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Tulloch Homes future secured by management buyout

Tulloch chief executive George Fraser
Tulloch chief executive George Fraser

An Inverness house builder is back in the hands of its management for the first time since the start of the banking crisis.

Bosses at Tulloch Homes have bought out US investment giant Goldman Sachs and private equity firm TPG, which took control of a 40% stake in the company in 2013.

Tulloch chairman Tom Allison, chief executive George Fraser and finance director Sandy Grant have led the buy-out, claiming the deal will secure the jobs of the company’s 150 employees and the future of one of the north’s leading companies.

The amount they paid to Goldmans and TPG was undisclosed, but the deal was backed by a £30million loan from the Bank of Scotland.

As part of the acquisition, Tulloch will write down the value of its land bank by an expected £10.5million to reflect “current market realities”.

In addition, the group, which has for several years owned the three stands at Tulloch Caledonian Stadium on a ground lease from Highland Council is in the process of transferring its interests in the stands to a trust set up for the benefit of the community.

Mr Allison said: “This is a very significant chapter in the history of one of the most important companies in the Highlands and a deal which we’re confident will secure the future of the business for many years to come.

“Tulloch’s 90 years of construction expertise and its reputation for developing high quality homes at reasonable prices means the company is very well-placed to capitalise on the undoubted opportunities available in the years ahead.”

The housebuilding firm first became part-owned by HBOS when then chairman David Sutherland sold a 40% stake to the bank for £27.5million. The deal was done just months before HBOS was taken over by Lloyds Banking Group as the banking crisis started taking its toll in the UK.

Lloyds later restructured the debt it owned in Tulloch twice, in 2009 and 2012, causing the housebuilder to post losses of £65million for the 18-month period to June 30, 2012. The bank then sold the debt, as part of a £1.2billion package of distressed property loans, to Goldman Sachs and TPG in 2013.

Tulloch returned to the black with a £964,000 pre-tax proft in 2013.

Mr Grant revealed that, in the next few weeks, Tulloch is expected to announce turnover of over £58million and more than 280 home completions for the year to 30th June 2014.

He said: “We expect to build a further 300 homes in 2015 via a strong pipeline of developments in our core Highlands market as well as two new developments in Aberdeenshire in the city centre and Bridge of Don.”

The deal marks the return of Lloyds as lender to the group, through its subsidiary Bank of Scotland.

Mr Allison said: “I have to give particular credit to Bank of Scotland for the very positive and professional way they have responded to our requirements. They clearly recognise the importance to the Highland economy of having a strong, sizeable house builder like Tulloch and have been prepared to back us in every possible way.”

Simon Sweeney, strategic finance director for Bank of Scotland, said: “Tulloch is a leading house builder in the Highlands and the firm’s locally-based management team marks the ongoing commitment to its core market while the recent purchase of new sites in Aberdeen gives the business great potential to increase its presence in the wider housebuilding market in Scotland.

“The house building industry makes a significant contribution to Scotland’s economy and Bank of Scotland is committed to investing in the sector, whether that be lending to builders like Tulloch or helping home buyers as a major mortgage provider.”