Last checked at 
LONDON (Alliance News) - Plaza Centers NV on Thursday said it has signed a debt repayment agreement regarding its shopping centre Zgorzelec Plaza with the financing bank of the shopping centre.
The emerging markets property developer said that, under the deal, it will make a EUR1.1 million payment, held in escrow, to the financing bank of the shopping centre and, in exchange, the financing bank will deposit a number of release letters.
These letters are for a mortgage in favour of the bank from a plot of land of Plaza in Leszo, Poland and for a right of recourse right obligation of EUR1.1 million under the corporate guarantee of Plaza and one of Plaza's subsidiaries.
Plaza is obliged to make its best effort and cooperate with the bank in trying to sell the shopping centre under the deal, it said, and the bank will seek a third party to purchase shares in the shopping centre.
However, if a third party is not found by September 15, the bank will appoint a new manager, will receive the EUR1.1 million payment held in escrow, and Plaza will stay as a silent shareholder until the end of 2016.
On conclusion of the transaction, Plaza said it expects to recognise an accounting profit of around EUR10.0 million.
"This agreement paves the way for a significant reduction in our liability for this asset and supports our strategy to focus on our core business. At March 30 results, the total loan (including accumulated interest) against the asset was circa EUR23.0 million and the asset was valued at circa EUR12.0 million. The successful completion of the transaction will see the company released from an effective recourse guarantee and mortgage right held by the bank whilst removing the company's liability associated with the asset," said Plaza Acting Chief Executive Dori Keren.
"Furthermore, the sale of the asset will not impact on the company's net cash income receipts and therefore the disposal of the asset will generate a circa EUR10.0 million accounting profit for Plaza, further de-leverage our balance sheet and allow us to focus on the core assets in our portfolio," Keren added.
Shares in Plaza Centers were untraded on Thursday, having last traded at 2.50 pence.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
Copyright 2016 Alliance News Limited. All Rights Reserved.