Last checked at 18 Jan 2010 07:00
China Real Estate Opportunities plc
Disposal of Tangdao Bay investment at 10.9% premium to independent valuation
China Real Estate Opportunities plc ("CREO" or the "Company"), an AIM listed property company with an established investment and development property portfolio in China, today announces that it has executed an unconditional contract to dispose of its 50% interest in the Tangdao Bay joint venture development.
CREO's 50% interest in the joint venture has been sold to its partner in the project, SIIC Shanghai Holdings Company ("SIIC"). The sale price was based on a property value of RMB1.389bn representing a 10.9% premium to the most recent independent valuation in June 2009. Net cash proceeds from the transaction amount to £33.8 million at today's exchange rates with no borrowings to be repaid from the sale proceeds and will be received upon the completion of the standard PRC regulatory procedures for the offshore repatriation of proceeds of domestic asset sales.
The sale price reinforces CREO's reported NAV, and follows on from the June 2009 disposal of CREO's interest in the City Centre 5 development at an 8.9% premium to the independent valuation of 31 December 2008.
Furthermore the Company announces that due to the contracted disposal of Tangdao Bay, it has decided not to proceed with the issuance of zero dividend preference shares. In November 2009 the Company announced it was considering such an issuance to facilitate the repurchase of the Company's own ordinary shares which are trading at a significant discount to net asset value. Accordingly the Company proposes to commit up to £15 million from its cash resources to fund a tender offer for its own shares upon receipt of the Tangdao Bay sale proceeds.
At the same time the Company continues to work with its advisers to generate third party demand for its shares.
Commenting, Ray Horney, CREO Chairman said: "The CREO Board is very pleased to announce the execution of an unconditional contract for the disposal of its 50% ownership of the Tangdao Bay development, reinforcing the strength of CREO's balance sheet and underpinning its published net asset value as this sale represents the second asset disposal in the past 6 months above independent valuation. This transaction reinforces the Company's strategy of focussing on its core investment and development assets, particularly in Shanghai, and will further strengthen the Company's cash position and provide a strong platform for the Company to move forward in 2010 and beyond."
"This sale is timely and as such it is appropriate for the Company to cancel the zero dividend preference share issue and propose the allocation of a prudent sum from its own cash reserves to underwrite its earlier commitment to a repurchase of the Company's own shares."
ENDS
Contact:
CREO
Ray Horney, Chairman
Tel: + 44 (0)1273 775225
Sarah Moriarty, Investor Relations
Tel: +353 1 6189455
Matrix Corporate CapitalPaul Fincham, Rob Naylor Tel +44 (0)20 3206 7175
Davy
Des Carville
Tel: +353 1 679 6363
Citigate Dewe Rogerson Limited
Tom Baldock
Tel: + 44 (0) 20 7638 9571
Murray Consultants
Ed Micheau
Tel: + 3531 498 0300