GVA gains £30m war chest after equity swap

Lloyds Development Capital has taken its ownership in GVA to 30% after agreeing to swap its outstanding loan notes for an increased equity stake.

LDC has agreed to swap all its loan notes, which were valued at £40m when they were taken out in 2007 but are now valued at £60m because of rolled-up interest, for an extra 7.5% stake in the business. It will take up the extra shareholding over the next three years.

GVA chief executive Rob Bould said the deal would give the agent a war chest of £30m-£40m for investing in new acquisitions, expanding its GVA Worldwide global arm and boosting benefits for its employees.

“We have ambitious growth plans, and this release of equity will invigorate our business just at a time when many are finding the market tough going,” said Bould.

The firm has made four acquisitions in the past 12 months, including Humberts Leisure and hotel and leisure consultancy RGA.

Bould said the firm was in negotiations with a number of other niche regional players.

The restructuring of the agent’s ownership with LDC follows a £30m refinancing of the company earlier this year (18 February, p32). Bould said the move would result in a “vastly improved net debt position” of £15m. He added that the restructuring would also see senior GVA staff give up a “meaningful” number of shares that would be reapportioned across the firm, giving more staff a stake in the business.

Bould said the deal was important as it gave the firm a “competitive advantage” over many rivals by enabling it to offer acquisition targets an equity stake.

GVA’s latest accounts, for the year ended 30 April 2011, revealed a drop in pretax profits from £5.7m to £1.8m, despite a 1.8% increase in turnover to £131m.