Atrium European Real Estate Limited ("Atrium" or the "Company") (ATX: ATR), one of the leading real estate companies focused on shopping center investment management and development in Central and Eastern Europe, announces that it has agreed the terms of a new equity fund raising and related arrangements with Citi Property Investors and its investors ("CPI") and Gazit-Globe Limited ("Gazit" and, together, the "Investors"). The new agreement has been approved by a committee of the Company's independent directors, chaired by Professor Peter Linneman and advised by Kempen & Co.
This equity fund raising and related arrangements will raise EUR 72.1 million of new equity, reduce the Company's indebtedness by at least 103 million in principal amount and significantly reduce the equity overhang of the outstanding warrants to subscribe for the Company's shares from 30 million to approximately five million. The private placement and other arrangements will replace the 300 million rights issue that was proposed to follow the 500 million investment in the Company made by the Investors in August 2008 and due to be completed by the end of January 2009.
The terms of the new equity fund raising and related arrangements have been agreed against a backdrop of a number of factors, including:
· The fact that the Company's current and recent share price makes it unlikely that the certificate holders would subscribe to the proposed rights issue at 7 per share, which would result in the Investors subscribing to the entire issue and causing considerable dilution to existing certificate holders.
· The letter the Company recently received from the Austrian Takeover Commission ("ATC") regarding its proposed investigation into the application of the Austrian Takeover Act to the Company during the period of its management by Meinl European Real Estate Limited. This created an uncertainty that in fully subscribing a EUR 300 million rights issue under their backstop commitment, the Investors might have been required to make a mandatory bid for the Company, which was never the intended result.
· Following an assessment of the Company's development pipeline, Atrium's management believes that the Company has sufficient cash to cover its current requirements.
Details of the new equity fund raising and related arrangements are as follows:
· The Company will issue 10,300,000 new ordinary shares in aggregate at a price of EUR 7 per share. CPI will acquire 4,738,000 shares and Gazit will acquire 5,562,000 shares with the subscription amount being paid at the option of each Investor either in cash or by the transfer to the Company of convertible bonds issued to the Investors by the Company on August 1, 2008 in a principal amount equal to its respective subscription amount.
· The Investors will deliver 25,066,667 existing warrants to subscribe for ordinary shares (out of a total of 30 million such warrants issued to the Investors on August 1, 2008) to the Company. They will be cancelled for nil consideration, removing the potential dilutive effect of those warrants. No additional warrants will be issued to the Investors in relation to their subscription for 10,300,000 new ordinary shares.
· Conditional on closing of the subscription for the new shares by the Investors, the Company will acquire from Gazit around EUR 103million in principal amount of the Company's 2006 listed medium term notes (ISIN XS0263871328). The notes have been acquired by Gazit in market purchases over the past year and prior to the Company's buyback programme at a variety of prices and shall be acquired by the Company for a cash amount equal to the aggregate of the prices paid for them in the open market (including dealing costs) by Gazit (which in aggregate is EUR 77.26 million) plus accrued interest on the notes to the date of purchase by the Company.
· The Investors have deposited certain of the Company's debt securities with the Company as security in respect of their obligation to subscribe for the new shares. The Investors' securit