| Tue 22 Jun 2010, 9:58 | | NEP - New Europe Property Investments plc - Internalisation of management |
|
NEP
NEP
NEP - New Europe Property Investments plc - Internalisation of management
New Europe Property Investments plc
(Incorporated and registered in the Isle of Man with registered number 001211V)
(Registered as an external company with limited liability under the laws of
South Africa, registration number 2009/000025/10)
AIM share code: NEPI
JSE share code: NEP
ISIN Code: IM00B23XCH02
("NEPI" or "the Company")
INTERNALISATION OF MANAGEMENT
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 that it has agreed to acquire all of the issued shares of the
Company`s investment adviser, NEPI Investment Management Limited ("NEPI IML"),
(the "Internalisation") from the vendors, consisting of Fortress Asset Managers
(Proprietary) Limited, Slabbert Family Limited, Focus CEE Investments Limited
and CEMZ Holdings Limited (collectively the "Vendors").
Rationale for the Internalisation
NEPI IML was established in 2007 to provide investment advisory services to
the Company. NEPI remains the only client of NEPI IML. The appointment of
an experienced external investment adviser with the requisite skills and
expertise has enhanced NEPI`s performance and growth since listing. However,
the board and management of NEPI believe that the Company is now at a stage
where it is preferable to internalise its investment adviser.
The Company expects that the management of the Company`s property portfolio
going forward may be achieved more efficiently and cost effectively with the
management team of NEPI IML being employed and incentivised directly by the
Company. These efficiencies are expected to result in better returns to NEPI
shareholders over time and enhanced distributable earnings per share.
Terms of the Internalisation
The purchase price of approximately Euro6.3 million will be settled through
the issue of 2,450,748 ordinary shares in NEPI ("Vendor Shares") at a price
of Euro2.58 per Vendor Share.
The purchase price for the shares of NEPI IML is based on a seven times multiple
of current estimated annualised after tax profit of NEPI IML, where annualised
profits were estimated at a share price of Euro2.58 per Company share (the last
issue price). NEPI IML`s fee from the Company is calculated at 1% of the
average annual market capitalisation of the Company. Given the current Company
share price, the implied multiple of the NEPI IML purchase price is likely to be
lower than seven times after tax annualised profit.
Of the Vendor Shares being issued, 1,531,717 will be issued for the benefit of
Fortress Asset Managers (Proprietary) Limited (a wholly-owned subsidiary of
Resilient Property Income Fund Limited ("Resilient"), which owns 20.3% of the
Company`s issued ordinary shares). 735,224 Vendor Shares will be issued for the
benefit of Slabbert Family Limited (a company in which Martin Slabbert has an
indirect interest), 122,537 will be issued for the benefit of Focus CEE
Investments Limited (a company in which Victor Semionov has an interest) and
61,270 will be issued for the benefit of CEMZ Holdings Limited (a company in
which Alexandru Morar, an executive of NEPI IML, has an interest).
In addition, the Company will also be issuing 2,832,515 ordinary shares at a
price of Euro2.58 (the "Scheme Shares"), pursuant to the share incentive scheme
(the "Share Incentive Scheme") of NEPI IML. Of the Scheme Shares being issued,
2,266,012 will be issued for the benefit of Slabbert Family Limited (Martin
Slabbert being the key participant under the Share Incentive Scheme`s rules in
respect of this issue), 377,669 will be issued for the benefit of Focus CEE
Investments Limited (Victor Semionov, being the key participant under the Share
Incentive Scheme`s rules in respect to this issue) and 188,834 Scheme Shares
will be issued to CEMZ Holdings Limited (Alexandru Morar being the key
participant under the Share Incentive Scheme`s rules in respect to this issue).
These Scheme Shares are subject to trading restrictions and will vest over a
five year period in equal portions, provided that the key participants remain
employees of the Company. As a result, the Internalisation is not only expected
to be earnings enhancing to the Company, but also serves to incentivise and
retain the services of the senior executives.
The Vendor Shares and Scheme Shares are expected to be admitted to trading on
AIM and the JSE Limited on 28 June 2010.
The Vendor Shares and Scheme Shares shall rank pari passu with the existing
ordinary shares of the Company which are currently in issue.
The Internalisation will become effective from 30 June 2010.
NEPI IML made profits before tax of approximately Euro0.5 million for the year
ended 31 December 2009. The net asset value of NEPI IML as at 31 December
2009 was approximately Euro1.0 million. Under the terms of the Internalisation
a pre-completion dividend will reduce NEPI IML`s net assets by approximately
Euro0.5 million resulting in an expected adjusted net asset value as at 31
December 2009 of Euro0.5 million which substantially represents NEPI IML`s net
working capital. Under the terms of the Internalisation, net working capital of
NEPI IML as at 30 June 2010 less the 2010 interim dividend distribution in
respect
of the Company`s shares issued in terms of the Internalisation will be paid by
NEPI to the Vendors. A further announcement will be made when this amount,
which is subject to post-completion audit, has been determined. The employees
of the investment adviser will become full time employees of the NEPI group
as a result of the Internalisation.
Directors` and other interests
As a result of the Internalisation, Share Incentive Scheme share issues and
allocations of previously unallocated shares in the Share Incentive Scheme:
Mr Slabbert`s indirect beneficial interest in the equity of the Company is
4,294,038 ordinary shares, representing 6.93% of the enlarged issued share
capital of the Company; Mr Semionov`s indirect beneficial interest in the
equity of the Company is 940,206 ordinary shares, representing 1.52% of the
enlarged share capital of the Company; and Resilient`s beneficial interest
in the Company is 13,981,975 ordinary shares, representing 22.58% of the
enlarged share capital of the Company.
Related party transaction
Martin Slabbert and Victor Semionov are directors of the Company and Resilient
is a substantial shareholder in the Company. Accordingly, in terms of the
AIM rules, the transaction is a related party transaction, requiring an
opinion on the fairness and reasonableness of the Internalisation. Desmond de
Beer and Jeffrey Zidel are directors of the Company and of Resilient.
In this regard, the independent directors of NEPI (being the directors of
the Company excluding Martin Slabbert, Victor Semionov, Desmond de Beer and
Jeffrey Zidel) consider, having consulted with the Company`s nominated
adviser, that the terms of the Internalisation are fair and reasonable
insofar as the Company`s shareholders are concerned.
22 June 2010
For further information please contact:
New Europe Property Investments plc +40 74 432 8882
Martin Slabbert
Smith & Williamson Corporate Finance Limited +44 20 7131 4000
Azhic Basirov / Charles Combe
South African sponsor
Java Capital (Proprietary) Limited +27 11 283 0042
Date: 22/06/2010 09:58:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
