Gleeson looks to raise £16m for post-covid recovery

MJ Gleeson, which on Monday said it was furloughing 75% of staff and cutting director pay, has unveiled a plan to raise cash which it claims will be used to take advantage of the post-covid-19 recovery.

The housebuilder and land trader today announced a proposed placing of new shares worth £16.4m which it said was “intended to position the Company for an early recovery of the first-time buyer market”.

The firm said it wanted to ensure the Company is well placed to rapidly meet pent-up demand from first-time buyer market as and when COVID-19 restrictions are lifted.

In particular, it said it wanted to be able to accelerate the resumption of building on existing sites, accelerate the opening of new sites, and secure the supply chain now in order to enable both to happen. The firm said it has over 1,000 plots already built to “slab level” across 67 sites, all of which have now been temporarily wound down and shut.

It said it will focus on homes for “key and critical workers” when the market effectively re-opens, opening its pipeline of 22 sites on which work has yet to start much more quickly than previously anticipated.

The firm said: “The Company anticipates that the current situation, caused by COVID-19, will further reinforce the supply shortages of low cost homes for first-time buyers. It should also be noted that people designated “Key and Critical Workers” by the UK Government keeping the country safe, fed and healthy form c.60% of the Company’s customers and will be prioritised by the Company when the market returns.”

Of the £16m, the firm said £4m would be spend paying and securing trades so that they are ready to recommence building, £2m on securing materials, and £10m on buying and opening new sites.

Shares in the firm rose 6% in early trading on the news, despite the wider stock market again falling back sharply, with the FTSE 100 down nearly 2% in early trading.