MJ Gleeson to raise ?16.4m to meet demand from first-time buyers
By Michele Maatouk
Date: Wednesday 08 Apr 2020
(Sharecast News) - Low-cost housebuilder MJ Gleeson said on Wednesday that it is looking to raise about ?16.4m in a share placing to position itself for "an early recovery of the first-time buyer market" once coronavirus restrictions are lifted.
The company will place around 2.7 million shares at 600p each through an accelerated bookbuild, with Liberum acting as the sole bookrunner.
Proceeds from the placing will be used to accelerate the resumption of building on existing sites and the opening of sites already owned or contracted. They will also be used to secure the supply chain.
After the placing, Gleeson will have cash on hand of around ?82.9m, with a monthly cash burn of ?3.1m, down from ?4.9m before the Covid-19 restrictions were put in place.
"The company believes that once Covid-19 restrictions are lifted, low cost homes and those sold to first-time buyers will be the segment of the housing market that will recover the fastest," it said. "A precursor to home ownership is the saving of a deposit of as little as ?5,000. A significant proportion of the company's customers are the key and critical workers who will be working overtime during the current health crisis and may emerge from this period having saved such amounts.
"To be able to meet the demand for its homes, building on current sites and opening of new sites will be concertinaed into a much shorter time scale, which will be more capital intensive than usual. The company is therefore proposing to raise additional capital by way of the placing to provide additional liquidity."
Gleeson added that along with other actions being taken by management, the placing will mean it is well capitalised and better able to withstand a prolonged period of coronavirus restrictions.
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