Last checked at 24 Dec 2008 07:00
| PRESS ANNOUNCEMENT | |
| EMBARGOED FOR 0700HRS | |
| 24 December 2008 | |
| Carpathian PLC ("Carpathian" or the "Company") | |
| DISPOSAL OF VARYADA, FINANCING UPDATE AND DIVIDENDS | |
Following the announcement of a strategic review on 22 October 2008, the Board of Carpathian (AIM:CPT) announces the following update.
Highlights
Disposal of Varyada Shopping Centre at an agreed property value of £46.7 million;
Net cash receipt from disposal after debt repayment and fees of approximately £10.8 million;
Extension of Barclays loan facilities (in relation to Antana facility), negotiations with Anglo Irish ongoing (in relation to the Interfruct and Ericsson Office Building);
Discussions continue with parties interested in either making an offer for the entire Company or certain assets within the portfolio; and
Final 2008 dividend suspended and subject to further review pending clarification of the Company's cash resources and the impact of the current economic climate.
Sale of Varyada
Carpathian is pleased to announce its indirect subsidiary Carpathian Properties sàrl ("Seller") has exchanged contracts in relation to the disposal of the share capital of the Czech Republic SPV which owns the Varyada Shopping Centre ("Varyada") to Invesco Beteiligungsverwaltungs GmbH & Co. KG ("Invesco") at a property value of £46.7 million. Varyada consists of 73 retail units located in Karlovy Vary, north west of Prague in the Czech Republic. It was acquired in November 2005 for £25.5 million. The net proceeds of the sale, after paying down associated debt of approximately £35.0 million (provided by Anglo Irish Asset Finance plc ("Anglo Irish")) and other transaction costs is approximately £10.8 million (subject to adjustment as described below). Effective legal completion of the sale of Varyada is expected to take place on 29 December 2008. A further announcement will be made once legal completion has occurred. The purchase price for the share capital equates to the agreed property value less the debt due to Anglo Irish plus an amount equal to the closing net working capital of the SPV being sold. Closing accounts of the SPV will be prepared and agreed (or arbitrated) between the Seller and Invesco to determine the actual net working capital at closing, and the share price will be increased or reduced accordingly.
The period for claims in relation to title of the property is ten years and limited to the agreed property value of £46.7 million. Invesco has put in place a property title indemnity insurance policy against which any claims must first be made. The period for claims in relation to title to the shares in the Czech Republic SPV is five years and limited to the agreed property value of £46.7 million. In relation to tax, the time period for claims is an initial four years and capped at a maximum of £4.7 million. However, should any claim arise between today's date and the end of those four years, the tax indemnity will be extended for a further four years from the end of the initial four year period. The time limit for other warranties is 18 months from closing. In addition, the Company will guarantee the obligations of the Seller under the share sale and purchase agreements. This guarantee will be issued for four years and will be limited to the agreed property value (£46.7 million) for the first three years and 10 per cent. of that figure for the fourth year.
The net proceeds of the sale will be transferred into a Carpathian designated account with Anglo Irish until such time as both parties have resolved the outstanding issues with all of the remaining Anglo Irish facilities (see below).
Financing
The Company also announces that it continues to be in active discussions with its lending banks in relation to certain debt obligations due for refinancing before 31 December 2008. A more detailed update is provided below for each of the facilities which are due to be refinanced in this financial year.
Barclays facility extended (Antana)
The £9.5 million loan from Barclays Bank Plc ("Barclays") secured on the Antana Logistics Park was initially scheduled for refinancing in October 2008. This loan has now been extended to 30 January 2009. The Company is finalising discussions in order to further extend the term of the loan in conjunction with agreeing adjusted covenant arrangements.
Anglo Irish facilities due for extension (Interfruct and Ericsson)
(A) Interfruct - Hungary
The portfolio of 23 properties had outstanding debt obligations of approximately £55.1 million prior to receipt of the guarantee monies, due for refinancing by the end of November 2008. As announced on 20 November 2008, the Company has received the outstanding £5.3 million from the bank guarantee provided by the former tenant, Interfruct Kft ("Interfruct") which has been used to reduce the facility.
As the loan is in technical default as a result of the administration of Interfruct and the termination of the leases, the Company continues to assess a number of options in relation to all or parts of the portfolio and in the meantime is clarifying arrangements with Anglo Irish as a priority.
(B) Ericsson Office Building - Hungary
The acquisition of the property was financed with a loan of £10.5 million from Anglo Irish, which remains outstanding and was due to be refinanced in September 2008. The Company continues to discuss an agreed resolution with Anglo Irish as a priority.
Strategic Review
The Board of Carpathian confirms that it continues to be in discussions with a number of parties interested in either making an offer for the entire Company or certain assets within the portfolio. There can be no certainty that these discussions will lead to an offer for the Company being made or any other transaction.
Dividends
In light of ongoing refinancing discussions with its banks, and a general requirement in the current economic climate to conserve the Company's cash, the Board has decided it would be prudent for the Company to review in due course whether or not to recommend payment of a final dividend for the year ending 31 December 2008. Accordingly, the previously announced intention to pay a final dividend of 3p per share is withdrawn. A further announcement will be made once the Company's cashflow requirements have become clearer as refinancing discussions with its bankers progress and more information becomes available about underlying economic trends.
- Ends -
| Enquiries: | |
| Carpathian PLC | Via Redleaf Communications |
| Rory Macnamara (Non-executive Chairman) | |
| Carpathian Asset Management Limited | 020 3178 2892 |
| Paul Rogers | |
| Collins Stewart Europe Limited | 020 7523 8000 |
| Bruce Garrow | |
| Hawkpoint Partners Limited | 020 7665 4500 |
| Edward Arkus | |
| Redleaf Communications | 020 7566 6700 |
| Emma Kane Samantha Robbins | carpathian@redleafpr.com |
Notes to Editors:
| - | Carpathian was created in 2005 for the purpose of investing in Central and Eastern European commercial real estate. |
| - | Carpathian's primary focus is on shopping centres, supermarkets and retail warehousing in several countries in Central and Eastern Europe being currently Croatia, the Czech Republic, Hungary, Poland, Romania, Lithuania and Latvia.. |
| - | Carpathian listed on AIM in July 2005 and has acquired a substantial property portfolio of approximately £650 million (approximately €810 million). |
| - | Carpathian Asset Management Limited ("CAM") is the Property Investment Adviser to Carpathian. It is responsible for identifying acquisition targets, managing transactions and portfolios and development activity within Central and Eastern Europe. The Company holds a 50 per cent. interest in CAM, the remaining 50 per cent. of which is held by UK Real Estate Management Limited (a company wholly owned by Paul Rogers and Massimo Marcovecchio). |
| Hawkpoint Partners Limited ("Hawkpoint"), which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Carpathian and no one else in connection with any possible offer or other transaction and will not be responsible to anyone other than Carpathian for providing the protections afforded to customers of Hawkpoint, or for providing advice to any other person in relation to any possible offer or other transaction. |
| Collins Stewart Europe Limited ("Collins Stewart"), which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Carpathian and no one else in connection with any possible offer or other transaction and will not be responsible to anyone other than Carpathian for providing the protections afforded to customers of Collins Stewart, or for providing advice to any other person in relation to any possible offer or other transaction. |