Trading Update (8054A)
February 07 2011 - 9:19AM
UK Regulatory
TIDMDDE
RNS Number : 8054A
Develica Deutschland Ltd
07 February 2011
7 February 2011
Trading update for Develica Deutschland Limited ("DDL" or the
"Group")
The Board of Develica Deutschland Limited (the "Board")
announces today that the agent to the lenders of DDL's second
largest property portfolio (referred to as "Bluestar" and the
"Bluestar lenders") in terms of gross assets has issued notice of a
breach of the loan to value covenant as set out in the loan
agreement.
As a result of the breach of covenant and as required under the
loan agreement, the Group has been asked to rectify a breach by way
of equity cure which it will be unable to do due to insufficient
funds at a Group level. The quantum of the required equity cure is
significantly in excess of the Group's cash balance.
This is despite the re-gear of Develica's largest lease with
Deutsche Telekom (Office building with c. 33,600 sqm in Bonn) in
January 2011. However the market value of the underlying three
properties has reached a level that has eroded the equity in its
entirety of this part of Develica's property portfolio.
DDL is currently in negotiations with the Bluestar lenders, but
under the terms of the loan agreement the breach could result in a
cash trap on the facility which has previously contributed c. EUR4m
p.a. towards the EUR7m p.a. operating cost.
This, combined with the expiry at the end of March 2011 of the
waiver from Citigroup (the Group's largest lender), will have a
significant negative impact on the Group's current cash
reserves.
The board is urgently analysing how to preserve and maximise the
remaining shareholder value in the Group. The Board intends to
report to shareholders once it has determined the best course of
action.
Contact:
Derek Butler, Chairman, Develica.
Tel: 020 7016 1860
Philip Secrett, Grant Thornton Corporate Finance.
Tel: 020 7383 5100
This information is provided by RNS
The company news service from the London Stock Exchange
END
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