Dr. Henry Chang Kar-Shun, Chairman of New World Development Company Limited, and the beneficial owner of Knight Dragon who will own the remaining 60% of the interest.
Dr. Cheng’s Chow Tai Fook Enterprise Limited, which has a substantial interest in New World Development Company, will provide guarantee to the obligation of Knight Dragon, which will provide £300 million of revolving debt funding to GPRL at 5% interest above the applicable three month London Interbank Offer Rate (LIBOR) rate.
Quintain will receive cash of £78.8 million, subject to a post-completion adjustment. £28.8 million of which will be paid by Knight Dragon on completion and the remaining £50 million will be received on deferred terms over a six-year period, the contract stated.
“There are no obligations on Quintain to commit new funds for future development at Greenwich Peninsula and Quintain’s share of existing infrastructure funding will be repaid to Quintain as a priority before new infrastructure funding.”
A further potential cash of £80 million is also being anticipated by Quintain in relation to the deal, which would bring the total cash received in the next six years to approximately £150 million before developmental profits, that is equivalent to 29 pence a share.
Quintain’s Chief Executive Officer, Maxwell James, commenting on the new joint venture, stated:
“This is a transformational deal for Quintain and is the next step in realising the inherent value in our key London projects by attracting significant third party capital. It introduces a highly respected and experienced partner who brings considerable financial strength and a network of global relationships. Together, we are well placed to turn our vision for this landmark project for London into reality, creating thousands of homes and jobs in the process.”
Quintain Estates and Development, together with its current joint venture partner, Lend Lease, secured the rights to develop a 14-million square feet master plan in the wider Greenwich Peninsula Scheme in 2002, which saw the development of the area in front of the O2 Arena entertainment complex.
Established in 2002, Quintain became public in 1996, trading above £4 a share in 2007 and suffered a blow during the financial crisis and currently trades at less than 10% of its value five years ago.
Quintain share price is at 39 pence, up 18.2% at 11:00 AM GMT, following the announcement.
CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).