Proposed Placing of Ordinary Shares

RNS Number : 0632D

Globalworth Real Estate Inv Ltd

25 March 2014

 



25^th March, 2014

THIS  ANNOUNCEMENT  AND  THE  INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, INTO  OR WITHIN THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

Globalworth Real Estate Investments Limited ("Globalworth" or the "Company")

Proposed Placing of Ordinary Shares

Execution of agreement with York Capital Management, Oak Hill Advisors and the Founder

Shareholders' Written Resolution

Summary Highlights

The Board of Globalworth is pleased to announce the following:

·     Proposed Placing of Ordinary Shares in the Company

·     Execution of an agreement with two leading institutional investors, York Capital Management and Oak Hill Advisors (both as defined below), and the Founder (the "Agreement")

·     Circulation of a written resolution to the Company's shareholders concerning certain amendments to the Company's articles of incorporation and the waiver of the pre-emption provisions contained in such articles

The Company is launching today an equity capital raising with the following key highlights:

·     Target amount: up to €200 million.

·     Proposed placing price of 5.90 €/share ("Proposed Placing Price"), representing a circa 36% discount to the Pro-forma EPRA NAV.

·     Proposed Placing of new Ordinary Shares to raise up to €135 million, of which €55 million have been committed through the execution of the Agreement.

·     Execution of the Agreement with the following key features:

o  €95 million committed by an affiliate of York Capital Management Global Advisors, LLC ("York") and certain affiliates of Oak Hill Advisors (Europe), LLP (together, "Oak Hill Advisors"), as follows:

§ €65 million through the acquisition of the €65 million facility that the Company recently signed with UBS (the "UBS Facility") and its mandatory conversion (together with fees and accrued interest thereon) to Ordinary Shares by December 18, 2014 at the Proposed Placing Price.

§ A further €30 million to be subscribed by way of new Ordinary Shares at the closing of the Proposed Placing at the Proposed Placing Price.

o  €25 million of new Ordinary Shares to be subscribed by by Ioannis Papalekas, the Company's Founder and CEO at the Proposed Placing Price.

·     As a result of the Agreement, amounts due under the UBS Facility will be met through the issue of Ordinary Shares rather than out of the Company's cash resources.  In addition, the Company has raised an additional €55 million of equity capital at the same price as and simultaneous with the completion of the Proposed Placing.  The Company has therefore secured €120 million of capital commitments from York, Oak Hill Advisors and the Founder.

·     Use of Funds is as follows: Of the €200 million targeted to be raised, €65 million will be used to repay the UBS Facility through a mandatory conversion to Ordinary Shares (per the terms and conditions of the Agreement), €23 million is planned to be invested in the current portfolio of the Company (predominantly to partially fund its development projects), and €112 million in future investments, of which €94 million consist of investments contracted or at a very advanced stage of negotiations.

Geoff Miller, Chairman of Globalworth, commented:

"Following the successful conclusion of the first phase of the Company's investment programme as described in the IPO admission document, the Company is now ready to enter into the next phase of its evolution and is therefore well-placed to seek additional capital from existing and new investors. This will enable it to consolidate its position as the leading real estate investor in Romania and one of the largest in the broader SEE/CEE region.

We are delighted that we have already secured €95 million of capital commitments from York Capital Management and Oak Hill Advisors, two of the world's largest and most reputable financial investors.  The significant investment they are making in the Company constitutes a powerful acknowledgement of the outstanding progress made and milestones achieved since the IPO and a very positive vote of confidence in the quality of Globalworth's portfolio, the strength of its management team and the future prospects of the Company.  They have demonstrated considerable long term commitment to support the Company and we are very excited to be forming a partnership with them.

In addition, we are grateful for the continuous support of Ioannis Papalekas, Founder and CEO of the Company, who, having already invested circa €90 million in the Company, has committed to invest an additional €25 million.

We look forward to successfully concluding what should be a landmark capital raise and to welcome the new shareholders to our company."

-      Ends -

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

EastWest Partners (Financial Adviser)                                  

David Hill                                                                                            Tel: [phone]

Scott Evans                                                                                         Tel: [phone]     

Panmure Gordon (Nominated Adviser)                                Tel: [phone]

Nicola Marrin

Freddy Crossley

Cantor Fitzgerald Europe (Joint Broker)                                Tel: [phone]

Rick Thompson

David Foreman

Milbourne (Public Relations)                                                     Tel: [phone]

Tim Draper

About Globalworth:

Globalworth Real Estate Investments Limited is a real estate investment company founded by real estate investor and developer Ioannis Papalekas to take advantage of investment opportunities in Romania and the broader SEE and CEE regions. The Company is Guernsey incorporated and has been declared by the Guernsey Financial Services Commission to be a registered closed-ended collective investment scheme. The Company's shares were admitted to trading on AIM in July 2013.

The Romanian market offers an attractive real estate investment proposition in the medium-to-long term. Globalworth believes that global investor capital flows will gradually move from markets considered as "safe havens" to more peripheral markets such as Romania and the broader SEE and CEE regions in search of higher yielding investments. As a result, Romania and the broader SEE and CEE regions should, in due course, become more attractive destinations for a wide investor audience. Globalworth anticipates holding an early mover advantage in these markets and benefitting from this gradual shift in investor sentiment.

IMPORTANT NOTICE

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

This announcement is for information purposes only and does not constitute, or form part of, any offer or invitation to sell or issue any shares in the Company in any jurisdiction nor shall it, or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever.  Any decision to subscribe for shares in the Placing must be made only on the basis of the documents, announcements or other information referred to in the placing letter (including the Guernsey Regulatory Disclosure Annex to it) referable to the Placing (which may include all or any part of this announcement), which together shall constitute a prospectus (the "Guernsey Prospectus") pursuant to the Guernsey Prospectus Rules 2008. 

The securities have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act. The Company does not intend to register any part of the Placing in the United States or to conduct a public offering of securities in the United States.

Certain figures in this document, including as to expected or stabilised NOI, are current expectations based on a number of assumptions that reflect a substantial degree of judgment.  These projections are subject to risks and uncertainties that could cause actual outcomes to differ materially from those expressed or implied by the relevant statements; they are not guarantees of future performance and there can be no assurance that these projections can or will be achieved.

Agreement with York Capital Management, Oak Hill Advisors and the Founder

The Company is pleased to announce that it has entered into a binding agreement (the "Agreement") with two leading institutional investors, an affiliate of York Capital Management Global Advisors, LLC ("York") and certain affiliates of Oak Hill Advisors (Europe), LLP (together, "Oak Hill Advisors") and the Founder. 

York was founded in 1991 and is a global alternative asset management firm specialising in event-driven investment strategies. As of March 1, 2014, York had approximately USD 21 billion in assets under management, 180 employees and offices in New York, London and Hong Kong. The firm focuses on special situations, arbitrage, and distressed investments across the capital structure in both equity and credit opportunities.

Oak Hill Advisors (Europe), LLP is the London-based investment advisory affiliate of Oak Hill Advisors, L.P., a leading independent investment firm headquartered in New York with more than 20 years of experience investing in North America and Europe. Oak Hill Advisors has 175 employees and more than USD 21 billion of capital under management.  Oak Hill Advisors employs a fundamental, value-oriented investment strategy in making credit and equity investments on behalf of a diverse, global investor group.

The Agreement provides for the following:

Convertible Loan

York and Oak Hill Advisors have acquired from UBS Limited its rights as original lender under the €65,000,000 Secured Term Bridge Facility Agreement dated 14 February 2014 made between, amongst others, the Company and UBS Limited (the "Facility Agreement"). 

Under the terms of the Agreement, the Facility Agreement will be amended so that all interest is capitalised and the maturity date will be set at 18 December 2014 (the "Maturity Date").  The facility will not be repaid until the Maturity Date and amendments will be made to the Facility Agreement which will enable the Company to carry on its business in the ordinary course in accordance with its investing policy.

Not later than the Maturity Date, the indebtedness under the Facility Agreement (including capitalised interest) will be repaid though a mandatory conversion into ordinary shares in the capital of the Company ("Ordinary Shares") at the Proposed Placing Price.  The Ordinary Shares will be admitted to trading on AIM following conversion.

Pending the Maturity Date, and since the conversion of the indebtedness under the Facility Agreement is mandatory, York and Oak Hill Advisors shall be entitled, so far as practicable, to  certain shareholder rights on an as converted basis (including the right to participate in any pre-emptive offer of the Company's equity securities).

Each of York and Oak Hill Advisors will also be entitled to appoint one person as a director of the Company for so long as it holds at least 8 per cent of the issued Ordinary Shares at that time (with exceptions for anti-dilution).  Each of York and Oak Hill Advisors will enter into a relationship agreement with the Company and the Company's Nominated Advisor (Panmure Gordon).

Committed Ordinary Share Subscriptions

York and Oak Hill Advisors have each agreed to subscribe, in each case in cash, for Ordinary Shares at the Proposed Placing Price at completion of the Placing (together, the "York and Oak Hill Advisors Share Subscriptions") in a minimum aggregate amount of €30 million.

Ioannis Papalekas has further agreed to subscribe €25 million in cash at the Proposed Placing Price at completion of the Placing (the "Founder Subscription").  The York and Oak Hill Advisors Share Subscriptions are conditional on the Founder Subscription.

Ioannis Papalekas is a related party under the AIM Rules and, as such, the Founder Subscription is classified as a related party transaction for the purposes of Rule 13 of the AIM Rules.  The Directors (other than Mr. Papalekas), having consulted with Panmure Gordon, consider the terms of the Founder Subscription to be fair and reasonable insofar as the Company's shareholders are concerned.

The above committed Ordinary Share subscriptions may only be scaled back in the event either or all of them (including pursuant to the Convertible Loan) would give rise to a mandatory offer obligation.

Structure of Proposed Capital Raising

Issuer	§ Globalworth Real Estate Investments Limited
Structure	§ Up to €200 million capital raise as follows: § €65 million in the form of the Convertible Loan committed by York and Oak Hill Advisors § Up to €135 million through the issue of new Ordinary Shares to existing and new investors, of which €55 million has been committed through the York and Oak Hill Advisors Share Subscriptions (€30 million) and the Founder Subscription (€25 million)
Proposed Placing Price	§ 5.90 € / share
Selected Advisors	§ Financial Advisor, Placing Agent & Global Coordinator: EastWest Partners Ltd § Other Placing Agents: Cantor Fitzgerald (UK), Rosario Capital (Israel) § Nomad: Panmure Gordon (UK) Ltd
Timetable	§ End of offering period April 10th, 2014 § Expected trading date of listing/start trading of new shares on April 17th, 2014

Planned Use of Proceeds from Proposed Capital Raise

The planned uses of the proceeds from the proposed €200 million capital raise are as follows:

Equity required for current portfolio (mainly for the Company's development projects)	€23m
Acquisition and development of Investment Pipeline (see details below)	€94m
Acquisition and development of other projects	€18m
Repayment of UBS Facility through Convertible Loan	€65m
Total	€200m

Investment Pipeline

There are a number of investments that the Company is currently pursuing which have either been contracted or are currently under active, and in some cases advanced negotiations (together the "Investment Pipeline"). 

These investments are in line with the Company's strategy of acquiring and developing income-producing assets at attractive-valuations and mispriced or underperforming assets that can be transitioned into high quality properties.

Details are presented below:

Investment Pipeline - Investments contracted or at advanced stages of negotiations
Investment	Location	Status	Acquisition Cost (€m)	Dev/ment Cost (€m)	Expected Debt (€m)	LTV (%)	NOI (Annualised)(2) (€ m)			NOI Yield
							Current	Q1 '15(E)	Q1 '16(E)
Unicredit HQ (office)	Bucharest	Completed	43.3	-	28.0	65%	3.9	3.9	4.0	9%
D. Pompeiu(1)  (office)	Bucharest	Development	5.0	30.0	20.0	57%	-	1.5	7.0	20%
Class "A" Office Complex Dev/ment (office)	Bucharest	Development	13.0	60.1	43.8	60%	-	-	15.7	22%
Floreasca Office (office)	Bucharest	Completed	12.0	-	7.0	58%	1.1	1.8	1.8	15%
Smardan / Selari (retail)	Bucharest	Development	5.0	6.3	6.8	60%	0.3	0.3	1.5	12%
Decathlon/ M.Image (big box)	Bucharest	Development	5.4	5.1	4.2	40%	-	1.1	1.1	10%
Bratianu (office)	Bucharest	Re-development	5.0	-	3.0	60%	0.6	0.6	0.6	12%
TAP (Valeo) (logistics)	Timisoara	Phase A: Comp. Phase B: Dev.	17.3	-	13.0	75%	1.4	1.9	2.0	11%
TAP (Continental) (logistics)	Timisoara	Development	19.0	-	7.5	39%	-	1.5	1.8	10%
Conex Shops (retail)	Constanta	Completed	4.5	-	2.0	44%	0.5	0.5	0.5	10%
Total / Average			129.5	101.5	135.3	59%	7.8	13.1	36.0	16%

Shareholders' Written Resolution

The Company has today circulated a written resolution to its shareholders which covers certain amendments to the articles of incorporation of the Company (the "Articles") with respect to shareholders' pre-emption rights and the waiver thereof as a result of the proposed capital raising and the Convertible Loan and the rights of the Founder to appoint additional board members.  To be approved, the written resolution requires members representing not less than seventy-five per cent. (75%) of the total voting rights to vote in favour. A further announcement with regard to the passing of the written resolution will be made in due course. The Company expects this to be in the next few days. 

Please refer to the Company's website for a copy of the relevant resolution. 

 

END

 

 

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