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Share Name | Share Symbol | Market | Type |
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Banks Energy Inc. (Tier2) | TSXV:BKL | TSX Venture | Common Stock |
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RNS Number:1079P Berkeley Group PLC 28 August 2003 28 AUGUST 2003 THE BERKELEY GROUP PLC CROSBY EXECUTIVE TEAM ACQUIRE RIGHTS IN CROSBY HOMES & RESIGNATION OF GEOFF HUTCHINSON AS A MAIN BOARD DIRECTOR Introduction Following the completion of the strategic review reported on 26th June 2003 The Berkeley Group plc ("Berkeley" or the "Group") has today entered into an agreement whereby the Crosby Executive Team led by Geoff Hutchinson have subscribed for new shares in The Crosby Group plc (Crosby). Broadly, these shares are entitled to 50.01% of the economic and voting rights of Crosby after the generation of #450 million of operating cashflow. Until this time, Berkeley will remain in control of Crosby and therefore will continue to consolidate Crosby as a subsidiary. Thereafter, Berkeley will retain 49.99% of the shareholding. As Geoff Hutchinson was a Main Board Director of Berkeley, until his resignation yesterday, and the Executive Team being Directors of The Crosby Group plc, this is a Related Party Transaction, but due to the transaction's size is exempt under the Listing Rules from the need for shareholder approval. The transaction has been approved unanimously by the Main Board, (other than Geoff Hutchinson who has not participated in the Board's discussion in view of his interest in the acquisition). Background and Reason for the Transaction Following the strategic review the Board set out to simplify the business and concentrate increasingly on complex mixed-use urban regeneration projects in London and Southern England. Consequently, the Crosby Executive Team approached the Board with the suggestion that an effective way of maximising the value of the assets within Crosby was to allow them to acquire a shareholding in Crosby. Crosby is presently developing some 80 sites. Under the terms of the agreement, Berkeley remains able to develop major regeneration sites in the Crosby operating area and will do this if suitable opportunities arise. Crosby contributed 21% of the Group's turnover in the year ended April 2003 and is forecast to continue broadly at this level until 2007. After 2007, as the assets are realised turnover will reduce. The Board debated keeping within Berkeley the urban regeneration sites currently in Crosby but decided that the best way to maximise shareholder value was to incentivise the Executive Team to develop all their existing assets. Crosby Executive Team The Crosby Executive Team comprises Geoff Hutchinson (Chairman), Richard Starkey (Finance Director), Andrew Brady (Regional Managing Director), Andrew Jinks (Regional Managing Director) and Keith Pepperdine (Executive Director). Information on the Crosby business Crosby principally comprises Crosby Homes (North West) Limited, Crosby Homes Special Projects (NW) Limited, Crosby Homes Limited, Crosby Midlands (Special Projects) Limited, Crosby Homes (Yorkshire) Limited, Crosby Homes (East Midlands) Limited, Crosby Homes (Lancashire) Limited, The Berkeley Clarence Dock Company Limited, The Beaufort Homes Development Group plc, Crosby Homes (Special Projects) Limited and St David Limited. These companies operate out of five regional offices located in Birmingham, Manchester, Bristol, Cardiff and Leeds. Crosby will also continue to benefit from its joint ventures. These are Ician Developments Limited (with Amec Developments Limited), Crosby Seddon Limited, Crosby Peel Limited, Crosby ASK Limited and Hungate (York) Regeneration Limited (with Land Securities and Evans of Leeds). The Crosby Group controls over five thousand plots across some eighty development sites. The major sites are Redbank, Manchester (1,014 units), Clarence Dock, Leeds (605 units and 310,000 sq ft of commercial), Southside in Birmingham (443 units and 20,000 sq ft of commercial), Navigation Street in Birmingham (305 units and 11,000 sq ft of commercial), Gosforth in Newcastle (184 units), John Bright Street in Birmingham (146 units), and Combermere in Nantwich (100 units). Its largest joint venture site is Hungate in York (700 units). Berkeley acquired The Crosby Group plc for #10.9 million in April 1991 and established The Beaufort Homes Development Group plc in July 1994. Principal Terms and Conditions of the Transaction The Executive Team are subscribing for B shares in Crosby for a consideration of #500,000, funded by a loan from Berkeley. These shares carry dividend and voting rights if Crosby makes agreed milestone payments to Berkeley every six months and generates overall #450 million of operating cashflow within seven years. Unless both these requirements are met the B shares will receive no dividends or voting rights and, consequently, Berkeley will not cede control. This #450 million will be realised from the capital employed in Crosby which at 30th April 2003 was #253.7 million and comprised an inter-company loan of #215.9 million and shareholders funds of #37.8 million. Until this time, Berkeley will remain in control of Crosby and, therefore, it will continue to be consolidated. Upon completion of the principal terms and conditions of the transaction control will pass to the Executive Team and Crosby will then cease to be consolidated and Berkeley will instead equity account for its shareholding. It has also been agreed between the parties that, in addition to the conditions above, economic or voting control will not pass unless the gross assets of Crosby at the time control passes are less than #75 million and the net assets are less than #50 million. Board Changes Geoff Hutchinson resigned yesterday as a Main Board Director of The Berkeley Group. Geoff Hutchinson joined the Group in October 1993 and was appointed to the Main Board with effect from 1st May 1996. Geoff Hutchinson has entered into a new service agreement with Crosby and remains its Chairman. He has ceased to benefit from Berkeley's Long Term Incentive Plan. Under this service agreement, Geoff Hutchinson and the Executive Team will receive #2.3 million if Crosby is acquired by a third party within 364 days from today's date. This payment is contingent on Geoff Hutchinson not joining the acquiring company and therefore leaving Berkeley and Crosby. If Crosby is not acquired within the 364 day period these sums do not become payable. The Berkeley Board would like to thank Geoff Hutchinson for his immense contribution to The Berkeley Group. His experience will be missed from the Main Board. The Board are pleased to be working with him on this transaction and wish him every success in this venture. Conclusion Berkeley set out its forward strategy in its announcement on 26th June 2003 and its 2003 Annual Report, and this transaction is another step in driving that forward. The Group is focussed increasingly on regenerating major - often complex - urban sites through mixed use developments. Its special experience in this field enables Berkeley to participate in creating some of the most innovative regeneration projects in the country. Berkeley will continue to simplify the Group, withdrawing from its smaller scale traditional business (developments of less than twenty units) and focus on organic growth. At the same time it will generate cash, strengthen its financial base and take advantage of further opportunities in the market - all benefits inherent in this transaction. Commenting on the agreement with the Crosby Executive Team, the Managing Director of Berkeley, A W Pidgley, said "I am delighted about this transaction - which significantly advances our transition from a traditional home-building company and concentrates the Group on mixed-use urban regeneration. This deal is true to the uniquely entrepreneurial spirit at the heart of Berkeley, which remains central to our management approach and, I believe, is key to our continuing success. This transaction gives security of cashflow and incentivises an experienced management team to deliver. Crosby could generate over #500 million of operating cashflow in less than seven years." "I am sorry that Geoff Hutchinson is no longer a Main Board Director but I look forward to working with him closely on this venture. This transaction puts us in the best position to exceed our expectations." Geoff Hutchinson said "I am sad to leave the Board of Berkeley. I have enjoyed working with the Main Board over the last ten years and I now look forward to this new challenge with my experienced Executive Team. The unique way that this transaction has been put together shows the vision Berkeley has to manage change while maximising shareholder value. I am looking forward to working with my Executive Team to achieve the aspirations of both Crosby and Berkeley in this exciting new venture." For Further Information Please contact: Smithfield Financial - 0207 360 4900 John Antcliffe Rupert Trefgarne This information is provided by RNS The company news service from the London Stock Exchange END STRDGGZRVRNGFZG
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