Gleeson suspended building work on all of its sites last month and furloughed three quarters of its workforce.
Gleeson is now preparing for the post-pandemic world and an acceleration in build rates.
Key to boosting work rates will be protecting the supply chain and Gleeson has set aside £4m of the new cash for its subcontractors.
The share placing will :
- Ensure subcontractors and key trades are ready to re-commence building. The Company will work closely with its supply chain, mindful of their own financial positions, honouring commitments and bringing them back to site. This is expected to cost c.£4m
- Secure materials including the supply of bricks, block timber, kitchens and other materials ensuring availability on resumption of building. This is expected to cost c.£2m
- Purchase and open new sites under contract. This is expected to cost c.£10m
Gleeson currently has 1,046 plots built to slab level across its 67 active sites.
It anticipates that, in addition to the resumption of building on its current sites and completion of its current order book, there “will be a significant opportunity to convert the company’s current pipeline of new sites owned or under contract to help satisfy demand for the company’s homes.”
Gleeson has 22 new sites owned or in planning of which management had, prior to the current lock-down, planned to phase the openings of 17 sites during the remainder of the first half of 2020.
It is now “targeting a compression of these new site openings into a smaller window once COVID-19 restrictions are lifted.”
Gleeson said: “The company believes that once COVID-19 restrictions are lifted, low cost homes and those sold to first-time buyers will be the segment of the housing market that will recover the fastest.
“A precursor to home ownership is the saving of a deposit of as little as £5,000. A significant proportion of the company’s customers are the Key and Critical Workers who will be working overtime during the current health crisis and may emerge from this period having saved such amounts.
“To be able to meet the demand for its homes, building on current sites and opening of new sites will be concertinaed into a much shorter time scale, which will be more capital intensive than usual.
“The Company is therefore proposing to raise additional capital by way of the Placing to provide additional liquidity.”