R.e.a.hldgs. Regulatory News (RE.)

24 Jan 2006 08:20

R.E.A.Hldgs PLC24 January 2006 R.E.A. Holdings plc ("REA") Acquisition of minority shareholding in Makassar Investments Limited("Makassar") and settlement of litigation REA announces that it has reached agreement with Mr Morris E. Zukerman and hisassociates, Bodley Investment Company, M. E. Zukerman & Co Incorporated ("MEZInc"), M. E. Zukerman Investments Limited and the Zukerman Family Trust,(together the "Zukerman parties") on the settlement of (a) litigation claimsmade or threatened by the Zukerman parties against REA and three of itsdirectors, Charles Letts, John Oakley and Richard Robinow, (together withMakassar, its subsidiary, PT REA Kaltim Plantations, and another subsidiary ofREA, Makassar Participation plc, the "REA parties") and (b) litigation claimsthreatened by the REA parties against the Zukerman parties. Pursuant to the settlement agreement (the "Settlement Agreement"), REA hasagreed to acquire the minority shareholding in Makassar (the "Zukerman heldMakassar shares") owned by certain of the Zukerman parties for a considerationof $19 million. In addition, PT REA Kaltim Plantations ("REA Kaltim") has,subject as noted below, agreed to pay a total of $6 million as additionalinterest on former loans to REA Kaltim from certain of the Zukerman parties andin settlement of various claims by MEZ Inc against REA Kaltim for fees inrespect of past services and financial support. Upon completion of theSettlement Agreement (which has been scheduled for 21 February 2006), all actualand potential claims relating to Makassar and REA Kaltim between the Zukermanparties and the REA parties will be released and the proceedings commenced inNew York in November 2001 by certain of the Zukerman parties against certain ofthe REA parties will be dismissed with each side bearing its own costs. Save to the extent otherwise required by law or regulation (including, in thecase of REA, compliance with the rules of the Financial Services Authority), theREA parties and the Zukerman parties have given mutual undertakings to keepconfidential the terms of the Settlement Agreement and all matters discussed inthe mediated negotiations from which the Settlement Agreement has resulted. The consideration of $19 million payable by REA for the Zukerman held Makassarshares will be satisfied by the issue by REA of $19 million nominal of 7.5 percent dollar notes 2012/14 of REA ("Zukerman dollar notes") ranking pari passu inall respects and forming a single issue with the existing 7.5 per cent dollarnotes 2012/14 of REA. Pursuant to an agreement (the "Supplemental Rights Agreement") made concurrentlywith the Settlement Agreement, REA and those Zukerman parties who will initiallyhold the Zukerman dollar notes (the "Zukerman dollar noteholders") have agreedthat (a) subject to certain limitations, REA may at any time acquire from theZukerman dollar noteholders some or all of their holdings of Zukerman dollarnotes (the "call rights") and (b) in certain circumstances, the Zukerman dollarnoteholders may require REA to purchase the Zukerman dollar notes (the "putrights"), in both cases at par plus accrued interest up to the date ofcompletion of the exercise of such rights. The rights of the Zukerman dollarnoteholders under the Supplemental Rights Agreement may be assigned (in whole orpart) by those persons to a limited class of assignees subject to assumption bythe assignees of obligations like to those of the Zukerman dollar noteholdersunder the agreement. The limitations upon the exercise by REA of the call rights are effectively thatby such exercise the nominal amount of the Zukerman dollar notes (as reduced byany previous exercises of the call rights) should not, unless the entireoutstanding holding of Zukerman dollar notes is to be acquired by REA, bereduced in nominal amount to below 25 per cent of the nominal amount of all thenoutstanding 7.5 per cent dollar notes 2012/14 of REA (including any furthernotes constituted by deed supplemental to the trust deed of 12 September 2005constituting the 7.5 per cent dollar notes 2012/14 of REA (the "trust deed")). The circumstances under which the Zukerman dollar noteholders may exercise theput rights are occurrences of events that supplement the events of defaultcontained in the trust deed. The principal of these supplemental events comprise(a) material disposals of assets by REA and its subsidiaries, (b) any person orgroup of persons acting in concert obtaining the right to exercise more than 50per cent of the votes that may generally be cast at a general meeting of REA and(c) if UK withholding tax becomes payable in respect of any principal orinterest payments on the Zukerman dollar notes, REA not paying such additionalamounts as will result in the net amounts receivable by holders remaining asthey would have been had no such withholding tax been payable. The payment of $6 million to be made by REA Kaltim pursuant to the SettlementAgreement is to be made in cash and is conditional upon receipt by REA Kaltim ofnecessary consents to the making of such payment from its lending banks. Shouldsuch consents not be obtained, REA has agreed to pay the $6 million on behalf ofREA Kaltim. The Zukerman held Makassar shares comprise ordinary shares in Makassarrepresenting 12.3 per cent of the issued ordinary share capital of Makassar. Theprofit before taxation and assets attributable to that interest in Makassar,based on the audited consolidated accounts of REA for the year ended 31 December2004 (which were prepared under UK Generally Accepted Accounting Practice),amounted to, respectively, £754,000 and £2,721,000. The audited consolidatedbalance sheet of REA at 31 December 2004 included provisions equivalent in totalto $3.6 million against the liabilities now to be settled under the SettlementAgreement by the $6 million payment to be made by REA Kaltim. The Zukerman held Makassar shares have for several years been the only issuedshares in Makassar not owned by REA and its subsidiaries. The directors of REAconsider that the Settlement Agreement will benefit REA both in terms of givingREA ownership of the whole of the issued share capital of Makassar and insettling all outstanding disputes with the Zukerman parties. This information is provided by RNS The company news service from the London Stock Exchange