TRANSPORT tycoon Sir Brian Souter has confirmed a major investment in an upmarket Edinburgh property development company as part of a deal which has seen tens of millions of pounds of bank debt paid off.
The Stagecoach co-founder has backed AMA (New Town) through his Souter Investments private investment vehicle, which also holds stakes in Scottish bus builder Alexander Dennis and Polish bus operator PolskiBus. Highland & Universal Investments, a joint venture with Souter’s sister Ann Gloag, has also invested. The deal with AMA is thought to be Souter’s biggest investment in the property sector for many years.
AMA said the refinancing and investment deal came after it looked to find “alternative funding partners” to support the group alongside the clearing banks.
Joint managing director Ali Afshar said: “This new alliance with Souter Investments provides us with an active, talented and robust partner and will allow us to explore together a number of interesting new projects and opportunities.”
Calum Cusiter, investment director at Souter Investments who has joined the board of AMA, said it was a “highly regarded, successful and long-established brand in the Edinburgh marketplace”.
Under the deal, the existing shareholders of AMA have established a new partnership which has acquired £21 million of the company’s bank debt and converted it into share capital. Another £21.7m of bank debt was repaid through the issuing of loan notes.
In its accounts AMA, run by the Iranian-born Afshar family and behind sites including the former Fountain Brewery site in the city, pointed out that it has managed to sell almost £45m of residential property since 2010 despite difficult market conditions and reduced its bank borrowing by £13.6m over the past three years.
“However, the directors considered that a more fundamental restructuring of the way we fund our business and developments was required given the lack of funding that is available from the banks, allowing us to purchase new sites and make available a pipeline of future developments,” said the firm.
During the period from 1 November, 2012, to 31 December, 2013, group turnover fell to £10.76m from £17.02m in the previous year. Pre-tax losses of £3.5m compared with £313,157 the previous year. The company pointed out that it would have made a healthy gross profit of more than £2m if it had not been for a “prudent decision” by the directors to write-down work in progress associated with the group’s commercial property stock.
Average sale prices achieved by the company rose to £430,437 in 2013 from £409,638. Debt at the end of last year stood at £45m.
AMA, established in 1983, has been involved in developments including the 90-home Caer Amon project at Cramond, Succoth Heights at Murrayfield, the Printhouse at Canonmills and the Greenhill Court development on the site of the old Bruntsfield Hospital.
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