Secure Property Dev & Inv PLC Update on Arcona Property Fund N.V. Agreement (1621I)
August 07 2019 - 2:01AM
UK Regulatory
TIDMSPDI
RNS Number : 1621I
Secure Property Dev & Inv PLC
07 August 2019
Secure Property Development & Invest PLC/ Index: AIM / Epic:
SPDI / Sector: Real Estate
7 August 2019
Secure Property Development & Investment PLC ('SPDI' or 'the
Company')
Update on Arcona Property Fund N.V. Agreement
Secure Property Development and Investment PLC (AIM: SPDI), the
AIM-quoted South Eastern European focused property company, is
pleased to announce the signing of two formal agreements ('the
Agreements') relating to the transfer of certain assets owned by
SPDI in Bulgaria and Ukraine (together 'the Assets') to Arcona
Property Fund N.V. ('Arcona') in exchange for approximately 630,000
new ordinary shares (the "Stage One Shares") in Arcona and
approximately 190,000 warrants over ordinary shares in Arcona
(subject to standard form adjustment and finalisation in accordance
with the Agreements).
The transfer of the Assets, which at the time of SPDI's 2018
Audited Final Results had an aggregate Gross Asset Value of EUR15.3
million, represents Stage One of an intended three-stage process to
complete the previously announced transfer to Arcona of SPDI's
property portfolio, excluding its Greek logistics properties ('the
Non-Greek Portfolio'), in exchange for, and subject to the same
standard form adjustment and finalisation mentioned above,
2,176,339 new ordinary shares in Arcona and 561,756 warrants over
ordinary shares in Arcona ('the Transaction') to create a larger
Central and South Eastern European focused investment vehicle.
The total EUR29.3 million value of the Transaction (based on a
net asset value of EUR13.44 per Arcona share as at 3 June 2019, and
excluding the issue of warrants over ordinary shares in Arcona),
completion of which is still subject to a number of conditions,
represents a premium of approximately 135% to SPDI's current market
capitalisation. Arcona, which invests in Central European
commercial property, is listed on Euronext Amsterdam and the Prague
Stock Exchange. As at close of markets on 5 August 2019, Arcona's
share price was EUR6.59.
The Assets comprise Boyana, a residential project in Bulgaria
with a gross asset value as per the Company's 2018 accounts of
EUR8.8 million, and three plots of land for development in Odessa,
Zaporoznie and Tsimliansky in Ukraine with a gross asset value of
EUR6.5 million. In anticipation of the Transaction, the continuous
price improvement in the region's property market and the capital
expenditure planned for 2019, sales at the Boyana project were
curbed and only three out of 37 units were sold in 2018 for a total
turnover of EUR0.2 million and a consequent operating loss before
tax of EUR0.2 million. The Boyana project is financed through a
EUR3.4 million bank loan from Alpha Bank and completion of Stage
One remains subject to receipt of confirmation from Alpha Bank
regarding an extension of the relevant property loan for an
additional two years until June 2021 and the execution of the
relevant documentation.
Closing of Stage One of the Transaction is expected to take
place in the third quarter of 2019, at which point SPDI will be
issued new shares in Arcona at an intrinsic net asset value of
EUR13.44 and warrants which can be converted into Arcona shares if
the price of Arcona shares reach a volume weighted average price
over a period of 10 trading days of EUR8.10 within five years. As
previously disclosed, SPDI intends in time to distribute the Arcona
shares and warrants to its shareholders.
In addition to the above, SPDI and Arcona have signed a
conditional Framework Agreement ('the Framework Agreement') as a
replacement of the conditional implementation agreement originally
signed by the two parties in December 2018 (see announcement of 18
December 2018 for further details). The Framework Agreement sets
out the process by which both parties will proceed in order to
execute Stages Two and Three of the Transaction later this year.
The Transaction is being implemented in three stages to accommodate
the existing financing banks which are required to agree to the
change of the shareholder structure for transferring the bank
financing to Arcona, as well as various requirements of the
Euronext Amsterdam ("Euronext"), including the need for a
Prospectus on behalf of Arcona to be approved by Autoriteit
Financiële Markten in order to proceed with Stage Two.
It should be noted that completion of Stage One is not
conditional on reaching agreement on the terms of Stages Two and
Three, discussions on which are still ongoing. In the event that
the Company and Arcona do proceed with Stage Two of the
Transaction, it is highly likely that this will be conditional on,
inter alia, SPDI Shareholder approval pursuant to AIM Rule 15. In
turn, the issuance of new Arcona shares envisaged for Stage Three
of the Transaction will most likely be conditional on, inter alia,
Arcona shareholder approval. Stage One does not require SPDI
Shareholder approval under the AIM Rules due to the scale of Stage
One of the Transaction relative to the Company.
Michael Beys, Chairman, said; "The estimated EUR30 million
intrinsic value of the Arcona deal highlights the substantial
divergence that has opened up between how the market and the
industry value SPDI's portfolio of South Eastern European real
estate. Stage One of the Transaction, which accounts for assets
valued on a net asset basis at over EUR12 million, alone accounts
for the vast majority of SPDI's entire market capitalisation. The
completion of Stage One in the third quarter of 2019 therefore
ought to act as a value trigger event for shareholders, not just
because it crystallises the value of the assets concerned, but also
because SPDI will be issued with shares in a much larger and more
diversified Central and South Eastern European focused property
company."
Lambros G. Anagnostopoulos, Chief Executive Officer, said; "This
is a very exciting milestone for SPDI and its shareholders, as we
commence the transition from a small South Eastern European focused
property Company to a larger Eastern European platform which will
have assets in six different countries and in various property
types, including many income producing commercial and retail
assets. Following numerous months of navigating through eight
different jurisdictions and legal frameworks, we are happy to have
concluded the first step of this transformative deal for the
benefit of creating value for our shareholders."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
* * ENDS * *
Lambros Anagnostopoulos SPDI Tel: +357 22 030783
Rory Murphy Strand Hanson Limited Tel: +44 (0) 20 7409 3494
Ritchie Balmer
Jack Botros
Jon Belliss Novum Securities Limited Tel: +44 (0) 207 399 9400
Frank Buhagiar St Brides Partners Ltd Tel: +44 (0) 20 7236 1177
Cosima Akerman
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END
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