Argo Real Estate Opportunities Fd Statement re Proton Bank Facility (5058U)
December 03 2013 - 2:00AM
UK Regulatory
TIDMAREO
RNS Number : 5058U
Argo Real Estate Opportunities Fd
03 December 2013
3 December 2013
Argo Real Estate Opportunities Fund Limited
("AREOF" or "the Company")
Statement Re: Proton Bank Facility and Other Company
Borrowings
The Company wishes to provide an update regarding the status of
its debt facility with Proton Bank ("Proton") and other material
borrowings.
On 2 January 2013, AREOF announced that it had failed to make an
interest payment due under the terms of its EUR29.3m debt facility
with Proton ("the Proton Loan"). On 3 September, the Company
announced that it had received a termination notice from Proton in
respect of the Proton Loan. The Company has been in discussions
with Proton and today wishes to announce that it has made a one-off
payment of EUR388,960 to Proton, financed through a secured loan
from the Company's Investment Manager, in exchange for Proton
agreeing to enter into substantive restructuring negotiations. The
Company has made a proposal to Proton regarding a restructuring of
the Proton Loan. Proton has agreed to suspend any enforcement
action available to it under the terms of its facility until 31
January 2014. The Company and Proton expect to have completed a
restructuring of the Proton Facility by this date.
AREOF also wishes to provide the following status summary
regarding the various other material loans it has outstanding.
The Company's Sibiu Shopping City retail park is supported by
two debt facilities - a EUR57.2m loan from a consortium of lenders
led by KBC Bank ("Sibiu 1 Loan") and a EUR25.1m loan from a
consortium of lenders led by KBC Bank (Sibiu 2 Loan"). On 21
January 2013, the Company announced that it had defaulted on the
Sibiu 1 Loan after failing to make a principal repayment. The
Company is currently in negotiations with KBC Bank regarding an
extension of the Sibiu 1 Loan which matured on 30 November 2013 and
a remedy of the loan default. On 3 April, AREOF announced that it
had defaulted on the Sibiu 2 Loan after omitting to make a
principal repayment. On 16 May 2013, the Company announced that it
had remedied this default. The Sibiu 2 Loan matures on 30 June
2016. Sibiu Shopping City is also financed by way of EUR1.4m of
Preference Shares held by NEF 3 (Cayman) Sibiu Limited. These
Preference Shares have a Preference Dividend which accrues at an
annual rate of 22.5% and mature in May 2015.
AREOF's Suceava Shopping City retail park is supported by a
EUR46.1m loan from Alpha Bank ("Suceava Loan"). On 16 January 2013,
the Company announced that following the maturity of its loan
facility on 10 November 2012 it had successfully completed an
extension of the maturity of the Suceava Loan to 10 November 2015
at a reduced interest rate of 3 month Euribor plus a margin of
3.35%.
The Company's ERA Shopping Park Oradea retail park is supported
by EUR64.1m loan from a consortium of banks led by Banca Romaneasca
("Oradea Loan"). On 11 November 2013, AREOF announced that it had
filed a petition for the voluntary insolvency of Omilos Oradea Srl,
a Romanian subsidiary of the Company that owns ERA Shopping Park
Oradea, arising from a contested legal dispute of EUR3.2m with a
Romanian contractor. This action was taken following legal advice
of this to be in the best interests of the subsidiary, its
creditors and stakeholders.
The Company's ERA Shopping Park Iasi retail park is supported by
a EUR60.5m loan from a consortium of banks led by Banco Romaneasca
("Iasi Loan"). The loan schedule provides for amortization payments
which continue to be waived by the consortium of banks from time to
time pending the finalization of a more complete restructuring that
will allow equity funds held in escrow to be used for the
completion of Phase 3 of the project.
AREOF's ERA Shopping Park Oradea and ERA Shopping Park Iasi are
also financed by Preference Shares ("Preference Shares") held by
NEF 3 (Cayman) 1 Limited and NEF 3 (Cayman) 3 Limited (together
"the Preference Share Investors"). On 12 April 2013 the Preference
Share Investors exercised Put Options compelling the Company to
redeem the Preference Shares by 11 October 2013 ("Redemption
Date"). On 11 November 2013, the Preference Share Investors
notified the Company of their decision to extend the Redemption
Date to 31 December 2013 and entered into negotiations with the
Company regarding a restructuring of the Preference Shares. The
total liability to AREOF arising from the Preference Shares will be
EUR8.5m on 31 December 2013.
AREOF's Riviera Shopping City retail park in Odessa is supported
by a EUR63.8m loan from Bank of Cyprus, which matures on 31
December 2014. The Company is in compliance with all covenant and
loan terms.
AREOF has a series of subordinated loans from various entities
associated with its Investment Manager. These include a EUR2.5m
loan from the Argo Special Situations Fund LP which carries a 10%
per annum interest rate and matures in September 2017; a EUR800,000
loan from the Argo Special Situations Fund LP with an interest rate
of Euribor plus 3.75% per annum and matures in November 2014; a
EUR2.4m loan from the Argo Special Situations Fund LP which carries
an interest rate of 15% per annum and matures in June 2014; a
EUR1.5m loan from Argo Special Situations Fund LP with an interest
rate of 10% per annum which is payable on demand; and a EUR1m loan
from North Asset Management Sarl with an interest rate of 12% per
annum which is payable on demand. Finally, the Company has a
EUR388,960 loan from its Investment Manager, Argo Capital
Management Property Limited, which carries an interest rate of 10%
per annum and is payable on 3 month notice from the lender. In
addition, AREOF has an ongoing liability of outstanding management
fees due to its Investment Manager of approximately EUR2.6m.
The Company believes that its strategy of debt restructurings is
the only possible way to enhance value for stakeholders and in this
context its equity value will increase further once the economies
of South Eastern Europe improve.
Enquiries:
Argo Real Estate Opportunities Fund Limited
David Clark, Chairman +44 (0)1481 231100
finnCap Limited (Nominated Adviser)
Matthew Robinson
Henrik Persson +44 (0) 207 220 0500
This information is provided by RNS
The company news service from the London Stock Exchange
END
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