Redrow is aiming to raise a total of £79.6m to grow its London division and to take advantage of other strategic land opportunities outside of London.
£19.4m will be raised through a firm placing of 14.9 million New Shares to Bridgemere Securities Ltd, which is ultimately controlled by executive chairman and company founder Steve Morgan. A further £60.2m will be raised through a 3 for 20 open offer at 130p per new share, fully underwritten by Bridgemere. The 130p price is an 11% premium to yesterday's closing price of 117p.
As the deal will take Mr Morgan’s shareholding past 30%, shareholders will be asked to at a general meeting, expected to take place on 10 May 2012, to support a motion that waives his obligation to make a mandatory offer for the company in accordance with Rule 9 of the City Code.
Mr Morgan said: "Redrow has made good progress under a strategy designed to return it to its roots, selling high-quality, differentiated family homes. We now believe the time is right to accelerate that strategy by taking advantage of the development opportunities we see. During the year to date we have secured planning on over 3,000 plots from our forward land bank, acquired new sites totalling £50m within Harrow Estates and commenced construction on our two largest London sites. There are an increasing number of land opportunities both in London and in the regions and as such we are looking to raise further capital to enable us to take advantage of these opportunities as they arise."
Redrow senior independent director Alan Jackson added: "Since Steve Morgan returned to Redrow, the group has made significant progress under a compelling strategy that has seen the business re-established as one of the leading premier homebuilders in the UK. The time is now right to raise funds to accelerate that strategy so we can take advantage of development opportunities that we have identified.
“The structure we have chosen will mean a further substantial investment in the business by Bridgemere at a premium to the current share price - underlining its confidence in and commitment to the business and its future prospects. The board believes the level of Steve Morgan's beneficial interest in the business is appropriate and consistent with the nature of his historic and on-going relationship with Redrow and shows that his interests continue to be tightly aligned with those of other shareholders."
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