Property boss moves over cash shortfall

Oct 6 2008

Rob Lloyd 200

PROPERTY development company Eatonfield has come up with a contingency plan to raise badly needed short-term funding if a £750,000 loan from its founder and chief executive Rob Lloyd is not approved by existing shareholders.

Mr Lloyd and his Cheshire-based racing stable business are willing to put up the money to help the group, which is struggling with tough conditions in the debt and property markets. But, if share- holders refuse to sanction the terms of the loan, the company says it may be forced to sell all remaining unissued shares in the company to raise the funding it needs.

The group, which has borrowings of £33.5m and assets worth £53m, has been unable to raise further finance against the value of its former Corus site in Workington, Cumbria, which means available cash is less than expected.

The group’s overdraft facility has been extended for a further year, and Mr Lloyd has increased his personal guarantee of the group’s debt to £1m, for which he will be paid a fee of £95,000.

Shares in Eatonfield have lost around two-thirds of their value in recent weeks after the real estate investor conceded that dire markets meant it was set to miss profit targets for the year to June 30, 2008. At the same time, the company said it was scrambling to fill funding gaps for its projects and was now implementing a series of cost-cutting measures.

To help tide the company over its short-term funding difficulties, Mr Lloyd’s business, Rob Lloyd Racing, will make a loan of £750,000 in return for a profit-sharing arrangement on the Corus and Birkwood sites. The board believes this cash injection will take the group through to the point where the Corus site can be refinanced with the benefit of planning permission.

Shareholders are being asked to approve the loan transaction, but, if they don’t, the company’s directors want to place all remaining 6,935,225 unissued shares to raise funding for the group.

Eatonfield is also cutting costs to generate cash and keep the business ticking over. It wants to close some satellite offices, sell or lease its head office in Mold, and cut some jobs to reduce fixed overheads by a quarter, or £500,000 a year. Last week, it sold a parcel of land at Greenfield, Holywell, North Wales, for £2m, raising £520,000 in cash after repayment of debt.