Farm Business Development plc – a 24.6% shareholder of FBD Holdings plc – has received a windfall to the value of €27.38 million following the completion of a deal involving land in Germany.

A subsidiary of the Irish investment holding company, Bulberry, has entered into a contract with a German property holding and development company for the disposal of a large proportion of land owned by the firm in Berlin, Germany.

Worth a total of €88 million to Bulberry, the subsidiary – which is 57.6% owned by Farmer Business Developments – will receive €62.877 million in October and has a first mortgage on the land until completion of the contract in early 2021.

The transaction applies to 69% of the portion of land owned by the subsidiary in Berlin.

There is another separate contract which has closed on a piece of land for €7 million. This gives total receipts to Bulberry of €69.877 million. Bulberry’s bank borrowings and costs and retention for tax etc. will reduce net cash available for distribution to €49.3 million.

According to chairman Padraig Walshe at the firm’s AGM in Dublin on Friday, June 7, Farmer Business Developments’ share of the distribution is €27.376 million. Tax arising on this is €1.254 million leaving €26.122 million net.

According to the chairman, the board of directors at the firm has deemed it necessary to develop a strategy to deal with this, and is intent on using the 2019 funds to pay off 50% of the companies bank borrowings – currently €17.5 million.

In addition, the board wishes to set aside cash for contingencies, unexpected events and unexpected or anticipated cash calls, and future investments.

The directors intend to convene an EGM after the October cash receipts to recommend that the shareholders approve a “substantial special dividend to be paid early in December”.

In addition, Walshe noted that a further contract on Bulberry land is due to close in late summer 2020 for €10.8 million.

Bulberry is also due to receive total phased payments of €25.1 million on completion of the main contract in early 2021.

Following these transactions, a portion of land, approximately 13% of the total amount owned by Bulberry in Berlin, will still need to be disposed of, according to Walshe.

“There are no current contracts on this land but the intention is to actively market this land now. This land is attractive to potential purchasers and would hopefully be disposed of quickly,” the chairman said.

Expert tax advice is to dispose of this land and to accumulate all cash receipts post December 31, 2019, and, after payment of all taxes and costs, to liquidate Bulberry and distribute all remaining cash to Bulberry’s shareholders including us.

“It anticipated that this will happen at latest hopefully in 2022,” Walshe concluded.