FSF acquires three afforestation sites & signs RCF
Monday 01 August, 2022
Foresight Sustainable Forestry Company Plc
("FSF" or "the Company")
FSF acquires three afforestation sites in Scotland and signs £30 million Revolving Credit Facility
Foresight Sustainable Forestry Company Plc, an investment company that invests in UK forestry and afforestation assets, today announces the acquisition of a further three afforestation sites in Scotland (deploying £3.8m, inclusive of tax and other transaction costs) and the signing of a £30m Revolving Credit Facility agreement.
Acquisitions
On 15 July 2022, FSF completed the acquisition of Droveroad Wood, a c.50 hectare afforestation property located in Lilliesleaf in the Scottish Borders, for £0.9m (including tax and other transaction costs). The property contains a mix of existing forest and woodland and land well suited for the establishment of a productive woodland creation scheme.
On 18 July 2022, FSF completed the acquisition of Chatto Craigs, a c.98 hectare afforestation property located near Galashiels in the Scottish Borders, for £1.8 million in aggregate (inclusive of tax and other transaction costs). A high proportion of the property is expected to be suitable for a high yielding woodland creation scheme.
Droveroad Wood and Chatto Craigs are both well located in relation to sawmills and timber processors and expand FSF's growing Scottish Borders portfolio.
On 29 July 2022, FSF completed the acquisition of Piltanton Wood, a c.79 hectare afforestation property located in Dumfries & Galloway, Scotland, for £1.1 million in aggregate (inclusive of tax and other transaction costs). The property has a small proportion of existing forestry, including native broadleaves, and a high proportion of the land area is expected to be suitable for inclusion in a woodland creation scheme. The acquisition extends the Company's presence in the region.
Combined, the three transactions increase the total area of FSF's portfolio to 8,769 hectares and the percentage (by value) of afforestation sites in the portfolio to 38%, representing continued progress towards the Company's aim of having 40-50% of its portfolio by value allocated to afforestation. The Company is looking to further increase its number of afforestation properties in the near future and is on track to deliver on this core strategic objective.
Revolving Credit Facility
FSF is also pleased to announce that it has signed a new three year agreement providing a committed Revolving Credit Facility ("RCF") of £30 million and an uncommitted accordion facility of up to an additional £30 million. The RCF has a 3-year tenor and two 1-year extension options. The accordion feature allows the Company to bring debt in line with 30% of Gross Asset Value, as detailed in FSF's Prospectus.
The RCF gives FSF a committed source of flexible funding outside equity raisings. Once drawn, the facility is expected to be paid down periodically by the proceeds of equity issues. This enables FSF to make new investments with certainty of funding and on a timely basis, reducing performance drag associated with holding cash balances.
The interest margin chargeable on the RCF is linked to the Company's Sustainability and ESG ("S & ESG") performance, with FSF incurring a premium or discount to its margin based on its performance against defined targets. These S & ESG targets are:
- A year-on-year increase in the total number of hectares of land acquired for carbon sequestering activities (including afforestation, peatland restoration and voluntary carbon credit acquisition)
- A year-on-year increase in the total number of people completing FSF's Forestry Skills Training Programme
Performance against these targets will be measured annually, with the interest cost of the RCF being amended accordingly in the following year.
The lender is Virgin Money and the interest margin can vary between 200bps and 220bps over SONIA ('Sterling Overnight Index Average'), depending on performance against the Company's S & ESG targets.
Richard Kelly and Rob Guest, Co-Heads of Foresight Sustainable Forestry Company, commented:
"We are delighted to have completed this trio of afforestation acquisitions which commences the deployment of the proceeds from our recent fundraise. These investments move us closer to achieving our objective of having 40-50% of the value of the portfolio allocated to afforestation and our attractive imminent pipeline makes us confident of achieving that goal".
Richard Davidson, Chairman of Foresight Sustainable Forestry Company, also commented
"Reaching financial close on the RCF is an important part of the business plan documented in FSF's IPO Prospectus. The RCF provides access to flexible capital which will be used to grow the business through the delivery of our deal pipeline. The Company is very pleased to be working with Virgin Money and are proud that the interest margin is aligned to S & ESG targets which form a core part of FSF's investment strategy".
About the Company
Foresight Sustainable Forestry Company Plc ("the Company") is an externally managed investment company investing in a diversified portfolio of UK forestry and afforestation assets. Targeting a net total return of more than CPI +5%, the Company provides investors with the opportunity for real returns and capital appreciation driven by the prevailing global imbalance between supply and demand for timber; the inflation-protection qualities of UK land freeholds; and biological tree growth of 3% to 4% not correlated to financial markets. It also offers outstanding sustainability and ESG attributes and access to carbon units related to carbon sequestration from new afforestation planting. The Company targets value creation as the afforestation projects successfully achieve development milestones in the process of converting open ground into established commercial forest and woodland areas. The Company is seeking to make a direct contribution in the fight against climate change through forestry and afforestation carbon sequestration initiatives and to preserve and proactively enhance natural capital and biodiversity across its portfolio. It is managed by Foresight Group LLP. https://fsfc.foresightgroup.eu/
For further information, please contact:
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Foresight Sustainable Forestry Company Plc Robert Guest Richard Kelly fsfc@foresightgroup.eu
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+44 20 3667 8100 |
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Jefferies International Limited Neil Winward Will Soutar
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+44 20 7029 8000
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Citigate Dewe Rogerson Toby Moore ( toby.moore@citigatedewerogerson.com ) Jos Bieneman ( jos.bieneman@citigatedewerogerson.com )
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+44 7768 981763
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This announcement does not constitute, and may not be construed as, an offer to sell or an invitation to purchase investments of any description, or the provision of investment advice by any party. No information set out in this announcement is intended to form the basis of any contract of sale, investment decision or any decision to purchase securities in the Company.
This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "intends", "may", "will", "targeting" or "should" or, in each case, their negative or other variations or comparable terminology. All statements other than statements of historical facts included in this announcement, including, without limitation, those regarding the Company's financial position, strategy, plans, proposed acquisitions and objectives, are forward-looking statements.
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