Three Cairn Homes executives take €3m paper hit on share deals

Three senior executives of listed Irish property group Cairn Homes have converted so-called founder shares into ordinary stock in the company in a move that has seen them incur an aggregate paper loss of €3 million on the transactions.

In announcements made to the London Stock Exchange on Wednesday, chief executive Michael Stanley, chief operating officer Kevin Stanley and executive director Alan McIntosh (via an investment vehicle called Emerald Everleigh LP) converted just more than 15 million "founder" shares into ordinary Cairn stock.

In each case, the conversion price was just above €1.18 per share, costing the executives €17.75 million between them.

As Cairn’s share price is currently trading at 98 cent a share, the trio have essentially taken a paper loss of just more than €3 million on the transactions.

Ambitious programme

With Cairn in the early stages of an ambitious residential building programme in

Ireland

, the executives are essentially betting on the company’s share price rising substantially in the coming years as they deliver on its business plan.

Mr McIntosh converted more than 7.5 million shares with Michael Stanley converting almost 5.3 million shares and Kevin Stanley 2.25 million shares.

All of these shares are subject to a one-year lock-up period with half of them remaining subject to another lock-up period lasting 12 months.

Some 100 million founder shares were issued to the trio as part of Cairn’s stock market flotation in June of last year.

They entitle the executives to receive 20 per cent of the total shareholder return over the seven years following the admission of shares to the stock market, subject to Cairn achieving a compound rate of return of 12.5 per cent a year in its share price.

The founder shares were valued for Cairn in 2015 by Towers Watson at €29.1 million over their seven-year term.

Home target

Michael Stanley said earlier this year that the company should be building on up to eight sites by early 2017. The group has a target of building up to 1,200 homes each year by 2019.

Some months ago, Cairn bought €1.75 billion in property loans from Ulster Bank, paying €378 million for the portfolio known as Project Clear.