2 Aug 2016 07:00
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")
UPDATE ON THE GUARANTEE AND DISPOSAL
London, 2 August 2016 - The Company provides the following update to the market.
Further to the Company's announcement of 25 July 2016, Mr Leviev, the Executive Chairman of the Company, and VTB Bank PJSC ("VTB") have continued to negotiate the terms of a personal guarantee to be provided by Mr Leviev to VTB in respect of the Group's obligations under the loan facility between Krown Investments Limited ("Krown") and VTB (the "Ozerkovskaya III Loan Facility") (the "Guarantee") as an alternative to the disposal of certain properties by the Group to VTB in exchange for VTB releasing the Group from its obligations in respect of the Ozerkovskaya III Loan Facility and the AFIMALL City Loan Facility as detailed in the Company's circular dated 15 July 2016 (the "Disposal") and which was approved by shareholders on 1 August 2016.
The Company has been informed that at a meeting on 1 August 2016 between Mr Leviev and VTB, Mr Leviev executed the Guarantee. The Guarantee is a personal guarantee and indemnity deed under English law from Mr Leviev to VTB, pursuant to which Mr Leviev has agreed to guarantee the obligations of Krown under the Ozerkovskaya III Loan Facility for a period of 12 months.
The Guarantee, which has not yet been accepted by VTB, is subject to obtaining, if necessary, shareholder approval and the Company and VTB entering into an agreement regarding the deferral of the payment of principal amounts due under each of the Ozerkovskaya III Loan Facility and the AFIMALL City Loan Facility (together the "Loan Facility Agreements") for a period of 10 months from the date of the Guarantee (the "Deferrals") and VTB agreeing not to enforce for prior breaches of such facilities (the "Standstill"). The Deferrals and the Standstill, further details of which are set out in the Company's announcement of 25 July 2016, are still being negotiated and are intended to provide the Company with a 10 month period in which to repay in full the Ozerkovskaya III Loan Facility, the outstanding balance of which currently amounts to US$191.1 million, from the proceeds from the planned disposal of Ozerkovskaya III and potentially other properties of the Company. In the event that the Ozerkovskaya III Loan Facility has not been repaid in full within this 10 month period, the Guarantee would become enforceable.
Should VTB enforce the Guarantee, the payment by Mr Leviev of any amounts under the Guarantee will lead to a discharge of Krown's respective payment obligations under the Ozerkovskaya III Loan Facility and any such payment made by Mr Leviev to VTB under the Guarantee will be deemed the granting of a loan by Mr Leviev to the Company (the "New Loan"). The New Loan, which is still being negotiated, is expected to have the same interest rate and maturity as the existing Ozerkovskaya III Loan Facility but would be unsecured.
In addition, pursuant to the Guarantee, if Mr Leviev ceases to have effective control of the Company, his liability under the Guarantee shall be decreased to US$100,000, and VTB may immediately terminate the Standstill and the Deferrals. In such circumstances VTB would be able to enforce its security under the Loan Facility Agreements (without any further consent or approvals required from either the Company or its shareholders).
Following the meeting on 1 August 2016, the Company received a letter from VTB, stating that in view of Mr Leviev having provided the Guarantee, VTB would defer completion of the Disposal until 30 September 2016. During this period, VTB will consider whether to accept the Guarantee and the Company will seek to finalise the Standstill, Deferrals and New Loan and obtain all requisite approvals for all of the agreements (including, if necessary, shareholder approval) during this period.
VTB are as yet to accept the Guarantee and in addition the Standstill, Deferrals and New Loan are still under negotiation and, accordingly, there is no certainty as to whether they will be agreed, approved (if necessary) or entered into prior to 30 September 2016 and there is no certainty as to what their final terms may be. If the Guarantee is accepted by VTB and the Standstill, Deferrals and New Loan have been agreed prior to 30 September 2016, subject to obtaining all requisite approvals (including, if necessary, any shareholder approvals), the Board of the Company may determine not to proceed with the Disposal but to enter into the Standstill, Deferrals and New Loan in relation to the Guarantee.
Further announcements will be made in this regard as appropriate.
- 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 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.
Legal Disclaimer
Some of the information in these materials may contain projections or other forward-looking statements regarding future events, the future financial performance of the Company, its intentions, beliefs or current expectations and those of its officers, directors and employees concerning, among other things, the Company's results of operations, financial condition, liquidity, prospects, growth, strategies and business. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could", "may" or "might" or the negative of such terms or other similar expressions. These statements are only predictions and that actual events or results may differ materially. Unless otherwise required by applicable law, regulation or accounting standard, the Company does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia and market change in the industries the Company operates in, as well as many other risks specifically related to the Company and its operations.