BRITAIN’S biggest retirement home developer yesterday unveiled a £1.5 billion plan to build 250 sites by 2018 after securing a £527 million refinancing deal.
McCarthy & Stone was saddled with massive debts after it was taken private in 2006 by Ayrshire entrepreneur Sir Tom Hunter and billionaire brothers David and Simon Reuben.
Existing shareholders – which include Goldman Sachs, Strategic Value Partners and TPG – have injected £367m of fresh equity in the group and offered a £160m loan.
The deal reduces McCarthy & Stone’s debt by £350m, nine months before its previous financing arrangements were due to expire.
Chairman Jeremy Jensen said: “The successful completion of the transaction is great news for McCarthy & Stone.
“The refinancing has reduced the company’s debt significantly and was concluded nine months ahead of maturity, which demonstrates tremendous support across the investor group.
“McCarthy & Stone is now on a much-stronger footing and has the financial flexibility to continue investing in the business to execute its growth strategy.”
Chief executive Mark Elliott added: “I am delighted by the continued support and faith of our investors. We can now focus exclusively on what we do best – building much-needed homes to the highest quality – and implementing our growth plans, which includes £1.5bn investment over the next four years.”
The Bournemouth-based firm, which sold almost 1,400 properties last year, was founded in 1963 by John McCarthy and Bill Stone and has focused on building retirement homes since 1977.
The company employs about 700 staff and has constructed dwellings for some 45,000 pensioners on more than 1,000 sites.
A debt-for-equity swap in 2009 had left its lender, Lloyds Banking Group, with a 25 per cent stake in the company. Lloyds later sold its stake to Goldman Sachs and TPG. Hunter is no longer involved with the firm.
Turnover at McCarthy & Stone grew by 12 per cent to £257.7m in the year to 31 August, according to its most-recent accounts, with profits rising by 10 per cent to hit a five-year high of £39.9m.
In February, house builder Crest Nicholson – which Hunter and HBOS took private in 2007 under a £715m deal – returned to the stock market, raising £225m in its initial public offering. Crest had previously spent nearly four decades in the public arena.
News of McCarthy & Stone’s refinancing comes amid a resurgence for house builders, with Persimmon yesterday becoming the latest company to hail the success of the UK government’s Help to Buy programme and the Bank of England’s Funding for Lending Scheme (FLS).
Some commentators have expressed concern that the stimulation provided for the mortgage market by the FLS could lead to another housing bubble.
Persimmon posted a 40 per cent rise in underlying profits, a day after Bovis notched up a 50 per cent rise. Earlier this month, Taylor Wimpey notched up a similar double-digit profits rise.