NEWS: Mace & Jones advises Harrow Estates on £15m sale

By Ben Schofield on Sep 23, 09 02:51 PM

CORPORATE lawyers at Mace & Jones have advised Harrow Estates on the £15m sale of its business to house building giant Redrow in a transaction forming part of Redrow's fund raising of £150m announced today.

Mace & Jones Liverpool based corporate partner Ian Hodgkinson worked on the sale of Preston Brook based Harrow Estates from the Bridgemere group of companies owned by Redrow chairman Steve Morgan.

The deal involves the acquisition of five freehold land assets and options to acquire seven further strategic land assets, together with the business of Harrow Estates, for £15m.

Mr Morgan said: "The proposed rights issue will strengthen Redrow's balance sheet and position Redrow for growth.

"We are returning Redrow to its traditional focus on a great product in the market for family housing.

"We now need to enhance our ability to acquire land through selected acquisitions. This is all part of our strategy to steer the business back to delivering a much improved return on capital employed."

Mr Hodgkinson added: "Mace & Jones has enjoyed working with Steve Morgan for some time advising him on a number of business transactions including his deal to buy Wolves FC.

"It is terrific to work on this important deal which will strengthen the business."

Redrow shares rose 4% to 242p in early trading today.

The main points of the sale are

Following a detailed review of their capital structure, Redrow announced today that it is seeking to raise c.£150m net of fees to fund expansion of the land bank, accelerate the return of Redrow to traditional family housing and provide greater financial flexibility for future growth.

Net debt will be reduced from £223m at 30 June 2009 to c.£80m post the Rights Issue and the £15m acquisition of Harrow. This leaves £170m of headroom on current facilities.

Steve Morgan, Redrow's executive chairman is the 100% owner of Harrow, which for the last 8 years has been a land development company. Redrow believe the acquisition of Harrow means that all conflicts of interests are removed and that an acquisition cost of just over £20,000 per plot represents a fair price. The acquisition adds c.600 plots to the land bank with first sales from the five sites expected in 2010/11 at "normal" housebuilding margins. The acquisition also includes options to purchase a further seven sites at 96% of open market value at the time of purchase.