TIDMAFRB TIDMAFID
RNS Number : 0597L
AFI Development PLC
28 September 2016
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION
IN OR INTO THE RUSSIAN FEDERATION, THE UNITED STATES, CANADA,
AUSTRALIA OR JAPAN
AFI DEVELOPMENT PLC
("AFI DEVELOPMENT" OR THE "COMPANY")
UPDATE ON THE DISPOSAL AND AMMENT
OF THE LOAN FACILITY AGREEMENTS AND GUARANTEE
London, 28 September 2016 - Further to the Company's H1 2016
results announcement of 25 August 2016, negotiations between AFI
Development, VTB Bank PJSC ("VTB") and Mr Leviev, the Executive
Chairman and largest shareholder of the Company, have been ongoing
in respect of reaching an agreement as an alternative to the
disposal of certain properties by the Group to VTB in exchange for
VTB releasing the Group from its obligations in respect of the
Ozerkovskaya III Loan Facility and the AFIMALL City Loan Facility
(together the "Loan Facility Agreements" or "Loans") as detailed in
the Company's circular dated 15 July 2016 (the "Disposal") and
which was approved by shareholders on 1 August 2016.
The Company is pleased to announce that the Company and VTB have
agreed to amend the terms of the Loan Facility Agreements. As
detailed below, the amendments include the deferral of the
quarterly principal payments due on the Loan Facility Agreements to
maturity of each of the Loans and the removal of the existing
covenants to the Ozerkovskaya III Loan Facility, which Krown
Investments LLC ("Krown") is currently in breach of, in
consideration for which VTB has sought additional security in
respect of the Loans which now includes cross default provisions
between each of the Loans and a suretyship from Bellgate
Constructions Limited ("Bellgate"), which holds the AFIMALL City
project, in respect of the Ozerkovskaya III Loan Facility.
In addition, Mr Leviev has entered into a personal guarantee
with VTB in respect of the Group's obligations under the
Ozerkovskaya III Loan Facility (the "Guarantee").
As a result of the amendments to the Loan Facility Agreements
and the Guarantee being entered into, the Disposal will not
proceed.
Amendments to the Loan Facility Agreements
(a) Krown, which holds Ozerkovskaya III, a completed Class A
office complex in Moscow
Krown and VTB have entered into an addendum to the Ozerkovskaya
III Loan Facility pursuant to which:
(i) the existing covenants (being the debt service coverage
ratio and the loan to value covenants), which Krown is currently in
breach of, have been removed;
(ii) all quarterly principal payments due under the facility,
including the quarterly principal payment due on 30 June 2016 and
which has not been paid, will be deferred to maturity, being 26
January 2018; and
(iii) the Company will provide additional security to VTB in consideration of the above.
All other terms of the facility, including interest payments,
remain essentially the same.
Pursuant to the additional security, a new share pledge by the
Company over 100% of the share capital of Bellgate has been entered
into with VTB (the "Bellgate Share Pledge"). The Bellgate Share
Pledge continues to cover the obligations of Bellgate pursuant to
the AFIMALL City Loan Facility (with any liability arising now
being satisfied by, inter alia, the transfer of the pledged shares
to VTB), and now also covers the obligations of Krown in respect of
the Ozerkovskaya III Loan Facility. In addition, within 60 calendar
days of this announcement, the Company and VTB shall execute the
following agreements which will provide additional security, being
a:
-- Share pledge agreement over 100% of the share capital of each
of Titon LLC (which holds the Company's interest in the Kossinskaya
project) and Semprex LLC (which holds the Company's interest in the
Aquamarine Hotel);
-- Mortgage agreement over the Kossinskaya project;
-- Suretyship agreements with each of Titon LLC, Rognestar
Finance Limited (the parent company of Titon LLC), Bellgate,
Semprex LLC and AQUAMARE TRE LTD (the parent company of Semprex
LLC) for the full amount of the Ozerkovskaya III Loan Facility;
-- Second ranking mortgage agreement over AFIMALL City and the Aquamarine Hotel; and
-- Pledge agreement over the equipment used to operate the Kossinskaya project.
(b) Bellgate, which holds AFIMALL City Shopping Centre, a
shopping and entertainment centre in Moscow City, the business
district of Moscow
Bellgate and VTB have entered into an addendum to the AFIMALL
City Loan Facility pursuant to which:
(i) all quarterly principal payments due under the facility,
including the quarterly principal payment due on 30 June 2016 and
which has not been paid, will be deferred to maturity, being 1
April 2018; and
(ii) the Company will provide additional security to VTB in consideration of the above.
All other terms of the facility, including covenants and
interest payments, remain essentially the same.
Within 60 calendar days from this announcement, the Company and
VTB shall also execute the following agreements:
-- Second ranking pledge agreement over 100% of the share
capital of each of Krown and Titon LLC (which holds the Kossinskaya
project);
-- Pledge agreement over 100% of the share capital of each of
Semprex LLC and AFI FM LLC (the property management company for the
AFIMALL City Shopping Centre);
-- Suretyship agreements with each of Krown, AFI FM LLC,
Inscribe Limited (parent company of AFI FM LLC), Titon LLC,
Rognestar Finance Limited and AQUAMARE TRE LTD for the full amount
of the AFIMALL City Loan Facility;
-- Second ranking mortgage agreement over each of the
Ozerkovskaya III project and the Kossinskaya project; and
-- Second ranking pledge agreement over the equipment used to
for operate the Kossinskaya project.
The Guarantee and New Loan
In addition to the addenda to the Loan Facility Agreements
described above, Mr Leviev has today provided VTB with the
Guarantee, being a personal guarantee and indemnity deed under
English law from Mr Leviev to VTB, pursuant to which Mr Leviev has
undertaken to guarantee, for a period of 10 months, the obligations
of Krown under the Ozerkovskaya III Loan Facility. The Guarantee,
which is enforceable for 12 months, provides additional security to
VTB in respect of the Ozerkovskaya III Loan Facility.
Should VTB enforce the Guarantee, the payment by Mr Leviev of
any amounts under the Guarantee will lead to a discharge of Krown's
respective payment obligations under the Ozerkovskaya III Loan
Facility and any such payment made by Mr Leviev to VTB under the
Guarantee will be deemed the granting of a new loan between the
Company and Mr Leviev (the "New Loan"). If, as a result of the
enforcement of the Guarantee, the Ozerkovskaya III Loan Facility is
repaid in full by Mr Leviev, all claims of VTB under the security
documents in respect of Krown's secured obligations under the
Ozerkovskaya III Loan Facility will fall away.
The New Loan will accordingly only become effective in the event
that VTB enforces the Guarantee and Mr Leviev makes a payment to
VTB. The New Loan, if drawn, would be unsecured, accrue interest at
an annual rate of 7.0% plus three month LIBOR payable quarterly, be
a maximum amount of US$220 million, being equal to the maximum
value of the Ozerkovskaya III Loan Facility, and repayable in full
on or before 26 January 2018. The interest rate and maturity date
of the New Loan are the same as the Ozerkovskaya III Loan
Facility.
The terms of the Guarantee are as previously announced on 2
August 2016, except that, following completion of the purchase by
Mr Leviev of an interest in, in aggregate, 64.88% of the Company's
issued share capital as announced on 8 September 2016, the
limitation of liability provision in the event that Mr Leviev
ceased to have effective control of the Company has now been
removed.
The Disposal
The Board of Directors of AFI Development believes that the
addenda to the Loan Facility Agreements are in the best interests
of the Company and shareholders as a whole and accordingly, have
decided not to proceed with the Disposal as approved by
shareholders on 1 August 2016.
The addenda to the Loan Facility Agreements provide the Company
with the ability to explore all options in relation to maximising
shareholder value and to repaying the Loan Facilities when they
fall due in 2018, which may or may not include the disposal of
certain assets or projects, and the Company will keep the market
updated in this regard.
-S -
For further information, please contact:
AFI Development, +7 495 796 9988
Ilya Kutnov, Corporate Affairs/Investments Director (Responsible
for arranging the release of this announcement)
Citigate Dewe Rogerson, London +44 20 7638 9571
David Westover
Sandra Novakov
Marina Zakharova de Calero
This announcement contains inside information.
About AFI Development
AFI Development is one of the leading real estate development
companies operating in Russia.
AFI Development is listed on the Main Market of the London Stock
Exchange and aims to deliver shareholder value through a commitment
to innovation and continuous project development, coupled with the
highest standards of design, construction and quality and customer
service.
AFI Development focuses on developing and redeveloping high
quality commercial and residential real estate assets across
Russia, with Moscow being its main market. The Company's existing
portfolio comprises commercial projects focused on offices,
shopping centers, hotels and mixed-use properties, and residential
projects. AFI Development's strategy is to sell the residential
properties it develops and to either lease the commercial
properties or sell them for a favorable return.
AFI Development is a leading force in urban regeneration,
breathing new life into city squares and neighborhoods and
transforming congested and underdeveloped areas into thriving new
communities. The Company's long-term, large-scale regeneration and
city infrastructure projects establish the necessary groundwork for
the successful launch of commercial and residential properties,
providing a strong base for future.
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCGMGZLRRDGVZG
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