COLG exchanges on Milton Homes buy

By James Buckley - Friday, August 11, 2017 10:48

COLG has conditionally agreed the acquisition of Milton Homes and a proposed £11m equity fundraising.

The company proposes to acquire the entire issued share capital of Milton Homes, a provider of equity release products for residential property, for consideration of £20.2m, approximately equal to net tangible assets, from DV4, a fund advised by specialist real estate investment advisory company Delancey.

The consideration for the acquisition will comprise £13.2 million in New ordinary shares in COLG and £7 million in cash.

The company proposes to raise £11m through an equity fundraising comprising £7m through non-pre-emptive subscriptions and £4m through a fully underwritten open offer both at a price of 90p per share.

MBIL has agreed to subscribe for £5.8m in new ordinary shares and to underwrite the open offer in full, in respect of any entitlements not taken up.

In addition, unconnected investors have agreed to subscribe for £1.2m in new ordinary shares and Peel Hunt may also subscribe, in lieu of part of MBIL’s subscription, to ensure that a free float of 10% is achieved following completion of the Acquisition.

Following completion of the Acquisition, the subscriptions and the open offer, DV4 and MBIL (and its concert parties) will hold 51% and up to 39% respectively of the enlarged issued ordinary share capital of COLG (assuming no take-up by other shareholders in the open offer).

The company proposes to change its status from an investing company (for the purposes of the AIM Rules) to a trading company.

The company proposes to amend its articles of association and to reorganise its share capital, to allow the subscriptions and open offer to proceed and to consolidate its ordinary shares on a 20-for-1 basis.

Paul Milner, Chairman of COLG, said: “The board believes that the acquisition of Milton Homes presents the Company and its shareholders with an attractive opportunity to acquire a business in the equity release sector.

“Building on the potential that exists within CAML, Milton Homes will enable the Group to develop a broad based financing business and moreover the additional balance sheet strength will give access to a wider range of funding lines. We have in place a strong and experienced Board and senior management team ideally placed to drive investor value”.

Commenting on the transaction, Colin Wagman, deputy chairman of Delancey and chairman of Milton Homes, said: “This acquisition is very positive for all of the parties. Milton Homes now has the opportunity to advance its business prospects with access to a wider pool of capital and to provide it with more profile to enable it to expand its equity release products.

“Following the transaction, the existing shareholders will retain a substantial involvement in the future of the business. We are delighted that DV4 will continue as the majority shareholder.”

jbuckley@costar.co.uk

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