PRIVATELY owned housebuilder Miller Group recorded another substantial pre-tax loss as it emerged that state-owned lender Royal Bank of Scotland has taken a 23% stake in the Edinburgh-based company.
Miller took £62.4 million of writedowns, which it said was linked to a financial restructuring, leading to a pre-tax loss of £92.8m for 2011. This was an improvement on the £158.8m deficit of the previous year.
The restructuring was led by American private equity group Blackstone, which was handed a 54% stake after leading a £160m capital injection into the company.
As part of the arrangement, which was completed at the beginning of the month but whose details are only now being revealed, 82% state-owned RBS took a 23% holding in Miller and its other lenders Bank of Scotland and National Australia Bank received a combined 10% after the trio exchanged £264.5m of debt for equity.
It is understood RBS decided to take the equity stake due to its positive view on the long-term prospects for housebuilders.
The banks also took control of £89.1m of development assets and their equivalent debt.
One of these assets, the Market Gates Shopping Centre in Great Yarmouth, has gone into administration in recent days.
Edinburgh-based merchant bank Noble Grossart took a 5% stake in Miller.
Existing shareholders and management were left with 8%.
The deal substantially dilutes the previous 20% equity holding of Bank of Scotland.
Miller chief executive Keith Miller, who previously had a 14.5% stake according to documents filed with Companies House, has also seen his holding greatly reduced.
He contributed what he described as a "substantial amount" to the injection of fresh equity.
Miller Group, which was founded in 1934, was saddled with borrowings of around £1 billion at the top of the property market.
Much of it was taken on in a 2008 deal when Bank of Scotland Corporate provided equity and debt to allow a group of disgruntled family members to exit.
The restructuring cuts around £500m from Miller's net debt, which totalled £706.6m at the end of 2011.
Miller has been given a new five-year facility of £238m.
Mr Miller said the complexity of its private ownership meant that the business took longer to recapitalise than its listed rivals.
"It is a demonstration of the quality of our company that we have managed to attract £160m of new money," he said.
Before taking account of exceptional items and interest payments, all four of Miller Group's divisions were profitable last year, the first time this has happened since 2007.
The company sold 1632 homes during the year, down from 1915 in 2010.
This compares with a peak of 3800 at the top of the market.
"We deliberately didn't bring in new sites because we didn't feel we wanted to invest at that point in the cycle," Mr Miller said.
"We now see a stronger recovery coming through and we can now draw down sites in the strategic land bank."
It plans to acquire 25 new sites this year. Mr Miller said many of these will be in the Midlands and south of England where the company thinks there is the greatest likelihood of house price growth and where it has a substantial landbank from previous acquisitions.
Miller said reservation rates are currently 10% ahead of 2011.
Its construction business, which had been hit by a slowdown in public sector work, has secured £200m of orders since the start of the year.
Miller's workforce remained "broadly stable" at 1300 last year, compared to 2300 at its peak.
"If anything, I would think we are likely to increase our workforce this year," Mr Miller said.