26 May 2016 15:55
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")
VTB BANK NOTIFICATION
London, 26 May 2016 - As previously announced by the Company on 30th March 2016, 3rd May 2016 and 17th May 2016, AFI Development is now in negotiations with VTB Bank PJSC ("the Bank") in respect of circa US$614 million of loans owed to the Bank (the "Loans"). On 25th May, the Bank notified the Company in writing that it would exercise its rights under the Loan Facility Agreements (described below) to accelerate repayment of the Loans unless a transaction with the Bank is completed by 10th June 2016. The Bank indicated that full transaction documentation needs to be agreed between the parties and finalised by 1st June 2016.
It is currently contemplated that a transaction will involve releasing AFI Development and its subsidiaries ("the Group") from the Loans in exchange for the disposal (the "Disposal") by AFI Development to the Bank of the following properties:
· AFIMALL City, a shopping and entertainment centre in Moscow-City (valuation as at 31 March 2016 was US$666 million);
· Ozerkovskaya III, a completed Class A office complex in Moscow (valuation as at 31 March 2016 was US$197.4 million); and
· Aquamarine Hotel, a 4-star hotel, located in the Aquamarine III complex in Moscow (the book value of the property as of 31 March 2016 was US$14 million).
As described in the recently published Q1 2016 results, the Company estimates that the effect of the Disposal would be to decrease the Group's equity by an amount of approximately US$266 million.
The proposed Disposal would be classified as a Class 1 transaction under the Listing Rules and ordinarily would be conditional upon the publication of a circular and shareholder approval. However, due to the Bank's position stated in its letter, the Company will not be able to publish a circular or seek shareholder approval before 10th June 2016 and will be seeking to take advantage of the provisions of Listing Rule 10.8, which allow companies in severe financial difficulty to make disposals without shareholder approval in certain circumstances, subject to the FCA's consent.
In the event that the Disposal is not completed by 10th June 2016 and the Bank exercises it rights under the Loan Facility Agreements, it is highly probable that there would be a material adverse effect on the group's operations and on the value of the Company's shares.
The Company has a high degree of confidence that it can finalise all the steps required to reach contractual agreement with the Bank within the deadlines specified by the Bank. Application to FCA to take advantage of Listing Rule 10.8 will be made in the next few days and a further announcement will be provided as appropriate.
The Company has appointed Stand Hanson Limited to act as its sponsor in connection with the Disposal.
- ENDS -
For further information, please contact:
AFI Development +7 495 796 9988
Ilya Kutnov
Citigate Dewe Rogerson, London +44 20 7638 9571
David Westover
Sandra Novakov
Marina Zakharova de Calero
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.