Conygar Investment Company plc (LON:CIC) has announced its intention to conduct a placing of c.6.7 million new Ordinary 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.
