Cairn Homes chief executive Michael Stanley, his brother, Kevin, and investor Alan McIntosh, will receive a stake in the homebuilder worth almost €62 million at yesterday's closing price under the company's founder shares incentive scheme.
The three hold founder shares in Cairn which can be converted to ordinary shares subject to the company’s value increasing by 12.5 per cent a year.
Cairn said on Friday that this condition had been met and that 38.68 million founder shares held by the three would convert to the same number of ordinary shares.
At yesterday’s closing price of €1.60 in London, 38.68 million shares were worth a total of €61.9 million. The new ordinary shares will be listed on August 18th.
A lock-in agreement means that the three must keep all the shares for 12 months, after which they can sell up to 50 per cent of them. They can sell the balance after two years.
In return for his founder's stake, Michael Stanley will receive 13.54 million Cairn Homes shares, worth €21.664 million at last night's close. Kevin Stanley will receive 5.8 million, worth €9.28 million.
Emerald Everleigh Limited Partnership, ultimately owned by Mr McIntosh and his wife, will receive 19.34 million Cairn shares, worth a total of €30.944 million at last night's close.
The move will dilute the value of Cairn’s existing ordinary shares by 5.4 per cent, according to stockbroker Davy. The company will have 761.7 million ordinary shares in issue by the end of this year.
Cairn published details of the scheme in the prospectus that it produced ahead of its 2015 stock market launch and in its annual reports. Those documents show that founder shares are convertible if the share price achieves a compound annual rate of return of 12.5 per cent.
The shares have to show this return over 15 consecutive business days in four month period, in this case, the beginning of March to the end of June. The scheme will run until 2022.
The three men contributed €29 million worth of assets to the company at cost before it floated in 2015 and put in €10 million on the same terms as other all other investors.
Cairn also paid Michael Stanley and Mr McIntosh in shares for various properties that it acquired from them. The group bought a business park in Dublin and development land in the capital and Galway from Mr McIntosh for €20 million cash.
The housebuilder intends listing on the Irish Stock Exchange next week. Its shares already trade on the London market. Cairn is building new homes on various sites in Dublin.
