Dunloe House, the property company controlled by Dublin solicitor, Mr Noel Smyth, has confirmed it is raising £25 million in a placing of new shares and an open offer to existing shareholders. It also proposes to buy property portfolios from Mr Smyth and his family interests, and from property developers, Mr Phil Monahan and Mr Dominick Glennane, for £21.18 million, payable in new Dunloe shares.
The open offer will be on the basis of nine new shares at 18p per share for every five shares held. This represents a big discount on the last quoted price of 35p prior to the suspension of dealings in June. Mr Smyth and his wife, Anne Marie, who own 40.7 per cent of Dunloe, are not taking up their entitlement which would have cost almost £11 million gross and these have been firmly placed with institutions. The remaining 86.8 million new shares are being offered to existing shareholders.
If none of the shares are taken up, Davy Corporate Finance has "agreed to endeavour to find subscribers for the shares". Mr Smyth has underwritten the issue which could cost £15.6 million gross. Because of their interest in the properties being purchased, Mr and Mrs Smyth did not participate in the board's decision on the deal.
Announcing the placing and acquisitions, non-executive director, Mr Sean Murphy, representing the independent directors, noted the acquisition involves the assumption of some £32 million in bank borrowings and, "being aware of the importance of controlling the level of the group's borrowings, the board believes that it is appropriate to raise equity to ensure that the enlarged group continues to seek and to take advantage of suitable opportunities". The proceeds of the placing and open offer will reduce borrowings by some £7 million and provide working capital "to finance existing and future development projects".
The property portfolios are being acquired through the purchase of Cradder, a new company which recently acquired properties in Aviette, owned by Mr Smyth and family interests, Monarch Group, controlled by Mr Monahan, and Cherrywood Properties, jointly owned by Aviette and Monarch. The deal involves the issue of 105.9 million shares at 20p per share, valuing Cradder at £21.18 million. Cradder is 50 per cent owned by Mr and Mrs Smyth and 50 per cent by Monarch Properties Holdings. Its assets have been valued at £57.7 million but there is bank debt of £32 million.
Aviette's portfolio includes: Cork Farm Centre, Wilton Road, Cork; Elm Court, Boreenmanagh Road, Cork; units at the Square Towncentre, Tallaght; an industrial unit at Quarterstown, Mallow; Westside Shopping Centre, Galway; Popular House, Poplar Square, Naas; and investment and development property at Nutgrove Avenue, Dublin. The Monarch Group portfolio consists of sites at Dundalk and Drogheda, and the Bloomfields Shopping Centre in Dun Laoghaire. Cherrywood has 405 acres of development land at Cherrywood, Loughlinstown, Co Dublin.
After the transactions, and assuming that Mr Smyth is not called upon to take up additional shares under the underwriting agreement, Mr and Mrs Smyth will have 26 per cent of the enlarged group, Mr Monahan will have 15 per cent and Mr Glennane will have 3 per cent. If Mr Smyth has to take up all the shares, then he and his wife would end up with 51.8 per cent. Normally this would prompt a takeover for the remainder. However, he has received a waiver under the take-over rules.
