Terrace Hill Group PLC Acquisition of Remaining Residential Assets (2957F)

TIDMTHG

RNS Number : 2957F

Terrace Hill Group PLC

22 May 2013

22 May 2013

TERRACE HILL GROUP PLC

("Terrace Hill" or the "Group" or the "Company")

TERRACE HILL ACQUIRES REMAINING RESIDENTIAL ASSETS OF TERRACE HILL RESIDENTIAL PLC

Terrace Hill Group PLC (AIM: THG), a leading UK property development and investment group, announces that it has acquired all the remaining residential assets of Terrace Hill Residential PLC (THR), its residential investment joint venture in which it owns a 49% interest, for the sum of GBP5.3 million (the "Transaction"). The balance of the interest in THR is beneficially owned by the Chairman of the Group. The purchase was funded by a bank loan of GBP4.6 million and cash from the Group's own resources.

The assets consist of 47 units in Scotland, Manchester, Bristol and Minehead and currently generate an annual income of approximately GBP0.3 million. The Group intends to dispose of these units on a piecemeal basis to owner occupiers, continuing the process adopted by THR prior to the Group's purchase. The purchase price of GBP5.3 million represents the current open market value of the assets as determined by independent third party valuers. Following this transaction, the Group's net gearing (including on a look through basis) is expected to be approximately 35%.

The Group agreed to acquire these assets in order that it could reach a negotiated settlement with the lender to THR as regards its guarantee exposure to that lender. At 30 September 2012, the Group had provided GBP6.0 million in respect of its guarantee exposure and as a consequence of the terms agreed with the lender to THR, this guarantee exposure is now fixed at the reduced amount of GBP4.2 million leading to a release of GBP1.8 million in the Group's accounts. The GBP4.2 million liability payment in respect of the guarantee has been funded by way of a 13 month term bank loan.

Arrangements with the Chairman

The Group has agreed with the Chairman that any net profit or loss arising on the disposal of these properties will be shared equally with him, continuing the same profit or loss sharing that would have arisen if the properties had not been acquired by the Group.

In addition, as agreed in 2010 and as previously disclosed, the Group agreed to pay to the Chairman a fee of 4.41% on the amount by which his guarantee to THR's lender had exceeded the amount of the Group's guarantee. The amount accrued in the Group's accounts under this agreement was GBP0.6 million and the Group and the Chairman have agreed that the accrued amount will be used to part fund payments by the Chairman in respect of his liability to THR's lender under the guarantee arrangements.

The Transaction is deemed to be a Related Party Transaction under Rule 13 of the AIM Rules for Companies. The Directors of the Company, with the exception of Robert Adair who is party to the Transaction, consider that, having consulted with Oriel Securities Limited, the Company's Nominated Adviser, the terms of the transaction are fair and reasonable insofar as the Company's shareholders are concerned. In providing advice to the Directors, Oriel Securities Limited has taken into account the commercial assessment of the Directors.

Philip Leech, Chief Executive at Terrace Hill, commented: "Following the sale of the majority of our residential assets to Places for People in February 2013 we are very pleased to have purchased the remaining assets of THR which facilitates a favourable negotiated settlement with the lender to THR on the guarantee. The remaining properties are continuing to be sold on a piecemeal basis to owner occupiers which we expect to complete within 15 months."

-Ends-

For further information, please visit www.terracehill.co.uk or contact:

Terrace Hill Tel: [phone]

Philip Leech/Jon Austen

FTI Consulting Tel: [phone]

Richard Sunderland/Will Henderson /Faye Walters

[e-mail]

   Oriel Securities (Nominated Adviser)                               Tel: [phone] 

Gareth Price

Mark Young

Notes to editors:

Terrace Hill Group

Terrace Hill Group PLC is a regionally based UK property development and investment group quoted on AIM.

Formed in 1986, the Company has five offices located in London, Glasgow, Teesside, Bristol and Manchester.

This information is provided by RNS

The company news service from the London Stock Exchange

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