Cairn to seek court approval for plan to give investors up to €550m
Shareholders back egm resolution to move sum to housebuilder’s distributable reserves
Cairn Homes chairman John Reynolds said all profits from this year onwards would be added to the company’s distributable reserves. Photograph: Nick Bradshaw
Builder Cairn Homes will seek High Court approval for a proposal giving it the option to distribute up to €550 million to investors after shareholders backed the plan on Tuesday.
Shareholders in Cairn voted at an extraordinary general meeting in favour of a resolution to move €550 million from its share premium account, which cannot be distributed, to the company’s distributable reserves.
Cairn’s directors confirmed yesterday that shareholders voted for the resolution.
The directors intend to ask the High Court shortly to confirm the proposal, a move required by company law, and will update shareholders on the outcome of that application.
If the court confirms the proposal, it would allow the company to distribute the €550 million to shareholders. In a letter to shareholders earlier this month, Cairn chairman John Reynolds said “no current proposal exists” to distribute any reserves to investors.
He explained that the directors believed shareholders would regard the flexibility provided by the resolution as positive and said it was “consistent with the company’s intention to implement a progressive capital returns policy”.
Cairn signalled in its most recent trading statement that, as well as paying dividends, the company wanted to return cash to investors in the future through measures such as buying back shares .
Mr Reynolds pointed out that, following “substantial investment” in building the business, Cairn was generating significant cash flow and all profits from this year onwards would be added to its distributable reserves.
“The directors believe that the generation of distributable reserves through the capital reorganisation is accordingly an important step for the company, which will provide greater flexibility to the company in respect of returning capital to shareholders,” he said.
In a trading statement last month, Cairn said it earned €337 million in revenues last year, more than double the €149.5 million it recorded in 2017. Excluding site sales, the company made €294 million in 2018 from selling new homes.
On average, it sold houses for €366,000 each last year, compared with €315,000 in 2017.