Laurus sells Spanish activities

Laurus N.V. announces that it has reached final agreement, with a company owned by funds managed by CVC Capital Partners (CVC), under which it sold its Spanish operations, comprising of 100% of the share capital of “Grupo El Árbol de Distribución y Supermercados S.A.“ and its subsidiaries and participations (El Arbol). The transaction has been closed on Thursday 17 October, in line with expectations as communicated in our press release of 5 September 2002.

During the last years, the weak performance and continuing losses of the Spanish operations resulted in an increased indebtedness and a continuous deterioration of equity of Laurus. Divesting the Spanish operations is therefore a significant step towards a restructuring of Laurus as a whole, as discussed earlier in the Explanatory and Offering memoranda of 13 June 2002 and 9 July 2002 respectively.

CVC brings a new management team, consisting of various retail sector specialists that will reinforce El ArbolÂ's management.

To strengthen the capital structure of El Arbol the transaction involves a financial restructuring, by capitalising intercompany loans for an amount of EUR 176 million and injecting new cash by both Laurus and CVC. The new funds will among others be used to refinance debt and provide liquidity for the contemplated operational restructuring of El Arbol.

As part of the financial restructuring Laurus provides additional liquidity through loan facilities totalling EUR 58 million and funds for a capital increase of EUR 40 million. With respect of the loans EUR 28 million is medium term and secured by mortgages and EUR 30 million is long term and subordinated, and may be converted into El Arbol equity at CVCÂ's option.

Laurus has drawn in connection with the transaction an amount of EUR 215 million under the Back Up Facility Spain of EUR 340 million. No amounts have been drawn under the Excess Liability Facility, non-recourse to Laurus (see Explanatory Memoranda).

In addition to the impairment of the assets of EUR 180 million as per 31 December 2001, the transaction results in a negative net result into 2002 and consequently lowers the equity of Laurus. At the time of this press release this result is estimated at approximately EUR 75 million.

A possible positive effect related to corporate income tax (loss carry forward) which may result from this transaction, is not considered in the negative equity impact calculation.
Laurus provides CVC with certain representations and warranties, which might in the future result in additional losses for Laurus.

(source: Laurus)

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