10 Aug 2009 16:54
Engel East Europe N.V
Parent Company funding and guarantees
MONDAY, 10 August 2009 - On 3 August 2009, the Board of Engel East Europe N.V. ('Engel' or 'the Company'), the AIM-listed Central and Eastern European property developer (EEE:L), signed agreements with Engel Resources and Development Ltd. ("Engel Resources") and some if its subsidiaries in order to formalize the financial support the Company has received from its parent ("Agreements").
The Board of Engel would therefore like to clarify the Company's financial relationship with Engel Resources and provide more details about the Agreements.
Parent Company Loans
59,996,111 ordinary shares in Engel representing 68.35% of its issued share capital are directly held by Engel General Developers Ltd, which is controlled by Engel Resources. The loans that Engel has received from Engel Resources and some if its subsidiaries amount to approximately €2.5 million in aggregate and were granted by Engel Resources to a subsidiary of the Company. The principal loan amount is linked to the Israeli general consumer price index as determined by the Central Bureau of Statistics and bears an annual interest rate of 6%. The loans are repayable on or before 30 June 2010.
Bank loans supported by Parent Company Bank Guarantees and Credit Lines
In addition, Engel Resources has provided bank guarantee and used its credit lines to support two bank loans to Engel with an aggregate value of approximately €9.3 million.
The first loan Engel received from the bank in an amount of approximately €2.5 million is due to be repaid in two equal installments of €1.25 million on or before 30 September 2009 and 31 December 2009.
The second loan Engel received from the bank in an amount of approximately €6.8 million is due to be repaid in two equal installments on or before 30 June 2010 and 31 December 2010.
The loan terms are on standard commercial rates. In addition, Engel pays a yearly commission of 0.5% to Engel Resources in consideration for the provision of the loan guarantees.
Security
Engel has agreed to grant a pledge in favour of Engel Resources over the Company's Marina Dorcol project in Serbia and the Wilanow commercial project in Poland as security under the terms of the Agreements.
The Agreements with Engel Resources and some if its subsidiaries are deemed to be related party transactions under Rule 13 of the AIM Rules. The Board, with the exception of Mr Boymelgreen, who is also a director of members of the Parent Company Group, considers, having consulted with its Nominated Advisor, that the terms of the Facility are fair and reasonable insofar as the Company's shareholders are concerned.
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Enquiries:
Engel East Europe N.V. Tel: +31 20 778 4141
Samuel Hibel
Libertas Capital Corporate Finance Limited Tel: +44 (0) 20 7569 9650
Sandy Jamieson
Bankside Consultants Tel: +44 (0) 20 7367 8888
Simon Bloomfield,
Andy Harris