Property group Dunloe Ewart plans to sell 20 properties in Ireland, Northern Ireland, England and Scotland for #156 million (£123 million) with part of the proceeds being used to fund the buyback of shares worth #18.7 million.
The sale of the properties and the tender offer to repurchase 34 million shares at #0.55 each - a 37 per cent premium on yesterday's price of #0.40 - have to be approved by shareholders at an extraordinary general meeting on May 21st. While there is little doubt that the sale of the properties will go through, as that will require a simple majority, there is uncertainty over the attitude of 27 per cent shareholder Mr Liam Carroll to the repurchase which requires approval from a 75 per cent majority.
Dunloe chairman Mr Noel Smyth said that he has tried unsuccessfully to discuss his plans with Mr Carroll, who runs the Zoe Developments apartment development company. Mr Carroll built up his stake over the past year but has so far declined to comment on his plans.
Mr Smyth conceded that Mr Carroll has the power to block the repurchase. "I rang Mr Carroll but he didn't take the call. Then I got a letter from his solicitor saying he wasn't interested in talking to me. We don't know what he's going to do at the e.g.m.," he said.
The proposed repurchase is much smaller than expected as Dunloe had previously indicated that it would buy back up to 67 million shares. Mr Smyth said: "We said we would buy back up to 67 million shares and that was a maximum. When we looked at it in more detail and with the difficulty there is in raising development capital, we decided that we needed to keep more money in the company."
Apart from the #18.7 million earmarked for the share purchase, Dunloe intends to use the proceeds of the property disposals to repay related bank debt of #102 million, other bank debt of #18 million and #17.3 million for working capital, of which #8.8 million will be used to pay tax arising from the property sales.
All of the properties have been sold subject to e.g.m. approval. They include nine in Scotland, three in England, four in Northern Ireland and four in the Republic - 4-5 Harcourt Road, 76-78 Harcourt Street and a number of units in The Square shopping centre in Tallaght and the Airways Industrial Estate in north Dublin. Overall, Dunloe will realise a profit of #32.6 million on the properties that will be sold.
The properties that will be retained include Bloomfields Shopping Centre in Dun Laoghaire, the Mill Shopping Centre in Clondalkin and the Castle Shopping Centre, as well as five office properties in Dublin, Belfast and England in addition to industrial properties in Cork and England.
Mr Smyth said that Dunloe also intends to sell a number of non-core development sites in the current year and concentrate its resources on larger developments, particularly the Sir John Rogerson's Quay and Barrow Street sites in Dublin and the Lanyon Place, Sirocco and Cathedral Way sites in Belfast.
Dunloe has also released its financial results and these show a fall in pre-tax profits from #25.7 million in 1999 to #9 million. The 1999 figure, however, includes an exceptional profit of #18.4 million on the sale of a 50 per cent stake in Cherrywood to British Land. When this exceptional profit is stripped out, underlying profits rose from #7.3 million to #9 million.
