High Street Group locks down £100m loan note
Newcastle-based High Street Group has secured approval from investors to prevent early redemptions from its £100m loan note.
Investors backing the residential developer’s seven-year loan note have agreed to waive their rights to draw funds, amid delays in development and a slowdown in sales of completed projects.
High Street Group approached investors in May asking for approval for the new business plan, claiming the retained liquidity would allow the company to “progress their projects as quickly as possible in order to achieve a profitable outcome”.
Newcastle-based High Street Group has secured approval from investors to prevent early redemptions from its £100m loan note.
Investors backing the residential developer’s seven-year loan note have agreed to waive their rights to draw funds, amid delays in development and a slowdown in sales of completed projects.
High Street Group approached investors in May asking for approval for the new business plan, claiming the retained liquidity would allow the company to “progress their projects as quickly as possible in order to achieve a profitable outcome”.
The developer held a meeting at the Sea Hotel in South Shields on 1 June, at which 88% of investors backed the plan. It means all investors will be prevented from accessing their money, regardless of whether they supported the vote. However, they will still receive their interest payments.
The special resolution also allows High Street Group to cancel prior requests for redemptions, even if that redemption was due to be paid before the meeting.
High Street Group launched the seven-year loan note in 2018 with a target to raise £100m. It secured the finance in 2019 from a mix of family offices from Dubai and the UK, high-net-worth individuals and a corporate bank in Korea.
The loan note promised returns of 12%, with annual increases of up to 22% in the seventh year, offering investors the opportunity to treble their money over the full period.
High Street Group aimed to invest the funds in its growing build-to-rent pipeline, with schemes in Newcastle (pictured), Milton Keynes and Birmingham sold to institutions including Grainger, Invesco and Edmond de Rothschild REIM. It claims to be the largest BTR company in the UK, with a pipeline in excess of £1.5bn.
In the wake of Covid-19, High Street Group has reported “widespread disruption in the UK and consequently for the group”. In September 2020, High Street Rooftop Holdings Ltd, a wholly owned subsidiary of the group, entered administration when it was unable to pay back a £26.9m loan to Korean-backed funder Strategic Advantage SPC. In May, this loan was still outstanding and subject to interest and charges.
In September 2020, auditors at PwC resigned. In a letter, PwC said it believed “the company’s control environment is not sufficiently robust to enable us to obtain reliable audit evidence”. The auditors said they had failed to receive complete, accurate or timely evidence, creating delays. PwC was therefore unable to audit the most recent accounts for the year ended 31 December 2018.
In a formal letter to investors after the vote, chairman Gary Forrest said: “The vote of confidence in our proposal is an important building block in the full recovery of our business from the financial fluctuations of the Covid-19 pandemic.
“Our investor proposal was a pragmatic, viable and responsible course of action to support the company’s successful corralling of resources to continue its investment programme.
“This vote gives the board the authority from its investors to execute its five-year plan.”
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Image © High Street Group
