Innes Smith: ‘another great acquisition’

Springfield Properties has swooped on the owner of Tulloch Homes, an Inverness-based housebuilder in a deal valued at £56.4 million.

The Springfield board proposes a placing of 15.7m shares priced at 140p to raise gross proceeds of £22m to re-finance part of the cash purchase of Thistle SPV2.

The placing price represents a discount of about 4.4% on last night’s closing price.

Tulloch Homes is a profitable, cash generative housebuilder with significant land ownership in the Scottish Highlands in and around Inverness.

The deal is worth £77.6 million with the inclusion of cash in the Tulloch Homes business on completion.

Springfield believes the deal will accelerate its growth by enhancing its foothold in an area of high demand in Scotland, and where Springfield has been organically building a presence in recent years.

It will also reinforce supply chain capabilities, such as gaining access to labour and subcontractors, and strengthen the company’s private housing land bank and create opportunity for affordable housing;

The net proceeds will be used to fund the acquisition by repaying part of a bridging finance facility with Bank of Scotland that will partially finance the initial cash consideration for the acquisition.

Singer Capital Markets Securities is acting as sole placing agent, bookrunner and broker in connection with the placing.

Shareholders will vote on the placing at a general meeting on 20 December.

The company has entered into an amendment and restatement agreement with Bank of Scotland in relation to its existing facilities agreement.

The amount available under the company’s revolving credit facility has been increased from £ 64.5 million to £87.5 million.

Part of the increase under the revolving credit facility will be used to fund a portion of the initial cash consideration in relation to the acquisition.

Three term loan facilities, totalling £43.2 million, were established under the company’s facilities agreement, for the purposes of financing the acquisition. The bridging finance facilities will be repaid using the net cash of Tulloch Homes on completion and the proceeds of the placing. 

Notwithstanding the increase in Springfield’s share capital as a result of the acquisition and the placing, ot intends to pay a final dividend in respect of the year ending 31 May 2022 in line with previous expectations.

Springfield CEO Innes Smith said: “This is another great acquisition for Springfield – and our third since coming to the market in 2017.

“Tulloch Homes has an excellent reputation for building high-quality homes in the Scottish Highlands in and around Inverness. This is an area of high demand where we have been organically building a presence in recent years.

“As a result, it will significantly strengthen our foothold in an area of strategic importance and accelerate our growth, being earnings enhancing from the current year.

“We welcome all of the Tulloch Homes employees to the Springfield group and we look forward to working together to continue to grow our business.”

Application will be made for the Placing Shares to be admitted to AIM and Admission is expected to take place on 21 December at 8am.