Last checked at 1 Dec 2011 07:00
Date: | 01 December 2011 |
On behalf of: | Carpathian plc |
Embargoed until: | 0700hrs |
Carpathian plc
("Carpathian" or the "Company")
Settlement of Dawnay, Day Group ("DDG") re-investment obligations
When Carpathian listed on AIM in 2005, it was agreed by DDG that the net profit (after tax) made by DDG on the sale of certain property assets to Carpathian would be re-invested into ordinary shares of Carpathian at a prevailing market price to ensure that interests with shareholders were aligned. A series of transactions took place whereupon DDG generated profits on disposals. Accordingly there were calculations made as to the re-investment obligations owed by DDG to Carpathian. The re-investment obligations were then sub-divided within various UK and offshore members DDG. One such re-investment by DDG resulted in the issue of 2,784,826 ordinary shares at a subscription price of £1.02 per share, as announced on 11 July 2008. However, these shares were held in a Company nominee until such time as the profit on sale by other members of DDG to Carpathian of Romanian development land plots could be aggregated and paid to Carpathian. These profits were never received, and certain members of DDG issued proceedings to recover those shares.
Most of the UK members of DDG subsequently went into insolvency procedures. These re-investment obligations form part of a highly complex administration exercise with the now largely insolvent DDG.
In addition, the profit arising on the sale of Promenada by DDG to Carpathian remains to be realised and re-invested. This profit was held over in the form of a loan note pending the resolution of certain identified transaction risks, so that if retentions made at the time from the original vendor proved to be insufficient, deductions could be made from the amount of the loan note and therefore from the held over profit. With accrued interest, the loan note has a face value of approximately £10m, of which approximately £7.9m would be re-invested in new ordinary shares at €1.07 per share. Disputes have arisen with the liquidator of the loan note holder as to the payment date of the note (following the sale of Promenada) as well as the existence of any corresponding re-investment obligation.
Your Board is pleased to announce that it has entered into a Settlement Deed and Release which deals with all outstanding profit re-investment obligations of various members and affiliates of DDG. The arrangements depend upon a Company Voluntary Arrangement ("CVA") in respect of Perriniana Limited ("Perriniana") (a former member of DDG) being successfully closed, its share capital being acquired by Carpathian and its final accounts being filed. This is expected to occur no later than the end of February 2012. Paul Rogers and Massimo Marcovecchio, current directors of CAM, each own 20% of the issued share capital of Perriniana.
As a consequence of these arrangements, the Company will make cash payments of £4.1 million which will be applied to Perriniana as a contribution in the CVA, such funds to be utilised to pay all its creditors in full and to acquire 60% of the issued share capital of Perriniana not owned by Paul Rogers and Massimo Marcovecchio, who are waiving their rights to payment as equity shareholders of Perriniana.
In addition, of the 2,784,826 ordinary shares currently held by the Company's nominee which are rightly owed to DDG, Carpathian will distribute 803,989 of those ordinary shares in the Company to certain members of DDG and retain 1,983,671 ordinary shares. All cash dividends accrued on these ordinary shares since issue in December 2007 will be paid pro rata. The cash owed on the ordinary shares being retained by the Company amounts to approximately €500,000.
Subsequently, and in light of Paul Rogers and Massimo Marcovecchio waiving their rights to receive payment for the purchase of the issued share capital of Perriniana, the Company will grant 40% of 1,983,671 ordinary shares and associated dividends to UK Real Estate Management Limited, a UK company owned equally between Paul Rogers, Massimo Marcovecchio and Simon Killick, all being directors of CAM.
This settlement concludes all outstanding profit re-investment issues with DDG, including the loan note and profit re-investment structure in relation to Promenada. The settlement deed includes a formal and mutual release by all parties of any and all further actual or potential claims.
In addition, the Group will acquire for nominal consideration the former carried interest shares issued to DDG at the time of admission to AIM in July 2005.
As a consequence of the provisioning policy adopted by the Company, the financial impact of the transaction will have a positive effect on the Company's net asset value of approximately €1.7 million.
- Ends-
Enquiries:
Carpathian PLC | |
Rory Macnamara, Non-executive Chairman | Via Redleaf Polhill |
CPT LLP | 020 7529 6413 |
Simon Killick / Paul Rogers | ir@carpathianam.com |
Collins Stewart Europe Limited | 020 7523 8350 |
Bruce Garrow | |
Redleaf Polhill | 020 7566 6720 |
Henry Columbine / Luis Mackness | carpathian@redleafpolhill.com |
Notes to Editors:
- | Carpathian was created in 2005 for the purpose of investing in Central and Eastern European commercial real estate. |
- | 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, which was previously owned 50% by the Company, became fully externalised when the Company and CPT LLP implemented the new portfolio management agreement on 1 March 2010. CAM, together with its parent undertaking, CPT LLP, is responsible for managing the remaining core portfolio of assets and transactions within Central and Eastern Europe. |