19 Jul 2016 16:15
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") NOTICE RECEIVED FROM AFRICA ISRAEL INVESTMENTS LTD.
London, 19 July 2016 - AFI Development announces that it received a notice on 18 July 2016 (the "Notice") from its controlling shareholder, Africa Israel Investments Ltd, on the following developments concerning a process currently taking place between Africa Israel Investments Ltd. ("AI"), its controlling shareholder and the Executive Chairman of AFI Development, Mr Lev Leviev and the holders of AI debentures (the "AI Bondholders"), in connection with the sale of AI's holdings in securities of AFI Development to Mr Leviev.
The Company is currently seeking further information in regard to this process and further announcements will be made as appropriate. It is the Company's current understanding that the process is ongoing and that there is no certainty that these discussions will culminate in a binding transaction.
Set out below is the contents of the Notice:
General
· As at the date on the Notice, three series of AI debentures (the "AI Debentures") are secured by pledges on AI's holdings in securities of AFI Development, constituting approximately 55% of AFI Development's issued share capital (out of the total securities of AFI Development owned by AI, constituting approximately 64.88% of AFI Development's issued share capital).
· Following the receipt of notice by VTB Bank ("VTB"), warning AFI Development on potential acceleration of repayment of two outstanding loans of VTB in the aggregate of circa. US$611 million and failure to reach understanding with VTB other than with respect to the Disposal Transaction (prior to Mr Leviev's initiative of the personal guarantee) resulting in the risks of AFI Development either becoming subject to insolvency proceedings, on 17 May 2016, AI announced that due to the ongoing deep economic crisis in Russia and its material adverse effect on AFID, AI's board of directors had come to the conclusion that there exists a great deal of uncertainty as to AI's ability to meet its financial obligations and therefore it is of the opinion that there is a need for restructuring AI's financial obligations towards the AI Bondholders (the "Debt Arrangement").
· Following this announcement, the trustees for the AI Debentures (the "Trustees") had summoned general meetings of AI Bondholders, which in turn have elected a delegation consisting of prominent AI Bondholders to serve as their representatives (the "Representative Bodies") for the purpose of negotiating the terms and conditions of a Debt Arrangement and/or evaluating other possible venues of action.
· Further to the foregoing, AI's management and Mr Leviev have been engaged in discussions over the terms of a possible Debt Arrangement with the Trustees and the Representative Bodies together with their legal counsels and economic advisors. In the framework of these discussions, the parties began to consider a possible scheme in the framework of which, Mr Leviev will acquire AI's entire holdings in the securities of AFI Development (the "Acquisition Scheme").
· The Representative Bodies are not authorised to conclude the terms of the proposed Acquisition Scheme, but rather recommend it to the AI Bondholders. In order to become effective, the proposed Acquisition Scheme will require the approval of general meetings of the AI Bondholders, as well as the approval of the District Court of Tel-Aviv (Israel) to certain aspects of the Acquisition Scheme.
Principles of the Acquisition Scheme
· Mr Leviev will purchase AI's entire holdings of securities of AFI Development (the "Purchased Securities") and will provide VTB with his personal guarantee, under terms to be agreed with VTB, in a manner that will prevent the Disposal Transaction as defined in the previous announcement published recently by the Company (the "Purchase Transaction"). The completion of the Purchase Transaction requires the approval of the AI Bondholders and is conditioned upon the approval of the Tel Aviv District Court (the "Conditions Precedent"), by no later than August 1, 2016 or any agreed deferred date.
· In consideration for the AFID Securities Mr Leviev will pay AI an amount in cash of NIS 550 million, within 36 days following the fulfillment of the Conditions Precedent.
· Mr Leviev will grant AI a call option to purchase from him, throughout a period of three years, securities of AFID constituting up to 10% of AFI Development's issued share capital, at a price reflecting 130% of the price to be paid by Mr Leviev under the Purchase Transaction (the "Purchase Option"). The Purchase Option will be assigned by AI to the Trustees at the closing of the Purchase Transaction who may exercise it from time to time upon instructions of the AI Bondholders.
· At closing of the Purchase Transaction a mutual deed of irrevocable waiver and release will be executed between Mr Leviev, AI, its directors and officers and advisors on the one side and the AI Bondholders, the Trustees and their advisors, on the other side, with respect to any claim or demand in connection with AFID, including its assets, business activities etc.
· The entire amount of consideration will be utilized for early repayment of the AI Debentures.
A motion for the approval of the Acquisition Scheme was submitted on 18 July 2016 by AI (in coordination with the Trustees) to the Tel Aviv District Court and was followed by a public announcement by AI to the Tel Aviv Stock Exchange.
- ENDS -
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
Marina Zakharova de Calero
This announcement contains inside information.
About AFI Development
AFI Development is one of the leading real estate development companies operating in Russia. Established in 2001, AFI Development is a publicly traded subsidiary of Africa Israel Investments Ltd.
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 and 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.