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Disposal of Auchan Hypermarket in Pitesti, Romania
NEW EUROPE PROPERTY INVESTMENTS PLC
(Incorporated and registered in the Isle of Man with registered number 001211V)
(Registered as an external company with limited liability under the laws of South Africa,
Registration number 2009/000025/10)
AIM share code: NEPI JSE share code: NEP BVB share code: NEP
ISIN: IM00B23XCH02
(“NEPI” or “the company”)
DISPOSAL OF AUCHAN HYPERMARKET IN PITESTI, ROMANIA
INTRODUCTION
Shareholders are advised that NEPI has, through its subsidiaries NE Property Cooperatief UA ("NEPC") and NEPI
Bucharest One SRL (“NEPI One”) (collectively, "the Sellers"), concluded agreements for the disposal of a
hypermarket (“the Hypermarket” or “the property”) to Auchan Romania SA (“Auchan” or "the Purchaser") ("the
Transaction").
Currently, NEPC and NEPI One jointly own Connect Investment SRL (“Connect”). Connect is the holding company
of the Retail Park Auchan situated in Pitesti, Romania which consists of a commercial center with a total gross lettable
area of approximately 43 100 square meters.
The Hypermarket has a gross lettable area of approximately 18 264 square metres and mainly consists of sales,
storage, administration and office areas, loading and unloading docks adjoining the Hypermarket and includes the
related pro rata quota of the land underneath.
RATIONALE FOR THE TRANSACTION
NEPI considers Auchan’s offer to acquire the Hypermarket to be attractive and that the proceeds from the Transaction
could be reinvested in other higher yielding investments.
SALIENT TERMS OF THE TRANSACTION
The implementation of the Transaction requires the separation of the Hypermarket and related assets and liabilities
from Connect by way of dismembering and transfer, in terms of Romanian law, of the Hypermarket and related assets
and liabilities into a special purpose vehicle (“Newco”), while the common areas of the commercial centre (driveways,
walkways, parking spaces etc.) will continue to be held by Connect. The Purchaser will acquire 100% of the share
capital of Newco.
The effective date of the Transaction is any date on or before 31 March 2013 on which all conditions precedent have
been satisfied or waived and the parties have performed their respective obligations including the payment of all
outstanding debts and amounts and the execution of relevant agreements in order to transfer ownership of the Newco
shares to the Purchaser ("the Closing Date").
The purchase price payable in consideration for the Newco shares will be determined formulaically and will be
approximately EUR28.7 million. The purchase price will be settled in cash and the cash will be used to settle the
portion of the outstanding loans in relation to the Hypermarket.
The agreements for the Transaction contain warranties typical for disposals of this nature.
The Transaction is subject to fulfillment of the following conditions precedent:
- the Purchaser providing a bank guarantee within 10 (ten) business days from the date of signature of the
disposal agreements;
- the Sellers and the Purchaser obtaining any necessary corporate and board approvals within 15 (fifteen)
business days from the date of signature of the disposal agreements;
- the parties agreeing on the terms and manner of management and maintenance of the common area within the
commercial centre by 31 August 2012;
- the Purchaser paying Connect all outstanding debts;
- obtaining written approval from the banks of Connect in relation to the Transaction;
- the Hypermarket remaining in the same physical condition as of the date of signature of the disposal
agreements, except for normal wear and tear;
- finalising the transfer of the Hypermarket to Newco and providing the Purchaser with all the relevant
documents in order to legally transfer the Hypermarket to Newco;
- completing other conditions precedent, if any, which may be required by the banks of Connect;
- executing addendums to agreements to reflect the technical/operational consequences resulting from the transfer
of the Hypermarket;
- the Sellers delivering to the Purchaser a land book excerpt, attesting that the Hypermarket is exclusively owned
by Newco and free of any encumbrances;
- the Sellers, Connect and Newco delivering to the Purchaser a statement confirming that all warranties of the
Sellers and Connect provided are complete, true and accurate in all respects at Closing Date; and
- the Purchaser delivering to the Sellers a statement that all of the warranties provided are true and accurate as of
the Closing Date.
THE PROPERTY
Details of the property including the valuation, effective as at 31 December 2011 attributed to the property by the
Company, are as follows:
Weighted Purchase price
average rental Rentable plus capitalised Valuation
Property per m2 area costs (EUR'
description Region Sector (EUR) m2 (EUR' million) million)
Hypermarket Romania Retail 9.16 18 264 18.6 21.7
The directors of the Company are not independent and are not registered as professional valuers or as professional
associate valuers in terms of the South African Property Valuers Profession Act, No 47 of 2000.
3
UNAUDITED PRO FORMA FINANCIAL EFFECTS
The unaudited pro forma financial effects have been prepared for illustrative purposes only to provide information on
how the Transaction may have impacted on the historical financial results of NEPI for the year ended 31 December
2011. Due to their nature, the unaudited pro forma financial effects may not fairly present NEPI's financial position,
changes in equity, results of operations or cash flows after the Transaction. The unaudited pro forma financial effects
are the responsibility of the directors of NEPI. The unaudited pro forma financial effects have not been reviewed or
reported on by NEPI's auditors or reporting accountants.
The unaudited pro forma financial effects have been prepared in accordance with the accounting policies of NEPI that
were used in the preparation of the audited results for the year ended 31 December 2011.
Change
Before the after the
Transaction After the Transaction
Note 1 Transaction (%)
Basic weighted average earnings per share (EUR cents) 23.86 32.42 35.88
Diluted weighted average earnings per share (EUR cents) 22.28 30.26 35.82
Distributable earnings per share (EUR cents) 24.67 24.38 (1.17)
Headline earnings per share (EUR cents) 20.04 19.70 (1.67)
Diluted headline earnings per share (EUR cents) 18.70 18.39 (1.65)
Net asset value per share (EUR) 2.41 2.48 2.90
Adjusted net asset value per share (EUR) 2.43 2.50 2.88
Net tangible asset value per share (EUR) 2.27 2.34 3.08
Weighted average number of shares in issue 78 659 834 78 659 834 -
Diluted weighted average number of shares in issue 84 264 285 84 264 285 -
Number of shares in issue for net asset value and net tangible asset
value per share purposes 97 569 456 97 569 456 -
Number of shares in issue for adjusted net asset value per share
purposes 102 783 693 102 783 693 -
Notes and assumptions:
1. The amounts set out in the “Before the Transaction” column have been extracted, without adjustment, from the audited financial
statements of the Company for the year ended 31 December 2011.
2. The amounts set out in the “After the Transaction” column reflect the impact of the Transaction on the historical financial results of
NEPI for the year ended 31 December 2011.
3. The Transaction is assumed to be implemented on 1 January 2011 for purposes of the statement of comprehensive income effects and on
31 December 2011 for purposes of the statement of financial position effects.
4. The Hypermarket is assumed to be disposed of to the Purchaser for a consideration of EUR28.7 million which will be settled in cash.
5. The cash proceeds of EUR28.7 million from the disposal of the Hypermarket is assumed to be used by NEPI to settle interest-bearing
borrowings related to the property in full and accordingly, interest on loans of approximately EUR1.5 million, being the historical
finance expense for the year ended 31 December 2011, is assumed to be saved.
6. The disposal of the Hypermarket is assumed to have resulted in a fair value adjustment on disposal of EUR6.9 million. In terms of
applicable laws, no tax will be payable as a result of the Transaction.
7. The Hypermarket earned historical net rental income of EUR1.7 million for the year ended 31 December 2011.
8. The historical property revenue and expenses were extracted from the underlying books and records of Connect which have not been
reviewed or reported on by the Company’s auditors or reporting accountants. However, the directors of NEPI are satisfied with the
quality of the information.
9. Estimated transaction expenses of EUR0.1 million are assumed to be incurred by the Company in respect of the Transaction and have
been expensed.
CATEGORISATION OF THE TRANSACTION
The Transaction has been categorised as a category 2 transaction in terms of the Listings Requirements of the JSE
Limited and is not subject to approval by NEPI’s shareholders.
3 August 2012
For further information please contact:
New Europe Property Investments plc +40 74 432 8882
Martin Slabbert
Nominated Adviser and Broker +44 20 7131 4000
Smith & Williamson Corporate Finance Limited
Azhic Basirov/Siobhan Sergeant
JSE sponsor +27 11 283 0042
Java Capital
Romanian advisor +40 21 222 8731
SSIF Intercapital Invest SA
Razvan Pasol
Date: 03/08/2012 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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