Burford announces pounds 142m rights issue

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The Independent Online
Burford, the property group chaired by Nigel Wray, yesterday announced its second demerger in six months and a pounds 142m rights issue, its third in three years.

The deal is the latest in a series of cash-calls in the property sector. Earlier this week rival developer Chelsfield announced it was raising pounds 102m.

Burford's new money will be used to finance the pounds 70.8m acquisition of seven properties from Shell Pensions Trust, also announced yesterday, the pounds 40m development of the group's 12-acre site on London's Finchley Road and the pounds 15m cost of a purpose-built distribution centre in Manchester.

The shares fell 9p to 137p on the news, which compares with the 122p price at which the rights shares are being offered on a two-for-five basis.

Mr Wray said: "The rights issue will enable Burford to use its financial strength and flexibility in pursuing new opportunities to create shareholder value, as we have successfully demonstrated in the past. The initiatives announced today and over the last few weeks are further steps towards achieving this objective."

The group is selling its 50 per cent stake in Columbus, a small publishing company, to another publisher, the USM-quoted Carnell, for pounds 14.1m. The all-share consideration for the deal will be passed directly through to Burford shareholders on the basis of around 22 Carnell shares for every 100 shares already held.

The latest spin-off comes hot on the heels of the November demerger of Trocadero, the owner of the leisure development of the same name in the West End of London.

The Shell deal comprises seven properties throughout the UK, but two assets represent 68 per cent of the portfolio by value. Darwin Shopping Centre in Shrewsbury is a 190,000 square foot development built in the 1980s in which several leading high street retailers are tenants. The other big property is Leeds Road Retail Park in Huddersfield, a 160,000 square foot freehold retail warehousing site on which nearly 60 per cent of the space is let to B & Q. Four hotels let to Forte and Mount Charlotte are included in the acquisition.