Press Release
May 6, 2013
Update on current status of ongoing discussions regarding a potential restructuring of Ruric's bond loan
Discussions with bondholders' agent and bondholders' committee regarding a restructuring of Ruric's bond loan are ongoing and making good progress, but no firm restructuring proposals for shareholders and bondholders have been agreed upon yet.
Based on the current status of the negotiations, Ruric would like to present the following two restructuring options to the bondholders:
Option 1: 50 % of the existing bonds are exchanged for shares in Ruric, whereas the remaining 50 % of the existing bonds are exchanged for new bonds issued by a subsidiary of Ruric that will consolidate certain key assets.
Option 2: All of the existing bonds are repaid by way of (i) Ruric transferring to the bondholders the full ownership of the business centers Gustaf, Magnus and Oscar and the Strelna land plot, together with (ii) a new share issue in Ruric giving the bondholders a 20 % shareholding in Ruric.
The proposals remain subject to further negotiations and review as well as input from legal, tax and accounting advisers.
Ruric proposes that the bondholders at today's bondholders' meeting mandates the Bondholders' Negotiating Group to finalise the negotiations of one or both of the two options that Ruric proposes. . The bondholders would then at a subsequent bondholders' meeting vote on the approval of either Option 1 or Option 2.
Bondholders representing about 60 per cent of outstanding bonds have preliminary indicated that they in principle are positive to the proposals.
Russian Real Estate Investment Company AB (publ) ("Ruric" or the "Company") is exploring the possibility of a restructuring of its bond loan no 4 not exceeding SEK 682,766,800 10 %/13 % 2010/2014, maturing November 16th 2014 (the "Bond Loan"). This process includes discussions with CorpNordic Sweden AB (the "Agent"), the agent for the bondholders' under the terms and conditions of the Bond Loan, a group of bondholders consisting of Alecta, Alpcot Capital Management Ltd, Proventus and Bengt Stillström (the "Bondholders' Negotiating Group") and certain major shareholders in Ruric (the "Principal Shareholders").
Ruric and the Bondholders' Negotiating Group have been engaged in negotiations with a view to finding an agreement that would protect the interests of the bondholders and at the same time secure financial long-term viability for Ruric. Based on these negotiations Ruric would like to present the following two restructuring options to the bondholders:
Option 1 Conversion/New Bond
50 % of the existing bonds under the Bond Loan (the "Existing Bonds") would be exchanged for shares in Ruric, whereas the remaining 50 % of the Existing Bonds are exchanged for new bonds ("New Bonds") issued by a subsidiary of Ruric that would be established by Ruric for this purpose. The option is proposed to include the following preliminary and tentative steps:
Ruric shall issue new class B shares to the bondholders at a proposed conversion price of SEK 0.65 in consideration for the redemption of 50% of the Existing Bonds.
Ruric shall incorporate a new subsidiary, tentatively named Ruric Properties AB, which shall consolidate on its balance sheet:
shares of Ruric 2 AB, Ruric 3 AB, Ruric 4 AB and PD Finance AB; and
all claims against Ruric Group of these companies and their subsidiaries.
The remaining 50 % of the Existing Bonds are exchanged for the New Bonds.
The Principal Shareholders and certain key bondholders (as shareholders following the restructuring of the Bonds) shall sign an interim undertaking which (subject to not triggering any mandatory tender offer):
secures the bondholders' right to appoint the majority of the board of Ruric Properties AB with one (1) board member to be appointed by the Principal Shareholders; and
Secures a "neutral" board of directors of Ruric during the restructuring consisting of two directors representing shareholders, two directors representing bondholders, and one independent director to be approved by both parties.
Shareholders of Ruric shall be offered the opportunity to subscribe for new shares in in a rights issue directed to all shareholders for an estimated subscription price of SEK 0.20 per share:
total subscription price: US$ 15M (SEK 98M)
If other shareholders do not subscribe, the Principal Shareholders will purchase further shares such that that their total investment amounts to up to US$ 10M and they reserve their right to subscribe for more shares.
Once at least US$ 5 million is invested by the Principal Shareholders and the other parts of the restructuring has been completed, a new shareholders' meeting will be convened and new board of directors of Ruric will be elected (with only one (1) director representing the bondholders).
Ruric Properties AB to enter into a Property Management & Service Contract with Ruric whereby Ruric undertakes to provide facility management services in respect of the business centers Gustaf, Magnus and Oscar (the "Business Centers") and the Strelna land plot ("Strelna") during a five (5) year period for an annual fee of US$ 1.5M.
The main terms of the New Bond are proposed to be:
Amount - SEK 320M
Maturity - Nov 2017
Floating Coupon payment corresponding to net operating income ("NOI") from the Business Centers and Strelna less fees under the Property Management & Service Contract
If NOI (less fees) yields more than 10 % per year, then any amount exceeding 10 % shall be applied towards repayment of the bonds.
Pledge over (amongst other things) Business Centers and Strelna as security for the New Bonds (subject to any mandatory law restrictions).
The New Bonds are non-recourse to the other assets of Ruric.
Ruric will upon completion of the restructuring pay for all costs of the restructuring (including reasonable legal fees).
Option 2 Repayment
All of the Existing Bonds are repaid by way of Ruric transferring to the bondholders the full ownership of the Business Centers and Strelna.
The Existing Bonds shall be deemed fully repaid by:
the transfer of ownership of the Business Centers and Strelna to the bondholders; and
a new share issued by Ruric giving the bondholders a 20 % shareholding in Ruric following the share issue.
All Existing Bonds shall be deemed to be settled upon completion of the above stated transactions.
Ruric will upon completion of the restructuring pay for all costs of the restructuring (including reasonable legal fees).
Proposed next steps for the restructuring
Ruric proposes that the following next steps are taken:
Ruric proposes that the bondholders at today's bondholders' meeting:
vote against accelerating the Existing Bonds, and
give a mandate to the Bondholders' Negotiating Group (together with legal advisers) to negotiate and finalise term sheets in respect of Option 1 and Option 2.
the bondholders shall at a subsequent bondholders' meeting vote on the approval of either Option 1 or Option 2 as set out in the term sheets referred to above; and
all necessary transactions shall be implemented as soon as possible following the bondholders' approval of the term sheet.
DISCLAIMER - IMPORTANT INFORMATION
This press release provides non-binding information and may not be relied upon in connection with the purchase or sale of any security. The information in this press release is preliminary and neither this press release nor any other written or oral information made available will form the basis of any contract or be construed as an offer or a solicitation to purchase or subscribe for any securities in Russian Real Estate Investment Company AB (publ) in any jurisdiction.
This press release is not for distribution in the United States, Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, South Africa or Switzerland.
For additional information:
Tatiana Ottestig, CEO of RURIC AB
Tel.: +7 (812) 309-78-95
E-mail: TOttestig@ruric.com
Web: www.ruric.com
About company:
RURIC AB (Russian Real Estate Investment Company AB (publ) (reg. No. 556653-9705, Hovslagargatan 5 B, SE-111 48 Stockholm)) is a company with Swedish capital, operating in St. Petersburg commercial real estate market since 2004.
Besides its property management, RURIC AB establishes the realty agency, which services are based on the cutting edge mobile application, and introduces the system analyzing visitors traffic at business and trade centers prepared by the partners. This method has no parallels and is suggested as a part of the consulting offer for office and retail property owners.
Beyond that, the company is already dealing with the investment projects coordination, local and national market approach consulting, valuation and property trust services. Real estate portfolio construction and management services are also included. These services apply to the property of different return, from €100,000 to 6% per annum.
RURIC's Certified Advisor at First North is Erik Penser Bankaktiebolag
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: Russian Real Estate Investment Company via Thomson Reuters ONE
