Investor Update

RNS Number : 0084N

Trans Balkan Investments Ltd

03 June 2010

 



03 June 2010

TRANS BALKAN INVESTMENTS LIMITED
("TBIL or the "Company")

Investor Update

TechnomarketDomo ("TMD")

The Board is in discussion with the minority shareholders of TMD concerning an unsolicited and indicative offer from them to purchase TBIL's equity shareholding of 61.8 % in TMD.  Whilst the Board is giving suitable consideration to this offer, it is also reviewing other realistic options whereby it can resolve most advantageously for the Company's shareholders the matter of raising sufficient funds in the near future both to repay the EUR 17 million TBIL owes to the State General Reserve Fund of Oman ("SGRF") as well as to finance the further development of the TMD Group's business throughout the South East European region.  To this end, the Board is in the process of selecting a suitable independent financial adviser to assist it in this endeavour. 

This review of the options in respect to TMD is taking place as the Company continues to face a challenging trading environment.  Both the businesses in Romania and Bulgaria have increased their market share while taking steps to reduce costs, close unprofitable stores and otherwise refine operating efficiencies. 

Further to the announcement made on 9 February 2010 regarding SGRF having notified the Company that their exchange rights and other rights under a comprehensive security package had become exercisable and as such SGRF had reserved its position, TBIL continues to work towards a resolution of the issues.

Borovets

No early decision is likely to be made in the light of the continuing weak market conditions in respect to this potential resort development.  However, there have been some preliminary discussions with the representatives of a major resort developer which are ongoing.

Novera

As previously announced, TBIL has had a meeting with legal representatives of the Bulgarian Government, over the Municipal Council of Sofia's conduct in relation to the termination of the  Concession Agreements.  The senior and mezzanine lenders to Novera also participated in this meeting.  The initial response from the Bulgarian Government to these discussions is to reject any proposal for a negotiated settlement.  Consequently, the Board is investigating the options available to it in respect to pursuing the complaint with the Bulgarian Government, under the terms of the relevant Bilateral Investment Treaty. 

Property Companies

Pelican, one of TBIL's wholly owned property subsidiaries, is in discussions with potential buyers for the sale of its three former cinemas sites (namely Iztok, Urvich and Europa Palace), all situated in Sofia.  In the case of the Iztok cinema a preliminary purchase agreement has already been signed and, subject to its conditions being met, completion of the transaction, at a purchase price of EUR 1.8 million, is anticipated to occur in late June 2010. 

TBIL, with the benefit of advice from an independent property consultant, has determined the most realistic and advantageous course for handling the balance of its properties held through its subsidiaries Pelican and Immofinance.  In respect to the Banya Hotel and Spa project, the Company is in advanced discussions with DSK Bank concerning a proposal for completing the project. 

Regrettably, the Sozopolis Resort project has yet to identify a satisfactory solution and the Company is still in discussion with Alpha Bank concerning its future. 

Cash Flow Update

TBIL's liquidity has been boosted in recent months firstly by the repayment of a loan provided to Uniqa AD which, together with outstanding interest, amounted to EUR 3,691,673, and secondly by the settlement, and initial payments, of an agreed repayment schedule over the coming 12 months for the balance of the Auto Union sale proceeds, amounting in all to EUR 2 million.

Restructuring

The Board can report that the planned simplification and consequent reduction in cost of the TBIL group's corporate structure is progressing well.  The number of companies within the group has been reduced from 43 to 28 by way of merging or liquidating defunct entities.  The number of entities is expected to be reduced by a further 8 by the end of the year.

TBIL is currently reviewing its contracts with external service providers in order to ensure that the most competitive service and fees are obtained.

Audit

The audit in respect to the financial year ended 31 December 2009 is still in progress and it is hoped that Deloitte Audit OOD, the Company's new auditor, will complete this over the coming month.

Enquiries:

Trans Balkan Investments Limited	Ian Schmiegelow (Chairman) Natalie Weedon	Tel: + 44 20 7630 3350
Financial Dynamics	Ed Gascoigne-Pees Nick Henderson	Tel: + 44 20 7269 7132
Collins Stewart Europe Limited (Nomad)	Stewart Wallace	Tel: [phone]
KBC Peel Hunt Limited (Broker)	Capel Irwin	Tel: + 44 20 7418 8900

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