RE: RNS from 6th June20 Jun 2016 14:52
At 31 December 2015, the Group was in breach of EUR33.3 million (2014: €21.6 million) of lease payments. After the reporting date, the Company further breached its obligation to pay by an additional amount of €0.1 million.
Following the above, the municipality initiated several claims during recent periods to collect those debts.
In the event that it does not settle the debt, the Company is exposed to the following sanctions and risks:
· Termination of the lease contracts which will cause the loss of the right to use of land;
· Should any party commence bankruptcy proceedings against Marina Dorcol, the Company would lose control of Marina Dorcol and would be exposed to uncertainty with respect to compensation from the bankruptcy estate, since the Company will be in the "last row of creditors".
In the event that the Serbian municipality decides to terminate the lease contract, it has to give to the Company written notice of its intention to do so and detail the reasons for the termination. The Company will have 90 days to remedy the breach in order to avoid the agreement termination (i.e. perform the payment obligation, and if it fails to do so the municipality is entitled to terminate the agreement).
In the event that the Company does not accept the reasons for the termination, they should initiate a procedure before the Commercial Court in Belgrade for the determination of the validity of the request for the termination and whether the request is based on valid legal and commercial reasons.
In the event of termination, the final result of termination would be the restitution of the amounts paid by the Group in respect of Marina Dorcol based on the agreements with the municipality, decreased by the amount of compensation for usage of such land for the period of duration of lease and for compensation of damages which occurred for the municipality, if any.
The Group is currently in the process of negotiation with the municipality of Belgrade to restructure the arrangement.