BKSA Black Sea

TIDMBKSA

RNS Number : 4520H

Black Sea Property Fund Limited

16 March 2015

The Black Sea Property Fund Limited

("Black Sea" or the "Company")

Notice of Extraordinary General Meeting

The Board of Black Sea announces that, on 13 March 2015, it posted to Shareholders a document ("Document") setting out proposals ("Proposals") to recommence investment activities in the residential real estate, holiday homes, commercial real estate and distressed real estate markets of Bulgaria and convening an extraordinary general meeting of the Company ("EGM") to seek approval from Shareholders to adopt a new investing policy, appoint a new investment advisor, extend the life of the Company and raise funds as soon as practically possible to invest the Company's resources in the Bulgarian real estate market, subject to the approval of the Jersey Financial Services Commission. In the alternative, Shareholders also have the option to vote for the Company cancelling the admission of its shares to AIM and the winding up of the Company. The Document contains notice of the EGM to be held at 4th Floor, St Pauls Gate, New Street, St Helier, Jersey JE1 4TR at 10.00 a.m. on 10 April 2015.

A copy of the Document is available at www.blackseapropertyfund.com.

Further information on the Proposals are set out in the letter to Shareholders contained in the Document and which is set out below. The definitions used in this announcement have the same meaning as they have in the Document.

For further information please contact:

The Black Sea Property Fund Limited

Alex Borrelli, Chairman Tel: +44 7747 020600

   Cairn Financial Advisers LLP                                                  Tel: +44 20 7148 7900 

Nominated Adviser

Sandy Jamieson

   Peterhouse Corporate Finance Limited                                   Tel: + 44 20 7469 0930 

Sole Broker

Charles Goodfellow, Heena Karani

Proposals for, in the Alternative,

(1) Delisting and Winding up the Company

OR

(2) Adopting the Proposed Investing Policy, Appointing BLD Asset Management as Investment Advisor and Amending the Articles of Association to extend the life of the Company

   1.         Introduction 

On 30 October 2014, the Company published an announcement stating that the Board of the Company had received a requisition from Fitel Nominees Limited (on behalf of Mamferay Holdings) seeking to requisition an extraordinary general meeting of the Company for the purpose of considering resolutions to remove the entire board other than Antony Gardner-Hillman and to appoint Trevor Hunt and Alex Borrelli as directors. An extraordinary general meeting was held on 12 December 2014 and resolutions approving the said board changes were passed.

The Board of the Company now consists of Mr Alex Borrelli as Chairman of the Company, Mr Trevor Hunt, Mr Antony Gardner-Hillman and Yordan Naydenov, who are all Non-Executive Directors of the Company. The Board intends to evaluate opportunities that are available to the Company, and pursue those which have the potential to maximise value for the Company. The Board believes that very little or no value can be delivered to Shareholders if Black Sea ceases trading on AIM and effects a voluntary liquidation with a view to winding the Company up. The Board considers that it is in the interests of Shareholders to continue to operate the Company as an investment vehicle with its participating shares of no par value ("Participating Shares") traded on AIM.

The Board is therefore convening an EGM at which Shareholders will be asked to vote on the following Proposals. The Proposals include:

-- amending the definition of Wind-Up Date in the Articles to 31 December 2021, thereby deferring the winding up of the Company for an initial period of approximately 6 years 9 months to coincide with the Company's year-end;

   --      appointing BLD Asset Management as the Investment Advisor; 
   --      enabling the Directors to issue new Participating Shares on a non pre-emptive basis; and 
   --      adopting the Proposed Investing Policy. 

In the alternative, Shareholders also have the option to vote for the Company cancelling the admission of its Participating Shares to AIM and the winding up of the Company.

As the Company is regulated by the Jersey Financial Services Commission ("JFSC"), the Board requires the JFSC's approval to certain of the Board Proposals. In the event that JFSC approval for the Company to remain as a Fund is withdrawn, the Company will seek to re-domicile or remain on AIM with the intention of making a single investment.

The Document sets out the background to and details of the Proposals, and includes a notice of the EGM where resolutions will be put to Shareholders to seek approval to adopt a new investing policy, extend the life of the Company and raise funds as soon as practically possible to invest the Company's resources in the Bulgarian real estate market, subject to the approval of the JFSC.

The First Alternative (which is not recommended by the Board)

Resolutions 1 and 2 are the first alternative. Resolution 1 (in relation to the cancellation of the admission of the Company's Shares to AIM) will require the consent of not less than 75 per cent. of votes cast by the Shareholders in person or by proxy at the EGM. Resolution 2 (in relation to appointing a liquidator and approving a summary winding up) will be proposed as a special resolution (requiring the consent of not less than two thirds of votes cast by the Shareholders in person or by proxy at the EGM). The Board has not yet selected a liquidator, but, if the resolution is approved, the Board will do so as soon as is practicable.

Background to the First Alternative

Cancellation of the admission of the Participating Shares to AIM

Resolution 1 provides for the cancellation of the admission of the Shares to AIM.

Rule 41 of the AIM Rules requires an AIM company that wishes to cancel the admission of its AIM securities to AIM to notify such intended cancellation and to inform separately the London Stock Exchange of its preferred cancellation date.

Unless the London Stock Exchange otherwise agrees, the cancellation of the Company's Participating Shares from admission to AIM must be conditional upon the consent of not less than 75 per cent. of votes cast by the Shareholders, given in a general meeting.

In the event of Shareholder approval at the EGM, it is expected that the admission of the Participating Shares to AIM would be cancelled with effect from 20 April 2015. The Board would therefore be giving to Shareholders at least 20 clear business days' notice of the cancellation of the admission of the Participating Shares to AIM. The effect of the cancellation would be that the Participating Shares would no longer be quoted or tradable on AIM and Shareholders would not therefore be readily able to sell their Participating Shares. Shareholders would be able to buy and sell their Participating Shares "off market" although this would be more difficult than trading "on market". The only other opportunity for Shareholders to sell their Participating Shares would arise upon a sale of all of the issued share capital of the Company to a third party. There is no current intention to do this and the only further resolution in respect of the Company is to wind it up.

It is intended that, in light of the Proposals, if the resolution to cancel the admission of the Participating Shares to trading on AIM is passed by the requisite majority, it is anticipated that the trading in the Participating Shares on AIM will cease at close of business on 17 April 2015, with the cancellation taking effect at 7 am on 20 April 2015.

Summary Winding Up

The sole remaining asset of the Company is cash sufficient to meet its obligations for winding the Company up in each of the potential scenarios envisaged by this Circular. As at 28 February 2015, aggregate cash balances amounted to GBP265,092.06, EUR6,794.69 and LEV8,322.56, including the GBP100,000 drawn down under the Loan Agreement, which is being used to fund the running costs of the Company. Resolution 2 proposes that the Company be wound up by way of summary winding up in accordance with the Law.

As part of the summary winding up process, the Directors are required to make a prior statement of solvency, which the Directors will do prior to the EGM. The winding up process itself is commenced by way of a special resolution passed by Shareholders of the Company within 28 days after the statement of solvency has been signed by the Directors.

If the Company is placed into winding up, the Directors (or liquidator if appointed) will then begin the process of meeting remaining liabilities of the Company and then distributing net assets (if any) to its Shareholders. Shareholders will receive further information and updates on this process (from the Directors or the appointed liquidator) in due course. Allowing for the costs of the Company to the date of liquidation, liabilities and the costs of liquidation, Shareholders should anticipate no more than a minimal further return.

Once the winding up process has been completed and the Company has no assets and no liabilities, the Company will be dissolved.

Appointment of Liquidator

Pursuant to Article 149 of the Law, a Jersey company may, on or after the commencement of its summary winding up, by special resolution, appoint a person to be liquidator for the purposes of the winding up.

The Directors have resolved to propose to Shareholders that a liquidator be appointed.

On the appointment of a liquidator, the Directors will cease to be authorised to exercise their powers in respect of the Company and those powers may be exercised by the liquidator.

Pursuant to Article 148(2) of the Law, once the Company is placed in summary winding up the powers of the Company may not be exercised by the liquidator except so far as may be required to:

   (a)      realise the assets of the Company; 
   (b)      discharge the liabilities of the Company; and 
   (c)      distribute the assets of the Company in accordance with the Law. 

What happens if Resolutions 1 to 7 are not passed?

Resolution 1 is a resolution requiring the consent of not less than 75 per cent. of votes cast by the Shareholders and Resolutions 2, 3, 4, 5 and 6 are special resolutions requiring the consent of not less than two thirds of votes cast by Shareholders. Resolution 7 is an ordinary resolution and will require the approval of a simple majority of the votes cast by Shareholders. It is possible that the Board Proposals are not approved, but that Resolutions 1 and 2 are also not approved. If this were to occur, the Board's current intention is to apply to the courts in Jersey for an order to wind up the Company on the grounds that it is just and equitable or to take action with a similar effect. In such circumstances, any return to Shareholdersis expected to be no more than minimal.

The Second Alternative (which is recommended by the Board)

Resolution 3, which will be proposed as a special resolution, seeks subsequent approval, subject to Resolutions 1 and 2 not being passed and Resolutions 4 - 7 being passed, to amend the Articles by amending the definition of Wind-Up Date to 31 December 2021, thereby deferring the winding up of the Company for an initial period of approximately 6 years 9 months.

Resolution 4, which will be proposed as a special resolution, subject to Resolutions 1 and 2 not being passed and Resolutions 3, 5, 6 and 7 being passed, seeks approval of appointment of BLD Asset Management as Investment Advisor to the Board.

Resolution 5, which will be proposed as a special resolution, subject to Resolutions 1 and 2 not being passed and Resolutions 3, 4, 6 and 7 being passed, seeks approval for the terms of the new Investment Advisory Agreement as set out in the Circular and for any director or directors to be authorised to negotiate and agree the Investment Advisory Agreement generally subject to there being no material change to the terms outlined in the Circular.

Resolution 6, which will be proposed as a special resolution, subject to Resolutions 1 and 2 not being passed and Resolutions 3, 4, 5 and 7 being passed, seeks approval for Shareholders to abandon and waive any rights (pre-emption or otherwise) which they may have by law or otherwise to demand that any further shares issued in the Company are offered to the existing shareholders first and to hereby authorise the issue of Participating Shares in the Company to such third parties as the Directors in their sole discretion see fit in order to raise the further capital required to implement the Proposed Investing Policy.

Resolution 7, which will be proposed as an ordinary resolution, subject to Resolutions 1 and 2 not being passed and Resolutions 3, 4, 5 and 6 being passed, seeks approval of the Proposed Investing Policy being put forward by the Board.

If any of the Resolutions 3 - 7 are not approved by Shareholders then the Company will be wound up and Shareholders should not expect to receive more than a minimal further distribution of capital.

   2.         Background 

Six years after the beginning of the financial crisis and the consequent fall in the value of real estate and related transactions in Bulgaria, the Board believes that the Bulgarian real estate market is showing signs of recovery (an increase in sales volumes, price stabilisation, and a rise in the volume of mortgage loans). The Board considers that there are opportunities within the residential real estate, holiday homes, commercial real estate and distressed real estate markets of Bulgaria.

If the Company is wound up, the Shareholders will not receive any further meaningful distributions of capital. Accordingly, the Board has concluded that the Proposed Investing Policy offers greater opportunities for Shareholders than offered on a winding up of the Company and it therefore believes it is in the best interests of the Shareholders for the Company to remain on AIM. The Board Proposals will enable Shareholders to retain an interest in the Company (subject to dilution by future equity fundraises and share issues).

The intention of the Board is to raise funds from institutions and high net worth individuals as soon as practically possible, following the approval of the Board Proposals by Shareholders and the JSFC, in order to implement the Proposed Investing Policy.

In the meantime, as announced on 29 January 2015, the Board of Black Sea has entered into a Loan Agreement whereby Mamferay Holdings has provided the Company with an unsecured loan of up to GBP350,000. GBP100,000 of the Loan has been drawn down by the Company, and the remaining GBP250,000 may be drawn down once the Company has received approval from the JFSC to extend the life of the Company. The Loan will bear an interest rate of 3 months' Euribor plus two point five per cent per annum over the utilised portion of the loan, payable at the end of the term of the Loan. The Loan will be repayable on the earlier of a) 29 January 2016 and b) the date on which the Board determines that the Company has raised sufficient funds for its Proposed Investment Strategy. In the event that the JFSC does not approve the extension of the life of the Company or the Company is unable to raise sufficient funds to cover its working capital requirements, the Loan shall be free of interest and shall be used to fund the costs of winding up the Company, with any surplus being repayable to Mamferay Holdings (who will have no claim against the Company in respect of the balance).

The Company also has the option to convert the Loan and any accrued interest into Participating Shares in the Company at a price per share to be determined by reference to the volume weighted average price for the shares on the five immediately preceding days (such days to be selected by the Board in good faith as close as conveniently possible to the conversion date) on which trading took place on the AIM market of the London Stock Exchange, provided such a conversion would not result in additional financial expenses or further statutory obligations for Mamferay Holdings, including but not limited to an obligation for Mamferay Holdings to make an offer pursuant to the City Code on Takeovers and Mergers.

Taking into account the availability of this Loan and the funds retained by the Company to cover the costs of a solvent liquidation, the Board is of the opinion that the Company has, and will continue to have for at least 12 months from the EGM, sufficient working capital to meet its requirements.

   3.         Amendments to the Current Investing Policy 

It is proposed to change the Current Investing Policy. The Company was originally established as an investing company under AIM Rules for Companies to invest in residential and commercial real estate located in any part of Bulgaria including, but not limited to, real estate located along the Black Sea coastline. In addition, the Company could also invest in collective investment funds whose primary investment objective is property investment in the Balkan region.

However, on 28 June 2012, a resolution was approved by Shareholders to pursue a strategy of asset realisation. The Current Investing Policy is now as follows:

The Group is no longer seeking to make further investments in real estate assets and is managing its portfolio with a view to returning capital to Shareholders.

Any cash held by the Group may only be held on deposit or invested in money-market funds or other near-cash investments.

In accordance with the resolution passed at the annual general meeting held on 28 June 2012, the Shareholders authorised the Directors to pursue a strategy of asset realisation on the best terms and by such means as they consider to be reasonably achievable, with the view to liquidating as much as possible of the assets of the Company by 30 June 2014.

Distributions may be made by way of dividend or a redemption or repurchase of participating shares, at the Directors' discretion.

The following is a summary of the Proposed Investing Policy:

The Board is seeking to create a diverse portfolio of opportunistic and value-added Bulgarian real estate assets. The portfolio may comprise direct holdings of real estate assets, as well as stakes in collective investment vehicles, direct and indirect investments and co-investments in distressed companies holding real estate and real estate assets that need restructuring and further financing, and controlling and non-controlling stakes in real estate companies listed on regulated stock exchanges invested primarily in Bulgaria. The focus will be Bulgaria but exceptionally the Board may look at real estate opportunities and investments in neighbouring countries. The Board will strive to build a portfolio that will maximise value for its Shareholders.

The Board will seek to invest in the following real estate opportunities:

1. Distressed residential projects, primarily in the largest 3-4 cities in Bulgaria, Sofia, Plovdiv, Varna and Burgas, which are close to completion and capable of generating sales revenue within 12 months from the initial investment.

2. Commercial buildings, primarily in Sofia, with opportunities to improve occupancy through active asset management for example renovation, remodeling, remarketing, operational management and optimisation of cost structure.

   3.            Hotels and holiday homes with opportunities to improve operations and cost structure. 

4. Investments in distressed companies and assets that need restructuring and further financing, capable of offering a high growth potential.

The targeted size of each individual investment is anticipated to be in the range 5-20 per cent of the overall funds under management. The Company intends to use gearing levels of up to 70 per cent loan to value when acquiring real estate assets.

Except in the event of a Reverse Takeover (see below), the proposed asset allocation of the respective types of direct and/or indirect real estate investment is:

1. 40 - 60 per cent of funds to be invested in residential projects of a minimum lot size of 50 units;

2. 20 - 40 per cent of funds to be invested in commercial property with a minimum Gross Lettable Area of 5,000 sqm; and

3. 10 - 30 per cent of funds to be invested in business, leisure and apartments, hotels and holiday homes, with a minimum of 50 rooms or units.

Initially, the Board's focus will be searching for companies where there may be a number of opportunities to acquire interests in undervalued properties.

The Company may be both an active and a passive investor depending on the nature of the individual investments. The Board will place no minimum or maximum limit on the length of time that any property/ investment may be held. The Company intends to retain sufficient cash resources for prudent management of its working capital requirements.

The Board will however ensure that any investments meet criteria designed to mitigate risks.

There will be no limit on the number of properties or investments into which the Company may invest, and the Company's financial resources may be invested in a number of propositions or in just one investment, which may be deemed to be a Reverse Takeover under the AIM Rules.

The Board believes that the status of the Company as an investing company will enable it to fund real estate investments or acquisitions using a mixture of cash, equity and/or debt and intend to actively monitor these investments.

Following on from adopting the Proposed Investing Policy, the Company will be required to make an acquisition or acquisitions which constitute a Reverse Takeover or otherwise implement its Proposed Investing Policy by 16 July 2015, being 12 months after the disposal of the last of its assets, failing which the Participating Shares would then be suspended from trading on AIM. If the Proposed Investing Policy has not been implemented within 6 months of the suspension, the admission to trading on AIM of the Participating Shares would be cancelled and the Directors will convene a general meeting of the Shareholders to consider whether to continue seeking investment opportunities or to wind up the Company and distribute any surplus cash back to Shareholders.

   4.         Dis-Application of any Pre-Emption Rights and Authority to Allot Participating Shares 

Following approval of the Board Proposals, the Company will need to increase its cash position to provide it with enough working capital to fulfil its Investing Policy. Subject to investor demand and the passing of the relevant Resolutions, the Company intends to issue new Participating Shares by way of a subscription or placing as soon as practical following conclusion of the Extraordinary General Meeting. There can be no guarantee that any such proposed subscription or placing will be successful. The Board believes that the Company should have maximum flexibility to raise funds by way of an equity subscription.

Resolution 6 seek approval and authority to allot further Participating Shares and to dis-apply any pre-emption rights.

   5.         Amendment to the current Articles 

Subject to Shareholder approval, the Directors intend to amend the definition of Wind-Up Date in the Articles of the Company to 30 October 2021 and to permit Shareholders to defer its winding up following the amended Wind-Up Date (being 31 December 2021). This would essentially extend the life of the Company and allow it to continue to operate as an investment vehicle on AIM, with a revised Investing Policy.

   6.         Appointment of Investment Advisor 

The Board intends to appoint BLD Asset Management as Investment Advisor to the Company after the approval of the Board Proposals, subject to the agreement of the Investment Advisory Agreement with BLD Asset Management on terms acceptable to the Board and to JFSC consent. BLD Asset Management is a subsidiary of AG Capital. As AG Capital is a substantial shareholder in the Company, the Investment Advisory Agreement will be deemed to be a related party transaction under the AIM Rules and therefore the Board intends to consult with the Company's nominated adviser in order to decide if the terms of the Investment Advisory Agreement are fair and reasonable insofar as Shareholders are concerned. Further details on AG Capital and the proposed Investment Advisory Agreement are set out below.

   6.1        Information on AG Capital and BLD Asset Management 

Christo Teodorov Iliev holds 100% of the issued share capital of AG Capital.

The directors of AG Capital are:

Christo Teodorov Iliev;

Dimitar Bonchev Savov;

Sergey Vidolov Koinov;

Georgi Bonchev Pavlov

AG Capital holds 60,814,581 Participating Shares in Black Sea through its wholly owned subsidiary, Mamferay Holdings, representing 28.54 % of the issued share capital of the Company.

BLD Asset Management is 100% owned by AG Capital Management AD, which is aBulgarian joint stock company. AG Capital holds 90% of the issued share capital of AG Capital Management AD and the remaining 10% of the issued share capital is held by Dimitar Savov.

   6.2        Property management experience 

AG Capital is the parent company of BLD Asset Management. AG Capital is a market leader in the real estate sector in Bulgaria, known both locally and internationally as one of the largest Bulgarian real estate business group. The AG Capital Group includes market-leading companies specialized in property management, residential property brokerage; financial services related to real estate including mortgage brokerage, appraisals, mortgage financing; insurances; asset development and management. AG Capital has over 20 years of experience in the real estate business sector, more than 1,700 employees, nation-wide coverage in approximately 210 locations in Bulgaria and an international presence in the UK, Russia, Israel, Serbia, and Macedonia.

The AG Capital Group offers the following services:

   --    preparation of project-related feasibility studies; 
   --    technical and legal due diligence; 
   --    market valuation of real estate properties; 
   --    project development; 
   --    property management services; 
   --    asset management services; 
   --    sales and leasing services / brokerage; 
   --    strategic consulting; 
   --    real estate portfolio management. 

BLD Asset Management, a subsidiary of AG Capital, is the management company of BLD, a real estate investment fund which was admitted to the AIM market of the London Stock Exchange in 2006. BLD raised a total of GBP40 million in 2 tranches (GBP25 million on admission in March 2006 and GBP15 million in February 2007) to meet capital investments according to the provided pipeline. Major shareholders in BLD were CLS Holdings plc, Henderson Global Investors Limited, Laxey Partners Limited and Jupiter Asset Management. The AG Capital Group managed BLD projects with total capitalization of over EUR130 million and sold more than 500 units and developed more than 40,000 sq.m. of office, residential and vacation properties. BLD was withdrawn from AIM on 19 August 2010. BLD is no longer an active fund and is in the process of selling its current assets.

The portfolio of projects managed by the AG Capital Group includes Polygraphia Office Center, Prestige Center, project Kakao, project Sophie, Garden of Eden Panorama, Paradiso Verde 1 and 2, Harmony Hills 1 and 2, July Morning, Paradise Dune, Paradise View, Evridika Hills, DSK distressed assets, Post Bank distressed assets and others.

Realised projects managed by the AG Capital Group include the following:

a. Polygraphia Office Center - Notable, historic building converted into a modern class A office project, TBA 22,000 sq.m., renovated and let at 96% within 1 year of operation, presently at 100% with phase 2 of the project under development;

b. Prestige Center - distressed office project acquired from a bank, TBA 1,900 sq.m., renovated and 80% leased within 8 months of operations;

c. Project Kakao - residential development, TBA 6,100 sq.m. (58 units), developed and 45 units sold since May 2014;

d. Project Sophie - residential development, TBA 6,000 (54 units) under development;

e. Garden of Eden Panorama - distressed seaside holiday homes development acquired from a bank, TBA 8,500 (107 units), redeveloped and 60 units sold since May 2013;

f. Harmony Hills - seaside holiday homes development, TBA 12,000 sq.m. (202 units), developed and sold-out;

g. Sunny Dream - seaside holiday homes development, TBA 3,500 (45 units), developed and sold-out;

h. July Morning - seaside holiday homes development, TBA 4,000 sq.m. (55 units), developed and 37 units sold since end of 2010;

i. Green Life Ski & SPA Resort - winter holiday homes development, TBA 18 000 sq.m. (137 units), off-plan deal, sold-out;

j. Paradise Dune - seaside holiday homes development, TBA 10,000 sq.m. (100 units), off-plan development, sold-out;

k. Paradise View - seaside holiday homes development, TBA 2,500 sq.m. (32 units), off-plan development, sold-out;

l. Evridika Hills - winter holiday homes development, TBA 3,500 sq.m. (37 units), off-plan development, sold-out.

   6.3        Property advisory services 

BLD Asset Management will be responsible for advising on and assisting with the management of the property portfolio of Black Sea. BLD Asset Management will provide the following services:

a. Asset sourcing and acquisition:

   --      Contacting local banks, real estate agencies, real estate investors and developers; 
   --      Performing necessary due diligence of potential projects and documents; 
   --      Negotiating terms and conditions of acquisitions; 
   --      Performing preliminary analysis and indicative valuation; 
   --      Drafting a business plan for project development; 
   --      Financial restructuring prior to acquisition; 
   --      Drafting of necessary documentation and asset acquisition. 

b. Project/Asset development and refurbishment:

-- Performing all necessary steps to organize the renovation, finishing, cleaning or repairs of assets in order to make them attractive to the market;

-- Contacting, negotiating with, and hiring construction and maintenance companies; assisting in finding and supplying all necessary materials at best prices;

   --      Dealing with all necessary documentation and supervising all steps of the process; 

-- Contacting banks and securing necessary financing including negotiating, presentations and indicative valuations, drafting documents, and servicing debts;

   --      Dealing with building permits, utilities, and regulatory issues; 
   --      Organisation of security services and accounting services. 

c. Managing and selling assets:

-- Organising the preparation of all necessary marketing materials including presentations, advertisements, and brochures;

   --      Negotiating and organising the preparation of assets valuations; 

-- Contacting and negotiating with real estate brokers; preparing necessary documentation and supervising fulfilment of commitments;

   --      Directly contacting and negotiation with selected tenants or investors; 

-- Preparing property management plans, optimizing the management process and if needed negotiating with management companies;

-- Organising the necessary accounting services, utilities, and other property management services;

   --      Closing and exiting investments: 
   --      Managing the settlement of outstanding financial obligations; 
   --      Collecting and managing payments; forwarding payments to the Company; 
   --      Starting any necessary legal proceedings against investors or tenants; 
   --      Facilitating transfer of ownership and making changes in the property register; 

-- Pricing last units of residential assets or facilitating the sale of residual assets by estimating necessary discounts;

   --      Dealing with follow up requests and if necessary mediating in dispute resolution. 

d. Obligations

   --      Using due diligence in performing all of the above tasks; 
   --      Renting out or selling the properties; 
   --      Maintaining and managing the assets; 
   --      Keeping good records; 
   --      Maintaining and arranging licenses. 
   6.4        Investment Advisory Agreement 

The proposed fee structure of the Investment Advisory Agreement will be as follows:

1. Advisory Fee of 2% of the raised capital - the Advisory Fee will be calculated at the beginning of every quarter on the basis of the average raised capital in the previous quarter.

2. Carried Interest Fee is planned to be 20% on realised profits up to a 20% IRR and 25% on realised profits above a 20% IIR. A hurdle rate of 8% plus 2% catch up will be applied before Carried Interest Fee calculation. Preferred return (hurdle rate) would be satisfied first, and then the catch up rate before carried interest is distributed to investors and BLD Asset Management.

The Investment Advisory Agreement will be for a period of 3 years. The contract shall be deemed automatically extended with another 3 years at the expiry of the term if not explicitly terminated by the Company.

The Investment Advisory Agreement can be terminated in one of the following ways:

   a.   By mutual consent; 

b. Unilaterally by the Company with 12 months written notice after expiry of three years from the signing the Investment Advisory Agreement; or

c. In case of a failure to fulfill the obligations by one of the parties, the non-defaulting party may terminate the Investment Advisory Agreement in accordance with the applicable law.

Further information on AG Capital and BLD Asset Management can be found at www.agcapital.bg and www.bld-am.com.

   7.         Sale of Participating Shares 

In the event that Resolutions 1 and 2 are not passed and Resolutions 3 -7 are passed, any Shareholder wishing to divest itself of its Participating Shares in the Company following the EGM may do so by notifying Peterhouse Corporate Finance within 15 days of the published results of the EGM. Peterhouse Corporate Finance has agreed to use its reasonable endeavours to arrange the execution of a sale of any Participating Shares held by any existing Shareholder wishing to sell the same to its clients for GBP0.000469 per Participating Share. This sale facility effectively values the whole of the Participating Shares at approximately GBP100,000.

Alternatively, Shareholders are free to retain their Participating Shares or sell them in the market as they see fit.

Any Shareholder wishing to take advantage of the above sale facility should contact Peterhouse Corporate Finance directly on 020 7469 0933 or 020 7469 0936.

   8.         Final Results and AGM 

The Directors expect to be in a position to announce and post the Company's Final Results for the year ended 31 December 2014 and the AGM Notice by end of March 2015.

   9.         Irrevocable undertakings 

Shareholders representing 28.54 per cent of the Current Issued Share Capital have signed irrevocable undertakings to vote against Resolutions 1 to 2 and to vote in favour of Resolutions 3 to 7.

This information is provided by RNS

The company news service from the London Stock Exchange

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