London & Stamford Property, a closed-ended investment company incorporated in Guernsey, has agreed in principle to the application for admission of the company’s ordinary shares to the premium segment of the Official List and to trading on the Main Market of the London Stock Exchange.

It has also agreed to the establishment of London & Stamford Property plc as the holding company of LSP by way of a scheme of arrangement under Part VIII of the Companies (Guernsey) Law, 2008.

In addition, it has agreed to the election by the enlarged group for UK Reit status and the internalisation of the management of the business by acquiring the business and assets of LSI Management.

The scheme requires the approval of a majority in number of those LSP shareholders present and voting (either in person or by proxy) at a Guernsey court-convened general meeting, who represent at least 75 per cent in nominal value of the shares. 

The shareholder approval must then be sanctioned by the Guernsey court for the scheme to become effective on admission. 

The acquisition is also subject to an LSP shareholder vote at an extraordinary general meeting of LSP and requires a vote in favour of 50 per cent of the votes cast in person (or in the event of a poll, by proxy) by the LSP shareholders.

Two separate resolutions will be put to LSP shareholders, one to approve the scheme and one to approve the acquisition. LSP shareholders may approve the resolution to effect the scheme without approving the acquisition resolution, but not vice versa.

The LSP board believes that the long-term future of the business and the interests of LSP shareholders as a whole is best served by converting to UK Reit status, becoming a permanent life vehicle to capture fully the long-term benefits of Reit conversion and by internalising its management.

The move to the premium segment of the Official List and to trading on the Main Market of the London Stock Exchange from AIM is considered more appropriate for the company given LSP’s current market capitalisation, and may confer a number of associated benefits, in particular, access to a broader range of investors and improved liquidity.

The company’s new board of directors will consist of Raymond Mould as executive chairman, Patrick Vaughan as chief executive officer and Martin McGann as finance director. The non-executive directors will be Mark Burton, Charles Cayzer, Richard Crowder, James Dean and Humphrey Price.

LSP’s external property advice and management function, currently provided by LSI, is to be brought within the enlarged group by way of the acquisition. The consideration payable pursuant to the acquisition agreements will be GBP55m to be satisfied by the issue of new ordinary shares by the company to LSI Management members of which GBP10m is subject to a clawback arrangement if certain performance conditions are not satisfied in the three years ending 30 September 2013.

Following completion of the acquisition and the scheme becoming effective, the management team will hold 49,580,406 new ordinary shares in aggregate representing 9.1 per cent of the issued share capital of the company.

Mould says: “We believe that converting to a Reit, moving to the Official List and internalising management is the best way forward for shareholders. We are pleased to be announcing these proposals which we believe will enable us to enhance shareholder returns as we continue to grow the business and take advantage of the significant opportunities we see to deploy LSP’s capital at attractive long term cash yields.”