Foresight Sustainable Forestry acquires trio of afforestation projects and signs new RCF – Foresight Sustainable Forestry (FSF) has acquired a further three afforestation sites in Scotland (deploying £3.8m, inclusive of tax and other transaction costs) and has also signed a £30m Revolving Credit Facility agreement.
On 15 July 2022, FSF completed the acquisition of Droveroad Wood, a c.50 hectare afforestation property in Lilliesleaf in the Scottish Borders, for £900k, containing a mix of existing forest and woodland and land well suited for the establishment of a productive woodland creation scheme.
On 18 July 2022, the company acquired Chatto Craigs, a c.98 hectare afforestation property near Galashiels in the Scottish Borders, for £1.8m in aggregate. A high proportion of the property is expected to be suitable for a high yielding woodland creation scheme.
Both properties are well located in relation to sawmills and timber processors and expand FSF’s growing Scottish Borders portfolio.
Finally, on 29 July 2022, FSF completed the acquisition of Piltanton Wood, a c.79 hectare afforestation property located in Dumfries & Galloway, Scotland, for £1.1m in aggregate. 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 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 FSF’s aim of having 40-50% of its portfolio by value allocated to afforestation.
Meanwhile, FSF has signed a new three year agreement with Virgin Money providing a committed RCF of £30m and an uncommitted accordion facility of up to an additional £30m. The RCF has a 3-year tenor and two 1-year extension options while its accordion feature allows the company to bring debt in line with 30% of Gross Asset Value.
Once drawn, the facility is expected to be paid down periodically by the proceeds of equity issues, enabling 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 FSF’s sustainability and 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.
Richard Davidson, chairman, said: “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”.
FSF : Foresight Sustainable Forestry acquires trio of afforestation projects and signs new RCF