Housebuilder reassures City as exclusive negotiations with suitor Horizon continue until mid-June
Private housebuilder Crest Nicholson has paved the way for a return to the stock market with a trading update to the City.
The presentation, which was made by chief executive Stephen Stone on Wednesday morning, came while the company was in exclusive talks with Horizon, the listed vehicle of entrepreneur Hugh Osmond. At stake is an estimated £350m takeover, which would make Crest a public company again.
It follows a change to its status on 19 May, when it re-registered as a plc, according to documents filed at Companies House, which would be a prelude to listing.
According to two analysts present, the thrust of the meeting was to reinforce the message that the company was not in trouble. In March last year Crest undertook a £630m debt-for-equity swap and refinancing deal with Lloyds Banking Group and 24 other lenders.
Kevin Cammack, an analyst at Cenkos Securities, said: “There wasn’t much detail on the deal with Horizon, but it showed how saleable the company is, given the brutal land writedowns it did at the time of refinancing.”
Unlike its listed rivals, Crest wrote the value of its land down to reflect its “fair value” on the open market rather than a zero margin under accounting rules that govern listed companies. It means that any acquirer would make a higher return on the land. Cammack estimated that the operating margin would be about 15%, as opposed to 0-5% at its listed peers.
Robin Hardy, an analyst at KBC Peel Hunt, added: “The land is massively cheaper than the likes of Persimmon, which could make it a fantastic buy for someone.”
Although the company is in exclusive talks with Horizon until the middle of June, there have been reports of interest from Galliford Try and Persimmon. Although analysts have played down a deal with the former as “too big”, they say Persimmon could be waiting in the wings.
Crest in numbers
- 4 number of divisions today, down from 7
- 2.85 sales rate per site in 2009
- 1.5 bank requirement for sales per site in 2009
- 12,463 number of units under development
- 65% percentage in the South-east