Sigma, the finance, property and urban regeneration specialist, is delighted to announce that its property division has signed a significant management contract worth £1.8 million over the next five years with Regenco Trading Ltd (“Regenco”). The Sigma board anticipates that, under this contract, revenue recognition and cash payments to the Group will broadly accrue on a straight line basis over the five year contract term. The contract represents the next phase of Sigma’s involvement with Regenco’s property development project, the Winchburgh Development, near Edinburgh, which has a total development value of £1 billion. Under the terms of the contract, the Group also has the potential to generate additional carried interest incentive fees based on profit targets.
The Winchburgh Development represents one of the UK’s single largest residential and mixed use developments with planning. The project, located eight miles west of Edinburgh, includes plans for the construction of 3,500 new homes, five new schools, a town centre, town park, retail facilities and a commercial park, as well as associated infrastructure such as a new motorway junction and train station, including ‘park and ride’ facilities.
The Group has been actively involved in the Winchburgh Development since 2010, managing the planning permission and commercial negotiations with West Lothian Council on behalf of Regenco. Planning Permission in Principle is now expected to be granted by the Council in April 2012 and Sigma has already secured contracts with Barratt Homes and Miller Homes for the development of the first residential phase comprising 180 new homes. Work on site is anticipated to start in late summer.
Commenting on the contract, Graham Barnet, CEO of Sigma, said,
“The Winchburgh Development represents a significant housing and infrastructure project for Scotland, worth over £1 billion in total. Having successfully handled the planning and commercial negotiations, we are delighted to have signed the management contract for the first stage of the project implementation phase.
The new contract will strengthen our recurring income and also offers additional opportunities for further revenue from performance-related payments.
We look forward to working together with all parties as we move the project from the planning phase to realisation.”
As West Coast Capital (“WCC”), a significant shareholder in Sigma, is also a major investor in Regenco, the transaction constitutes a related party transaction pursuant to the AIM Rules for Companies. The independent directors of the Group, other than James McMahon, who is also a director of Regenco and of WCC, having consulted with Sigma’s nominated adviser, Singer Capital Markets Limited, consider that the transaction is fair and reasonable insofar as its shareholders are concerned.