Conygar Investment Company plc (LON:CIC) has announced its intention to conduct a placing of c.6.7 million new Ordinary Shares (“Placing Shares“) at a price of 150 pence per share, raising gross proceeds of c.£10 million.
Highlights
· Proposed issue of c.6.7 million Placing Shares under the Placing at 150 pence per Placing Share, with the placing of any Placing Shares in excess of 5 million Placing Shares being conditional on certain resolutions being passed at the Company’s Annual General Meeting to be held at 4.00 p.m. on 20 December 2021.
· The Placing Price of 150 pence per Placing Share represents:
o a discount of 7.7 per cent. to the Company’s closing share price of 162.5 pence per Ordinary Share on 16 December 2021 (being the last business day prior to this announcement); and
o a discount of 31.0 per cent. to the Company’s net asset value per Ordinary Share of 217.4 pence per Ordinary Share as at 30 September 2021.
· The Company has a number of potential uses for the proceeds from the Issue, all of which will assist with progressing The Island Quarter site in Nottingham. These include funding the completion of the construction for the first phase of the scheme, bringing a new electricity substation to the site, funding the equity component of the student accommodation scheme and potentially progressing the design and planning for an office scheme. More details on these are set out below.
· It is the intention of the Directors to subscribe for 704,000 Placing Shares at the Placing Price in the Placing.
· The Placing will be conducted through an accelerated bookbuild, which will be launched immediately following release of this announcement (the “Bookbuild“). Liberum Capital Limited (“Liberum“) is acting as sole bookrunner in connection with the Placing (the “Bookrunner“).
· The Placing Shares will represent approximately 12.8 per cent. of the Company’s existing issued share capital, assuming 6.7 million Placing Shares are issued in total.
· Admission of the Placing Shares to trading on AIM is expected to be on or around 22 December 2021.
Robert Ware, CEO of Conygar, commented on the Placing:
“The Placing we are announcing today is to fund part of the next phase of the exciting 36 acre Island Quarter site in Nottingham. There are a number of potential uses for the proceeds, including bringing a new electricity substation to the site, funding the equity component of the student accommodation scheme and potentially progressing the design and planning for an office scheme. Significant progress has already been made on The Island Quarter, with planning permission granted for over two million square feet to include new homes, grade A office space, a creative market, a lifestyle hotel, retail units, student accommodation and associated public realm.“
Background
Since acquiring The Island Quarter in 2016, the Company has made significant headway in developing the concept and strategy and over the last year has submitted three detailed planning applications for the early phase developments. Two of these have subsequently been granted with the third, which includes two hotels, residential apartments and co-working space, expected to be considered by the planning committee in early 2022. The detailed applications granted to date have enabled the Company to commence the construction of the first phase, which includes a 21,500 square foot food and beverage-led building, planned for completion by late spring 2022, and to initiate the on-site preliminary groundworks for a c.700-bed student accommodation scheme.
Use of proceeds
The Island Quarter project is advancing quickly and there are a variety of uses for the proceeds from the Placing to assist with progressing the site. The first phase, which is currently under construction, is expected to be completed in late spring 2022. The cost to complete this development is c.£6 million.
The Company is also currently bringing a new electricity substation to the site as there is not enough capacity in the local network for anything beyond the first phase. The anticipated cost to complete this and ensure that the entire site is capable of supporting new buildings is expected to be c.£5 million.
The Company’s detailed application for student accommodation has been granted and the Company is expecting to be able to commence that development in 2022. The Company has also received several offers of bank finance for the construction and will determine how much of the placing proceeds to deploy as equity in this scheme next year.
The Company is also in discussions with a number of businesses for office space totalling 250,000 square feet. Should these negotiations progress, it is expected that part of the net proceeds of the Placing will be used to fund the design and planning processes as required.
Any additional cash requirements in connection with the above projects, in excess of the proceeds from the Placing, will be covered by funds from the sale of other assets.
As at 16 December 2021 (the latest practicable date prior to this announcement), the Company had c.£7.0 million of cash and requires further funding for the Island Quarter.
General Nottingham update
Since 30 September 2021, there has been steady progress on The Island Quarter. The construction of the first phase has continued and is still on track to be completed in late spring 2022. Following the granting of the permission for the student accommodation, the Company has focused on finalising the Section 106 Agreement and liaising with contractors to ensure a start on site in 2022. The Company is also in discussions with a number of organisations about taking commercial space on the site, and will look to progress those as soon as possible.
Numerous discussions have occurred, several of which are ongoing and some of which have just commenced, involving potential investors, potential partners and potential occupiers for all or different parts of the development. At present, none of these discussions have reached an advanced stage.
Update on other existing projects
Cross Hands, Carmarthenshire
As announced in the Company’s results for the year ended 30 September 2021, the retail park at Cross Hands is fully occupied comprising a strong and diverse tenant base including Lidl, B&M Retail, Costa Coffee, Iceland Foods, Domino’s Pizza, Pets at Home, Burger King, Snap Fitness and One Below which produces an annual rent roll of £1.38 million.
As the park is now fully income producing, the Company is considering marketing the park for sale in early 2022.
Holyhead Waterfront, Anglesey
The Company is awaiting the determination of its further detailed design and reserved matters application submitted in October 2021.
Selly Oak, Birmingham
As previously disclosed, contracts have been exchanged for sale to a specialist provider of student accommodation. The local authority issued its agreement to the Section 106 Agreement on these two industrial units and accordingly their planning consent on 12 November 2021. The sale agreement is now unconditional and the Company currently anticipates that the student provider will complete their acquisition by the end of 2021, at a price materially above the Company’s current book value for the asset.
Haverfordwest, Pembrokeshire
The construction of the 300-metre spine road and associated infrastructure will be completed by the end of 2021. The Company’s application to reduce the costs payable under the Section 106 Agreement was approved by the planning committee on 14 December 2021. All section 106 payments are to be removed for the first phase of 115 houses and subsequent phases will be considered in a similar fashion as they come forward. These amendments will be formally documented in due course.
Parc Cybi and Rhosgoch, Anglesey
Nothing new to report.
Bristol option agreement
The Company has signed an exclusivity agreement to acquire the land at The Wholesale Fruit Centre in Bristol. This is a site of c.15 acres to the east of Temple Meads Station. The transaction is subject to full due diligence and the granting of a suitable planning permission. At present, the Company is only committed to £60,000 in legal costs but assuming the due diligence is successful a planning application will follow which is likely to cost in the region of £1.5m and is expected to take nine months to be submitted.
Further information on the Placing
The Company is proposing to raise gross proceeds of c.£10 million through a placing of c.6.7 million Placing Shares with new and existing investors at the Placing Price of 150 pence per share.
The Placing Price of 150 pence per Placing Share represents:
· a discount of 7.7 per cent. to the Company’s closing share price of 162.5 pence per Ordinary Share on 16 December 2021 (being the last business day prior to this announcement); and
· a 31.0 per cent. discount to the Company’s net asset value per Ordinary Share of 217.4 pence per Ordinary Share as at 30 September 2021.
Liberum Capital Limited, as placing agent for the Company (“Liberum“), will use its reasonable endeavours to place the Placing Shares with institutional and other investors at the Placing Price. The Directors reserve the right, in conjunction with Liberum and subject to seeking any necessary shareholder approvals, to increase the size of the Placing.
The Placing will be conducted by way of a bookbuilding process which will be launched immediately following this Announcement, in accordance with the terms and conditions set out in Appendix 1 below, and is expected to close by 5.00 p.m. on 17 December 2021. Liberum, in consultation with the Company, reserves the right to close the bookbuilding process earlier or later at its discretion.
Details of the number of Placing Shares and the approximate gross proceeds of the Placing will be announced as soon as practicable after the closing of the Placing.
The Placing is not being underwritten.
The placing of up to 5 million Placing Shares pursuant to the Placing will use the existing shareholder authorities available to the Company which were granted by Shareholders at the 2020 AGM and any placing of Placing Shares pursuant to the Placing in excess of 5 million Placing Shares will use the shareholder authorities proposed to be made available to the Company at the 2021 AGM and will therefore be conditional upon the approval of the relevant resolutions by Shareholders at the 2021 AGM. The Placing is conditional upon Admission of the Placing Shares to trading on AIM, which is expected to occur on or around 8.00 a.m. on 22 December 2021.
The Placing Shares issued pursuant to the Placing will, when issued, be credited as fully paid and will rank pari passu in all respects with the Existing Ordinary Shares including the right to receive all dividends and other distributions declared, made or paid after their date of issue.
Directors’ participation in the Placing
The Directors intend to participate in the Placing as follows:
| Director | No. of Placing Shares |
| Nigel Hamway | 100,000 |
| Bim Sandhu | 392,500 |
| Robert Ware | 147,500 |
| Freddie Jones | 15,000 |
| Christopher Ware | 34,000 |
| David Baldwin | 15,000 |
Expected timetable
| Placing opens | 7:00 a.m. on 17 December 2021 |
| Placing closes | By 5.00 p.m. on 17 December 2021 |
| Result of Placing Announced | By 20 December 2021 |
| 2021 AGM | 4.00 p.m. on 20 December 2021 |
| Admission of Placing Shares | 8.00 a.m. on 22 December 2021 |
Each of the times and dates above refer to London time and are subject to change by the Company. Any such change will be notified to Shareholders by an announcement on a Regulatory Information Service.
