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31 Mar 2011 07:00
Date: | 31 March 2011 |
On behalf of: | Carpathian PLC ("Carpathian", the "Company" or the "Group") |
Embargoed until: | 0700hrs |
Carpathian PLC
Investment Update
The Board of Carpathian Plc (AIM: CPT), the commercial property investment company focused on retail properties within Central and Eastern Europe, wishes to provide an update on the progress of investment property disposals.
Blue Knight Portfolio - Gdansk, Poland
The Company is pleased to announce the signing of a conditional Preliminary Sale Agreement for the disposal of the Osowa shopping centre in Gdansk, Poland, having a likely completion date at the end of May 2011. The buyer is a Polish limited liability company on behalf of the Pradera Central & Eastern Fund.
The Osowa Centre in Gdansk, Poland is being sold for a consideration of €34.5 million payable in cash at completion (subject to the retention provisions referred to below).
€3 million consideration from the purchase price will be retained on an escrow and will become payable to the Company if an occupancy permit amendment is obtained by 31 December 2011. This amount will be reduced to €1.5 million if such amendment is obtained after 31 December 2011, but before 30 June 2012.
This property forms part of the Blue Knight portfolio acquired by the Company in September 2005, which also included the shopping centres of the Tulipan Centre in Lodz, the Kometa Centre in Torun and the Sosnowiec Centre. The sale of these three properties was announced on 9 March 2011.
The apportioned consideration at the time of purchase for the Osowa property now agreed to be sold was approximately €29.8 million and the apportioned independent valuation for Osowa was €34.5 million as at 31 December 2010. The consideration is also subject to retention provisions relating to finalisation of certain property title and property management issues, [in addition to the retentions arrangements mentioned above].
This property is subject to a loan of €20.4 million from Deutsche Pfandbriefbank AG ('DPB') which is cross-collateralised with the Promenada Shopping Centre in Warsaw and subject to a pre-agreed partial repayment mechanism (as announced on 2 July 2009).
DPB already hold approximately €7.9 million in escrow against the cross-collateralised indebtedness of Promenada and Gdansk from the sale of the 3 other Blue Knight properties.
The sequence of the completion of the sales of Gdansk and Promenada determines the overall DPB loan repayment liabilities. If Promenada is sold before the Gdansk property, an additional €0.9 million is to be paid to the above DPB escrow account.
The overall DPB loan also has an additional commitment for debt reduction attached to DPB's separate loan against the Company's core asset of Babilonas, in Panevezys, Lithuania in the sum of €3 million after all of the properties of the Blue Knight portfolio and the Promenada Shopping Centre are sold.
From the sales proceeds of the three Blue Knight properties, approximately €0.9 million was allocated against the Babilonas liability. The outstanding commitment of €2.1 million will be payable from the sale of the Gdansk property and the Promenada shopping centre depending on the timing of their sales. An additional €1 million will be allocated from the sale of the Gdansk property on completion, if it is completed before the ongoing sale of Promenada. The full outstanding commitment will be contributed from the proceeds of sale on the closing of Promenada, if it happens before the sale of Gdansk.
The effect of these debt provisions will be a requirement to repay debt (including fees) in the approximate sum of either €11.8 or €12.8 million following receipt of the sale proceeds from the Gdansk property, if all of the existing €7.9 million DPB escrow and the additional €0.9 million from the Promenada sale are allocated against the Gdansk loan amount. This will result in realisation of a minimum equity value from the above sale of approximately €18.7 million to the Company before transaction costs and corporate taxation.
Following the sale, the annualised net operating income within the Company will be reduced by approximately €2.9 million.
Promenada, Poland
In respect of the Company's major prime asset, the Promenada retail, leisure and business centre in Warsaw, the conditions precedent to closing are largely satisfied, and the expected date for full satisfaction, and therefore completion, is within May 2011.
Shareholder Distribution
The Company is in the process of reviewing the cash proceeds required to meet its current working capital requirements in the context of the current sales programme and intends to distribute as much as possible of these net proceeds to shareholders as soon as practicable in accordance with the previously declared intentions of the Board.
-Ends-
Enquiries:
Carpathian PLC |
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Rory Macnamara, Non-executive Chairman | Via Redleaf Communications |
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CPT LLP | 020 7529 6413 |
Paul Rogers/Balazs Csepregi | ir@carpathianam.com |
Collins Stewart Europe Limited | 020 7523 8350 |
Bruce Garrow |
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Redleaf Polhill | 020 7566 6700 |
Mike Ward | 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, the Czech Republic, Hungary, Poland, Romania, Lithuania and Latvia |
- | Carpathian was admitted to trading on AIM in July 2005. |
- | CPT LLP is the Property Investment Adviser to Carpathian. CPT LLP owns 100% of Carpathian Asset Management Limited ("CAM"). CAM, together with its parent undertaking, CPT LLP, is responsible for managing the core portfolio of assets and transactions within Central and Eastern Europe.
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