AREO Argo Real Est.

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

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Argo Real Est. (LSE:AREO)
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Argo Real Est. (LSE:AREO)
Gráfica de Acción Histórica
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