Foresight Sustain. - FSF acquires three afforestation sites & signs RCF

Foresight Sustainable Forestry

01/08/2022 07:00

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RNS Number : 3370U  Foresight Sustain. Forestry Co PLC  01 August 2022

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/ (https://fsfc.foresightgroup.eu/)

 

 

For further information, please contact:

 Foresight Sustainable Forestry Company Plc            +44 20 3667 8100

 Robert Guest

 Richard Kelly

 fsfc@foresightgroup.eu

 Jefferies International Limited                       +44 20 7029 8000

 Neil Winward

 Will Soutar

 Citigate Dewe Rogerson                                +44 7768 981763

 Toby Moore (toby.moore@citigatedewerogerson.com
 (mailto:toby.moore@citigatedewerogerson.com) )

 Jos Bieneman (jos.bieneman@citigatedewerogerson.com
 (mailto:jos.bieneman@citigatedewerogerson.com) )

 

 

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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