Investment Acquisition, Issue of Shares and Further Cautionary Announcement
Posted on: 11 March 2010
Further to the announcement of 5 February 2010, New Europe Property Investments plc, the Central and Eastern European property investment company which has a primary listing on the AIM market of the London Stock Exchange and a secondary listing on the Alternative Exchange of the JSE Limited, announces details in respect of the investment in a retail park for a total purchase price of approximately Eur20,949,348. The purchase price will be settled through the issue of 9,310,823 ordinary shares in NEPI ("Vendor Shares") at a price of Eur2.25 per Vendor Share. Of these shares, 2,429,723 will be locked up for a minimum period of 12 months.
On 3 February 2010, the Company signed a sale and purchase agreement to acquire 100% of the shares in Connect Investment SRL ("Connect") from Central Eastern European Real Estate Shareholdings BV and Oceanis International BV ("the Acquisition"). Connect is the holding company of a retail park located in Pitesti, Romania ("Pitesti Park") which consisted of a portion rented by the two anchor tenants, Auchan and Bricostore DIY, and the related common areas ("Iris Park"), as well as an approximately 7,000 square metre fashion and entertainment gallery ("Iris Mall").
As the Acquisition is for Iris Park and its associated debt, the implementation of the Acquisition has required the separation of the Iris Mall out of Connect. The separation has been agreed in such a form that Iris Mall is held by a separate company ("the Mall SPV") while the common areas of the Pitesti Park (parking, access roads, etc) are held by another company ("the Common SPV"), of which 80% is held by Connect and 20% is held by the Mall SPV. As part of the Acquisition, the Company also obtained a 1-year call option in relation to the portion of the Pitesti Park which it is currently not acquiring, being Iris Mall.
Pitesti is a city of over 167,000 people in Southern Romania, approximately 107km from Bucharest and located on the Arges River. Iris Park is situated on the Pitesti ring road, within 10 minutes walking distance from residential areas and benefits from a core catchment area of 133,000 people.
Iris Park is an 83,016 square metre site with approximately 33,000 square metres of gross lettable area. The leases of Auchan and Bricostore DIY provide a Net Operating Income of Eur4.67 million. The Acquisition is expected to improve distributable earnings per share.
The Acquisition will have an effective date as of 1 January 2010. The Vendor Shares will be admitted to trading on AIM and the JSE Limited on 12 March 2010. The Vendor Shares shall rank pari passu with the existing ordinary shares of the Company which are currently in issue.
For purposes of compliance with the JSE Limited Listings Requirements, the Company advises shareholders that NEPI remains in negotiations to acquire certain other retail assets in Romania, which if successfully concluded may also have a material effect on NEPI`s financial position and consequently on the price of the Company`s shares. No certainty can be given that these negotiations will be concluded successfully. Accordingly, shareholders are advised to continue to exercise caution when dealing in their NEPI shares until further announcements are made in this respect.