Homburg Invest Inc. (HII) has announced that HII has sold its 50% interest in Homburg SNS Property Finance Limited Partnership to Resolution Real Estate Limited (RRE), for CA $12.4 million (approx. 8.65 million) in promissory notes. The sale removes approximately CA $60 million in long-term debt and other liabilities from HII balance sheet.
The transaction results in three Canadian properties and associated liabilities being transferred to RRE, a newly created company incorporated under the laws of the Province of Nova Scotia, Canada. RRE is wholly owned by private companies controlled by HII Chairman and Chief Executive Officer, Richard Homburg.
The final sale price of the partnership interest is subject to independent appraisal and subsequent price adjustments (should the independent appraisal so determine) to ensure that Homburg Invest and its shareholders receive full fair market value for the properties. To ensure the interests of all shareholders are satisfied by the transaction, the sale and final price are subject to the overview and approval of an independent committee of the Board of Directors of HII.
"This sale fits perfectly within the context of our strategy of creating value by spinning off properties into independent entities. By selling its interest in the joint venture to a private company, HII is able to monetize the current value of the properties, strengthen the Company's balance sheet and increase our financial capacity," said Richard Stolle, President and Chief Operating Officer of Homburg Invest.
"The properties in question are non income-producing development properties that necessitate, for the most part, a long-term investment horizon and additional financing, conditions which can more easily be met by a privately held company."