28 Feb 2017 16:00
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION
IN OR INTO THE RUSSIAN FEDERATION, THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN
AFI DEVELOPMENT PLC
("AFI DEVELOPMENT" OR THE "COMPANY")
AFI DEVELOPMENT RECEIVES ACQUISITION FINANCETO ACQUIRE 50% STAKE IN PLAZA SPA KISLOVODSK
(CLASS 2 TRANSACTION NOTIFICATION)
London, 28 February 2017 - Following its previous announcement on 23 December 2017, AFI Development Plc announces that its subsidiary, Sanatory Plaza LLC ("Plaza"), has received a loan from VTB Bank PJSC ("VTB") to finance the acquisition of a 50% stake in the Plaza Spa Kislovodsk project ("the Project") from its partner in the project, allowing the acquisition to be completed today.
The loan, in the amount of US$22.5 million, is provided in US dollars for 5 years (the term can be extended for an additional 5 years subject to agreement between the parties), it bears an annual interest rate of 3 months Libor + 4.5%, has quarterly principal payments (ranging from US$260 thousand in Q3 2017 to US$822 thousand in Q3 2021), and a balloon payment of US$11.254 million at maturity. The interest is to be paid quarterly.
The loan will be used primarily to repay the outstanding debt of Plaza to the companies of AFI Development's partner in the project, in the amount of US$16.9 million, prior to the acquisition of the equity stake. The remainder of the loan will be used to finance the acquisition itself: the 50% equity stakes in both Nuana Limited and Craespon Management Limited (which together control 100% of Plaza) have been purchased by AFI Development's subsidiaries for US$5.6 million in cash.
The Project is an operating spa resort hotel in the Caucasian mineral waters region, in the town of Kislovodsk. It has 275 guest rooms and a gross buildable area of 25,000 sq.m.
This acquisition enables the Company to consolidate 100% of the Project, manage it at its sole discretion and consolidate 100% of its revenues. Revenue attributed to the acquired 50% stake, based on the 2015 annual results, was US$9 million. The gross profit attributed to the acquired 50% stake in the Project, based on the 2015 annual results, was US$3.9 million.
The interest and principal payments for the acquisition loan to VTB shall be provided from cash flow generated by the Project.
As a result of the transaction, finance expenses are expected to increase by US$1.17 million per annum (excluding potential forex effect). The annual incremental contribution of the acquired 50% stake in the Project to the income from hotel operations is estimated at US$9 million.
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For further information, please contact:
AFI Development, +7 495 796 9988
Ilya Kutnov, Corporate Affairs/Investments Director (Responsible for arranging the release of this announcement)
Citigate Dewe Rogerson, London +44 20 7638 9571
David Westover
Sandra Novakov
This announcement contains inside information.
About AFI Development
Established in 2003, AFI Development is one of the leading real estate development companies operating in Russia.
AFI Development is listed on the Main Market of the London Stock Exchange and aims to deliver shareholder value through a commitment to innovation and continuous project development, coupled with the highest standards of design, construction and quality of customer service.
AFI Development focuses on developing and redeveloping high quality commercial and residential real estate assets across Russia, with Moscow being its main market. The Company's existing portfolio comprises commercial projects focused on offices, shopping centers, hotels and mixed-use properties, and residential projects. AFI Development's strategy is to sell the residential properties it develops and to either lease the commercial properties or sell them for a favorable return.
AFI Development is a leading force in urban regeneration, breathing new life into city squares and neighborhoods and transforming congested and underdeveloped areas into thriving new communities. The Company's long-term, large-scale regeneration and city infrastructure projects establish the necessary groundwork for the successful launch of commercial and residential properties, providing a strong base for future.