| Mon 29 Nov 2010, 16:43 | | NEP - New Europe Property Investments plc - Acquisition of Ingen Europe BV |
|
NEP
NEP
NEP - New Europe Property Investments plc - Acquisition of Ingen Europe BV
and withdrawal of cautionary
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: IM00B23XCH02
("NEPI" or "the company")
ACQUISITION OF INGEN EUROPE BV AND WITHDRAWAL OF CAUTIONARY
INTRODUCTION
Shareholders are advised that NEPI through its wholly-owned subsidiaries NE
Property Cooperatief U.A. ("NEPC") and New Europe Property N.V. ("NEP NV")
(collectively, "the purchasers") has concluded an agreement for the
acquisition of all the issued shares in and shareholders` claims against
Ingen Europe BV ("Ingen") from Apollo Rom (US) S.a.r.l., Apollo Rom (EU)
S.a.r.l., Kanebo Investments SA and Grimsby Investments S.a.r.l.
(collectively, "the sellers")("the transaction").
Ingen holds 100% of the shares of Floreasca Business Park S.R.L. ("FBP")
which in turn owns land and buildings (collectively, "the property" or
"Floreasca Business Park") located in Bucharest, Romania.
The purchase price will be an amount of approximately EUR27.6 million ("the
estimated purchase price") which will be funded through the proceeds of the
rights offer ("the rights offer") further details of which were released on
the Stock Exchange News Service ("SENS") of the JSE and the Regulatory News
Service ("RNS") of the London Stock Exchange on 5 November 2010 and 12
November 2010.
RATIONALE FOR THE TRANSACTION
NEPI is of the view that the Bucharest office market currently offers value
for investors. As a result, the management team conducted a detailed review
of opportunities in the Bucharest office market that included 12 potential
acquisition targets, ranked by the management team and external advisor,
Colliers International, for visibility, technical quality, design, parking
facilities and access to public transport. The Floreasca Business Park
achieved the highest ranking of the potential acquisition targets.
The property is an A-class office building located on one of Bucharest`s main
boulevards with convenient access to a subway station and other means of
public transport. The property benefits from 3 levels of underground parking
space and its tenants include various large international corporations. The
property also stands to benefit from infrastructure works currently underway
in its surrounding area.
It is expected that the acquisition of the property will contribute to the
growth in distributable earnings for NEPI shareholders.
SALIENT TERMS OF THE TRANSACTION
The effective date of the transaction will be the date of transfer of
ownership of the shares in Ingen into the name of NEPI ("the effective
date").
The final purchase price ("the final purchase price") will be determined
formulaically in terms of the acquisition agreement taking into account the
net operating income of the property, the indexation of rental income in
January 2011 and the financial statements of Ingen and FBP as at the
effective date. In so far as there is a difference between the final purchase
price and the estimated purchase price an adjustment amount will be paid
between the purchasers and the sellers.
The acquisition agreement contains warranties typical for acquisitions of
this nature.
The transaction is not subject to any conditions precedent and is expected to
close before the end of 2010.
THE PROPERTY
Details of the property including the valuation, effective as at 25 October
2010 attributed to the property by the company, are as follows:
Property Region Secto Weighte Rentable Purchase Valuation
descripti r d area* price
on average
rental
per m2*
(EUR) (m2) (EUR`millio (EUR`millio
n) n)
Floreasca Buchares Offic 17.21 36 032 27.6 99.8
Business t, e
Park Romania
* These figures exclude parking spaces
FINANCIAL EFFECTS
The unaudited pro forma financial effects have been prepared for illustrative
purposes only to provide information on how the transaction may have impacted
on the historical financial results of NEPI for the six months ended 30 June
2010. Due to their nature, the unaudited pro forma financial effects may not
fairly present NEPI` financial position, changes in equity, results of
operations or cash flows after the transaction. The unaudited pro forma
financial effects are the responsibility of the directors of NEPI. The
unaudited pro forma financial effects have not been reviewed or reported on
by NEPI`s auditors.
The unaudited pro forma financial effects have been prepared in accordance
with the accounting policies of NEPI that were used in the preparation of the
unaudited interim results for the six months ended 30 June 2010.
Before the After the Change
transaction transaction after the
Note 1 transaction
(%)
Basic weighted average earnings per 6.63 7.55 13.9
share (EUR cents)
Diluted weighted average earnings 6.40 7.29 13.9
per share (EUR cents)
Distributable earnings per share 8.27 9.39 13.5
(EUR cents)
Headline earnings per share (EUR 7.70 8.62 11.9
cents)
Diluted headline earnings per share 7.44 8.33 12.0
(EUR cents)
Net asset value per share (EUR) 2.17 2.17 -
Adjusted net asset value per share 2.15 2.14 (0.5)
(EUR)
Net tangible asset value per share 1.99 1.90 (4.5)
(EUR)
Weighted average number of shares 62 255 904 62 255 904 -
in issue
Diluted weighted average number of 64 444 271 64 444 271 -
shares in issue
Number of shares in issue for net 71 268 704 71 268 704 -
asset value and net tangible asset
value per share purposes
Number of shares in issue for 76 933 734 76 933 734 -
adjusted net asset value per share
purposes
Notes and assumptions:
1. The amounts set out in the "Before the transaction" column have been
extracted from the "After the rights offer" column which was set out in
the rights offer declaration announcement published on SENS and RNS on 5
November 2010.
2. The transaction is assumed to have been implemented on 1 January 2010
for basic weighted average earnings, diluted weighted average earnings,
distributable earnings, headline earnings and diluted headline earnings
per share purposes and on 30 June 2010 for net asset value, adjusted net
asset value and net tangible asset value per share purposes.
3. Ingen was acquired at the estimated purchase price of approximately
EUR27.6 million, financed through the proceeds of the rights offer.
4. The amounts set out in the "After the transaction" column were
calculated by consolidating the results of NEPI for the six months ended
30 June 2010 (after taking into account adjustments for the rights
offer) and the interim accounts of Ingen and FBP for the six months
ended 30 June 2010, subject to the assumptions and adjustments set out
below:
4.1 For the six months to 30 June 2010, Ingen and FBP earned
consolidated historic net rental income of approximately EUR3
million, incurred non-property related expenditure of approximately
EUR0.167 million and incurred interest on external bank debt of
approximately EUR1.2 million. Ingen and FBP earned a consolidated
profit before tax for the six month period to 30 June 2010 of
EUR1.6 million.
4.2 The additional distributable income which results from the
transaction is assumed to be earned evenly throughout the six
months ended 30 June 2010.
4.3 Estimated transaction costs of EUR250 000 were expensed in
accordance with IFRS 3 (Business Combinations) 2008.
4.4 The value of the combined net assets of Ingen and FBP as at 30 June
2010 are EUR21.5 million.
4.5 The acquisition of Ingen together with FBP has been accounted for
under IFRS 3 (Business Combinations) 2008 whereby accounts and
other receivables, trade and other payables, deferred taxation and
goodwill have been recognised.
4.6 An amount of EUR6.1 million was recognised in goodwill.
4.7 An amount of EUR5.6 million was recognised as a deferred taxation
liability.
4.8 NEPI assumed external bank debt of EUR73.6 million which existed in
FBP at 30 June 2010.
CATEGORISATION OF THE TRANSACTION
The transaction is a category 2 transaction in terms of section 9.5(a) of the
Listings Requirements of the JSE Limited.
WITHDRAWAL OF CAUTIONARY
In accordance with the Listings Requirements of the JSE Limited, shareholders
are advised that caution is no longer required to be exercised when dealing
in their NEPI securities.
29 November 2010
For further information please contact:
New Europe Property Investments plc +40 74 432 8882
Martin Slabbert
Nominated Adviser and Broker +44 20 7131 4000
Smith & Williamson Corporate Finance Limited
Azhic Basirov/Charles Combe
South African sponsor +27 11 283 0042
Java Capital
Date: 29/11/2010 16:43:01 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.
