Exchange Offer for Outstanding Notes 2025 and 2026

Globalworth Real Estate Inv Ltd

28 March 2024

 

28 March 2024

NOT FOR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD BE UNLAWFUL.

This announcement shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities referred to herein in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction.

The information communicated within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this information is considered to be in the public domain.

Manufacturer target market (MIFID II and UK MiFIR product governance) will be eligible counterparties and professional clients only (all distribution channels). No PRIIPs or UK PRIIPs key information document (KID) has been prepared as not available to retail in EEA or the United Kingdom.

Globalworth Real Estate Investments Limited

("Globalworth" or the "Company")

Launch of Exchange Offer and Consent Solicitation for Outstanding Notes due 2025 and 2026 to be exchanged with New Green Notes due 2029 and 2030

Highlights

·      Globalworth (AIM: GWI), a leading real estate investment company focused on the CEE region, proposes to make an exchange offer to the holders of its €550,000,000 3.00% Senior Notes due 2025, of which €450,000,000 are outstanding (the "2025 Notes") and €400,000,000 2.95% Senior Notes due 2026, all of which are outstanding (the "2026 Notes" and together with the 2025 Notes, the "Existing Notes") to offer for exchange any and all of their Existing Notes for the applicable exchange consideration consisting of senior notes due 2029 and senior notes due 2030 to be issued (collectively, the "New Notes") and/or cash (as applicable) (the "Exchange Offer");

·      Globalworth also proposes to solicit consents from the holders of its Existing Notes to certain proposed amendments to the terms of the Existing Notes, to implement a mandatory exchange of the Existing Notes and align their terms with the terms and conditions of the New Notes; and

·      Globalworth intends to allocate an amount equal to the aggregate principal amount of the New Notes to the financing and refinancing of Eligible Green Projects pursuant to its Green Financing Framework.

Purpose of the Exchange Offer and the Consent Solicitations

The Existing Notes represent the majority of the Company's near-dated indebtedness in an aggregate principal amount outstanding of €850.0 million. The purpose of the Exchange Offer is to manage and extend the Company's maturity profile, address the near-term refinancing requirement of the 2025 Notes and the 2026 Notes and support the Company's deleveraging objectives by exchanging Existing Notes for a combination of New Notes and cash pursuant to the Exchange Offer. Assuming full participation in the Exchange Offer and successful Consent Solicitations, Globalworth's average debt maturity will increase to 5.5 years (estimated as at 31 March 2024).

Under the Exchange Offer, certain eligible holders have the opportunity to receive (i) a cash pay down in respect of a portion of their Existing Notes (if such eligible holders offer their Existing Notes for exchange prior to the Early Exchange Deadline), and (ii) New Notes (together, the "Exchange Consideration") with (A) an increased interest rate as compared to the Existing Notes; (B) an Optional/Final Redemption Price of 102.00 per cent; and (C) additional covenant protections with respect to dividend payments. In addition, the New Notes will benefit from a mandatory redemption feature, pursuant to which the Company shall be required to redeem a principal amount of up to €45.0 million of 2029 Notes and up to €20.0 million of 2030 Notes at par (plus accrued interest) from the net cash proceeds received from certain real estate sales, if any. Eligible holders who offer their Existing Notes for exchange after 9 April 2024 (the "Early Exchange Deadline") but before 17 April 2024 (the "Expiration Deadline") will not receive any cash pay down as part of the applicable Exchange Consideration.

The purpose of the Consent Solicitations is to amend each of the 2025 Notes terms and the 2026 Notes terms (i) to implement a mandatory exchange for the Existing Notes that are not exchanged pursuant to the Exchange Offer and redeem such Existing Notes at the Settlement Date by way of delivery of 2029 Notes and 2030 Notes, as applicable (the "Existing Notes Mandatory Exchange") and (ii) to align the Consolidated Coverage Ratio and the definition of Consolidated Interest Expense for the Existing Notes with the New Notes. Noteholders who do not participate in the Exchange Offer and whose Existing Notes become subject to the Existing Notes Mandatory Exchange will not receive any cash pay down on their Existing Notes and will only receive New Notes.

The Company will not receive any cash proceeds from the Exchange Offer. The Exchange Offer will be subject to a number of conditions. Before making a decision with respect to the Exchange Offer and/or Consent Solicitation, noteholders should carefully consider all of the information in the Memorandum (defined below) and, in particular, the risk factors therein.

Indicative Supporting Holders

Prior to the date of this announcement, the Company has discussed the terms of the Exchange Offer with certain noteholders, including International Finance Corporation ("IFC") and a number of global investment managers. The substantial majority of the noteholders with whom the Company has discussed the terms of the Exchange Offer have expressed support for the Exchange Offer, subject to obtaining internal approvals where applicable. In particular, IFC has expressed its intent to participate in the Exchange Offer with the entirety of their holdings of the Existing Notes, which as of the date of this announcement consist of 10.0% of the total aggregate outstanding amount of the 2025 Notes. However, neither the IFC nor any other Noteholder with whom the Issuer has discussed the terms of the Offer is subject to any obligation or commitment of any kind (and therefore no assurance can be provided as to their level of participation).

Exchange Offer and Consent Solicitation

Under the Exchange Offer, the holders of the Existing Notes are invited to offer any and all of their Existing Notes for the applicable consideration consisting of the New Notes and/or cash (as applicable). Subject to the conditions set forth in the Memorandum, the noteholders who exchange 2025 Notes (x) on or prior to the Early Exchange Deadline, will receive for each €1,000 2025 Notes that are exchanged €600 in 2029 Notes and €400 in early cash consideration and (y) after the Early Exchange Deadline, will receive for each €1,000 2025 Notes that are exchanged €1,000 in 2029 Notes and €0 in cash consideration. The noteholders who exchange 2026 Note (x) on or prior to the Early Exchange Deadline, will receive for each €1,000 2026 Notes that are exchanged €800, in 2030 Notes and €200 in early cash consideration and (y) after the Early Exchange Deadline, will receive for each €1,000 2026 Notes that are exchanged, €1,000 in 2030 Notes and €0 in cash consideration.

The Company will also pay an amount in cash (in euro) equal to any accrued and unpaid interest in respect of the Existing Notes validly tendered for exchange (and not validly withdrawn) which are accepted for exchange by the Company, up to (but excluding) the settlement date.

The 2029 Notes and the 2030 Notes will each bear interest at 6.25% and will mature on 31 March 2029 and 2030, respectively.  Following the first anniversary of the issuance, the New Notes will be redeemable at 102%.  The New Notes will be subject to a mandatory real estate sale redemption pursuant to which the Company shall be required to redeem a principal amount of up to €45.0 million of the 2029 Notes and up to €20.0 million of the 2030 Notes at par (plus accrued interest) upon receipt of net cash proceeds from one or more real estate sales, if any.  The New Notes will be issued in a minimum denomination of €100,000.

Application will be made to the Irish Stock Exchange plc trading as Euronext Dublin (the "Euronext Dublin") for the approval of the listing particulars and for the New Notes to be admitted to its official list (the "Official List") and to trading on the Global Exchange Market (the "Global Exchange Market"), which is the exchange-regulated market of Euronext Dublin. After the issue date of New Notes, the Company may also seek to apply for listing of the New Notes on the exchange-regulated market of the Bucharest Stock Exchange following the issue date of the New Notes.

The Company also announces the solicitation of consents from holders of the Existing Notes to approve certain proposals to amend the terms and conditions of the Existing Notes that are not exchanged pursuant to the Exchange Offer, in order to (i) implement a mandatory exchange of the Existing Notes (as further described below and in the Memorandum), and (ii) align the terms of the Existing Notes with the terms and conditions of the New Notes (including amending the definition of fixed charge coverage ratio to 1.5x) (together, the "Consent Solicitation").

The Exchange Offer and the Consent Solicitation are being made on the terms, and subject to the conditions, contained in the exchange offer and consent solicitation memorandum dated 28 March 2024 (the "Memorandum") prepared by the Company in connection with the Exchange Offer and the Consent Solicitation, which will be made available to holders of the Existing Notes subject to certain offer and distribution restrictions.

The New Notes are intended to be issued as Green Bonds and an amount equal to the aggregate principal amount of the New Notes is intended to be used to finance or refinance Eligible Green Projects, as further defined in the Company's Green Financing Framework available at https://www.globalworth.com/investor-relations/bonds.

Merrill Lynch International has been appointed by the Company to act as Lead Dealer Manager and Green Structuring Coordinator, Erste Group Bank AG and Raiffeisen Bank International AG have been appointed by the Company to act as Co-Dealer Managers and Kroll Issuer Services Limited as Exchange and Tabulation Agent in connection with the Exchange Offer and the Consent Solicitation. Merrill Lynch International is also acting as Green Structuring Coordinator for the New Notes.

Recent Developments

On 13 March 2024, we announced that our Board of Directors had approved the payment of an interim dividend of €0.11 per ordinary share in respect of the six months ended 31 December 2023 (which will be paid on 26 April 2024) and offered a scrip dividend alternative to such interim dividend so that qualifying shareholders can elect to receive new ordinary shares in the Company instead of cash in respect of all or part of their entitlement to this interim dividend. Qualifying shareholders who validly elect to receive a scrip dividend will become entitled to a number of scrip dividend shares in respect of their entitlement to the interim dividend that is based on a reference price of 196 cents per scrip dividend share calculated on the basis of a discount of 20% to the average of the middle market quotations for the Company's shares as derived from the Daily Official List, the daily publication of official quotations for all securities traded on the London Stock Exchange (or any other publication of a recognised  investment exchange showing quotations for the Company's shares) on the five consecutive dealing days from and including the ex-dividend date for the dividend.

Each of our significant shareholders, Zakiono, CPI and Growthpoint, have indicated their intention to provide an undertaking pursuant to which each such shareholder will elect to receive a scrip dividend instead of cash in respect of their entire holdings of shares and their full entitlement to any dividend proposed, in the event that a dividend with a scrip dividend alternative offered is declared in the future to comply with dividend restrictions included in the terms and conditions of the New Notes. As of 12 March 2024, such significant shareholders held a total of approximately 233.0 million shares, representing approximately 92.4% of the issued ordinary share capital of the Company.

We are in advanced negotiations to dispose one of our office buildings in Bucharest for an approximate consideration of up to €24.0 million of which we expect to receive up to a third in cash upon completion of the disposal and the rest as deferred consideration.

For further information, visit www.globalworth.com or contact:

Enquiries 

Rashid Mukhtar Group CFO	Tel: [phone]
Panmure Gordon (Nominated Adviser and Joint Broker) Dominic Morley	Tel: [phone]

About Globalworth / Note to Editors: 

Globalworth is a listed real estate company active in Central and Eastern Europe, quoted on the AIM-segment of the London Stock Exchange. It has become the pre-eminent office investor in the CEE real estate market through its market-leading positions both in Poland and Romania. Globalworth acquires, develops and directly manages high-quality office and industrial real estate assets in prime locations, generating rental income from high quality tenants from around the globe. Managed by over 269 professionals across Cyprus, Guernsey, Poland and Romania the combined value of its portfolio is €3.0 billion, as at 31 December 2023. Approximately 96.8% of the portfolio is in income-producing assets, predominately in the office sector, and leased to a diversified array of over 715 national and multinational corporates. In Poland Globalworth is present in Warsaw, Wroclaw, Lodz, Krakow, Gdansk and Katowice, while in Romania it has assets in Bucharest and seven other cities.

For more information, please visit www.globalworth.com and follow us on Facebook, Instagram and LinkedIn.

IMPORTANT NOTICE:

This announcement does not constitute, or form part of, an offer or invitation to sell or issue, or any solicitation of an offer to buy or subscribe for, any securities in the United States or any other jurisdiction nor shall it (or any part of this announcement) or the fact of its distribution form the basis of, or be relied upon in connection with, or act as any inducement to enter into, any contract or commitment. Recipients of this announcement who intend to purchase any securities are reminded that any such purchase or subscription must be made solely on the basis of the information contained in any final form offering circular published in connection with any such securities. In certain jurisdictions, the transactions described above and the distribution of this announcement and other information in connection with the transactions described above may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This communication is not an offer of securities for sale in the United States, Australia, Canada, Japan or any other jurisdiction where to do so would be unlawful. Globalworth Real Estate Investments Limited has not registered, and does not intend to register, securities in any of these jurisdictions or to conduct an offer of securities for sale in any of these jurisdictions. In particular, no securities of Globalworth Real Estate Investments Limited have been or will be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and such securities may not be offered, sold or delivered within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable state securities laws.

The securities referred to herein are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the EEA. For these purposes, a retail investor means a person who is one (or more) of: (i) a retail client as defined in point (11) of Article 4(1) of Directive 2014/65/EU (as amended, "MiFID II"); or (ii) a customer within the meaning of Directive (EU) 2016/97 (as amended, the "Insurance Distribution Directive"), where that customer would not qualify as a professional client as defined in point (10) of Article 4(1) of MiFID II. No key information document required by Regulation (EU) No 1286/2014 (the "PRIIPs Regulation") for offering or selling any in scope instrument or otherwise making such instruments available to retail investors in the EEA has been prepared and therefore offering or selling securities or otherwise making them available to any retail investor in the EEA may be unlawful.

The securities referred to herein are not intended to be offered, sold or otherwise made available to and should not be offered, sold or otherwise made available to any retail investor in the United Kingdom (the "UK"). For these purposes, a "retail investor" means a person who is one (or more) of: (i) a retail client, as defined in point (8) of Article 2 of Regulation (EU) No 2017/565 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018 (the "EUWA"); (ii) a consumer within the meaning of the provisions of the Financial Services and Markets Act 2000, as amended (the "FSMA"), and any rules or regulations made under the FSMA to implement Directive (EU) 2016/97, where that consumer would not qualify as a professional client, as defined in point (8) of Article 2(1) of Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA ("UK MiFIR"); or (iii) not a qualified investor as defined in Article 2 of Regulation (EU) 2017/1129 as it forms part of domestic law by virtue of the EUWA. Consequently, no key information document required by Regulation (EU) No 1286/2014 as it forms part of domestic law by virtue of the EUWA (the "UK PRIIPs Regulation") for offering or selling the securities or otherwise making them available to retail investors in the UK has been prepared and therefore offering or selling the securities or otherwise making them available to any retail investor in the UK may be unlawful under the UK PRIIPs Regulation.

This announcement is for distribution only to persons who (i) have professional experience in matters relating to investments falling within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the Financial Promotion Order)), (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc.") of the Financial Promotion Order, (iii) are existing Noteholders or other persons falling within Article 43 of the Financial Promotion Order, (iv) are outside the United Kingdom, or (v) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as "relevant persons"). This announcement is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this announcement relates is available only to relevant persons and will be engaged in only with relevant persons.

Solely for the purposes of each manufacturer's product approval process, the target market assessment in respect of the notes has led to the conclusion that: (i) the target market for the notes is eligible counterparties and professional clients only, each as defined in MiFID II; and (ii) all channels for distribution of the notes to eligible counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending the notes (a "distributor") should take into consideration the manufacturers' target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the notes (by either adopting or refining the manufacturers' target market assessment) and determining appropriate distribution channels.

Solely for the purposes of each manufacturer's product approval process, the target market assessment in respect of the notes has led to the conclusion that: (i) the target market for the Notes is only eligible counterparties, as defined in the FCA Handbook Conduct of Business Sourcebook, and professional clients as defined in Regulation (EU) No 600/2014 as it forms part of domestic law by virtue of the EUWA; and (ii) all channels for distribution of the Notes to eligible counterparties and professional clients are appropriate. Any person subsequently offering, selling or recommending the Notes (a "distributor") should take into consideration the manufacturers' target market assessment; however, a distributor subject to the FCA Handbook Product Intervention and Product Governance Sourcebook is responsible for undertaking its own target market assessment in respect of the notes (by either adopting or refining the manufacturers' target market assessment) and determining appropriate distribution channels.

 

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