OFFER ON EXCHANGE / ACQUISITION OF BONDS ISSUED BY RURIC, PROPOSED
AMENDMENTS TO TERMS AND CONDITION
(Thomson Reuters ONE) - As previously announced, Russian Real Estate Investment Company AB(publ) ("Ruric" or the "Company") has worked intensely to find asolution on the Company's long term financing in order to be able topursue the Company's strategy, which includes keeping, developing andrealising the value of the Company's assets. This has, among otherreasons, been done due to the upcoming payment of interest on 16November 2009 in accordance with the Company's outstanding bond loansand the repayment of the bond loans in November 2010.In consideration of this and the negotiations that have taken placewith the major bond holders and some of the Company's majorshareholders, Ruric hereby submits a public offer to the holders ofbonds issued in accordance with the Company's Bond Loan No. 2 andBond Loan No. 3 (together the "Bond Holders" and the "Bond Loans") totransfer all of these bonds to the Company[1] (the "Offer").In view of the Offer, the Company's interim report for the thirdquarter of 2009 will be published in advance on the 29 October 2009.In short, the Offer entitles the Bond Holders to either:(A) exchange each existing bond with nominal amount of SEK 10,000 inaccordance with the Bond Loans ("Existing Bond") for:* new secured bonds that run for five years ("New Bonds"), equivalent to 60 per cent of the Existing Bond's nominal amount and 5.5 percentage unit accrued interest[2] on the Existing Bond;* secured convertibles that run for slightly more than five years ("Convertibles"), equivalent to 40 per cent of the Existing Bond's nominal amount; and* cash payment equivalent to the remaining accrued interest[3] on the Existing Bondhenceforth referred to as the ("Exchange Alternative"),or(B) receive a cash payment of SEK 2,925, including accrued interest,for each Existing Bond according to Bond Loan No. 2 or SEK 3,300,including accrued interest, for each Existing Bond according to BondLoan No. 3 (the "Cash Alternative").The major Bond Holders Alecta Pensionsförsäkring, Proventus, NordeaFonder and the Gadd Group, holding in total Existing Bondscorresponding to approximately 45.2 per cent of the Bond Loans[4](approximately 40,8 per cent of Bond Loan No. 2 and approximately50.4 per cent of Bond Loan No. 3)[5] have, in respect of the ExchangeAlternative, indicated a positive view towards acceptance. TheCompany's major shareholders, ÿhman J:or AB, Cancale Förvaltnings ABand Nils Nilsson, holding in total approximately 21.7 per cent of theoutstanding shares and approximately 61.9 per cent of the outstandingvotes, have undertaken to vote in favor of the board of directors'proposal to authorise the board of directors to issue convertiblesand to amend the articles of association at an extraordinary generalmeeting.The Offer to the Bond Holders are subject to the conditions that areset out on page 7.Further information about the proposed amendments to the terms andconditions of Bond Loan No. 2 and Bond Loan No. 3 is set out on page8.Russian Real Estate Investment Company AB (publ)For further informationNils Nilsson, Chairman of the Board of DirectorsTel +41 22 534 95 42E-mail nils(at)ruric.comCraig Anderson, CEOPhone +7 812 703 35 50 (St. Petersburg)phone +46 8 509 00 100 (Stockholm)email craig(at)ruric.comweb www.ruric.comABOUT RURICRuric's business concept is to acquire, develop, manage, let anddivest real estate in St Petersburg, Russia, with a focus oncommercial premises of the highest quality in the best locations thatcan thereby contribute positively to the business of the tenants. Thecompany has the vision of becoming a leading real estate company incentral St Petersburg.The strategy is to identify real estate with great potential in thecentral parts of St Petersburg, create suitable acquisitionstructures and acquire at the best price. After renovations,commercial premises of the highest class are offered to tenants thatare looking for the best possible premises in the best locations andare willing to pay for it.Ruric's Certified Advisor at First North is Erik PenserBankaktiebolag.[1] The bonds of a nominal amount of SEK 20 million under theCompany's Bond Loan No. 3 that are held by the Company's subsidiaryRussian Real Estate Investment Company Sweden I AB will be"extinguished" and are therefore not included in the Offer.[2] Accrued interest for the period from 16 November 2008 until, andincluding, 16 November 2009.[3] See footnote 2.[4] Based on a total outstanding nominal amount of SEK 831,500,000,i.e. excluding Ruric's own holdings of Existing Bonds.[5] See footnote 4.BACKGROUND AND REASONSSt Petersburg's real estate market and the real estate market inMoscow are the best developed markets in Russia, and since 2000 havecontinually increased in market attractiveness. Ruric is wellpositioned on the market in Saint Petersburg, with attractivemanagement properties in good locations and a project portfolio withsignificant economic potential. On top of this Ruric has a locallyestablished property and project management organisation with a localnetwork of good contacts in both business and public organisations.Since autumn 2008 the real estate and rental markets in St.Petersburg have experienced markedly declining demand, which,combined with expanded supply through project completions, hasresulted in falling rent levels, after several years of continuousrises, and higher vacancies. Real estate prices also declined towardsthe end of 2008 as uncertainty intensified about future economicperformance combined with a sudden lack of liquidity andopportunities for loan financing.In the office rental market the supply of premises increased byapproximately 200,000 square metres in the first half of 2009.Further new additions to office space can be expected in the secondhalf of 2009 and early 2010 as several projects are reachingcompletion. However, in 2010 and 2011 the rate of increase isexpected to decline.The uncertain economic outlook has also affected demand. Tenants arechoosing to wait and see before seeking out new premises,particularly larger ones. Existing tenants are being active innegotiating down current rent levels, obtaining discounts andextending agreements with long contract periods and low rent levels.The average annual increase in rents for A and B class officepremises was 12 per cent during the period 2005 to 2008. In the firsthalf of 2009 rent levels for A class office premises decreased by 21per cent, and for B class office premises the equivalent decline was25 per cent. At the same time, the vacancy rate for A class officepremises had increased to 25 per cent from 10 per cent at the end of2008. For B class office premises the increase has not been asmarked. The vacancy rate for this type of premises was approximately12 per cent at the end of the second calendar quarter 2009, which canbe compared with 8 per cent at the end of 2008. The occupancy ratefor newly completed office complexes is approximately 40-50 per cent.Given St. Petersburg's size and location, Ruric believes there shouldbe an interest in modern, functional premises in the centraldistricts of the city, even in times of greater economic uncertainty.It is in this part of the real estate market that Ruric operates.However, the current exceptional economic situation influencing St.Petersburg's real estate market has affected Ruric to a significantextent. Based on external valuations, the value of Ruric's managementproperty is estimated to have declined by SEK 90 million,corresponding to 25 per cent in the period December 31, 2008 untilJune 30, 2009. In the same period it is estimated that the value ofRuric's project property has declined by SEK 336 million,corresponding to 28 per cent. There is currently a significant gapbetween what potential buyers are prepared to pay for property andwhat potential sellers are prepared to sell at. This is a result ofcontinued great uncertainty about issues such as the level at whichrent reductions will discontinue, as well as the difficulty inborrowing capital and to find attractive financing. It is believedthat this situation will persist for some time, resulting incontinued price pressure. It is likely that this situation will alsolead to several planned projects being postponed, which will have alimiting effect on future new additions of further premises. Givencontinued underlying economic growth in St. Petersburg, this willsuccessively lead to a market in balance. However, the timing of thisis currently highly uncertain.As an alternative to realising capital tied up in property, which wasregarded as value damaging, Ruric conducted a rights issue of newshares with preferential rights for the Company's shareholders inautumn 2008, totalling SEK 107 million, in order to, among otherthings, permit financing of interest payments on outstanding bondloans.As a result of the current exceptional situation, the board of Ruricassesses that the prospects of repaying the two outstanding bondloans maturing in November 2010 are limited. Given current marketconditions, the board believes that a realisation of capital tied upin properties in order to finance the repayment in November 2010would damage Ruric, and destroy value for both bond holders andshareholders.In consideration of the above the board has unanimously decided tosubmit the Offer.[1] The board assesses that Ruric will receive, ifthe Offer is completed, long-term funding to ensure that the Companycan maintain and develop the underlying long-term values assessed toexist in the Company's assets.THE OFFERIn accordance with the Offer, the Bond Holders are offered anexchange alternative and a cash alternative. Each Bond Holder can,when accepting the Offer, choose to accept either the ExchangeAlternative or the Cash Alternative for its entire holding. Nocommission will be charged in connection with the Offer.The Exchange AlternativeFor each Existing Bond with a nominal amount of SEK 10,000 thefollowing is offered:* 50 New Bonds, each with a nominal amount of SEK 131, corresponding to SEK 6, 550 in aggregate[2];* 91 Convertibles, each with a nominal amount of SEK 44 (corresponding to SEK 4,004 in aggregate) and a conversion rate of SEK 43.90 per class B share in the Company[3]; and* cash payment, which for each Existing Bond according to Bond Loan No. 2 amounts to SEK 300 and for each Existing Bond according to Bond Loan No. 3 amounts to SEK 1,050[4].* By accepting the Exchange Alternative the Bond Holders consent to the fact that no interest is paid on 16 November 2009 in accordance with the terms and conditions of the Existing Bonds, and also that the terms and conditions of the Existing Bonds are amended so that they will, in all vital aspects, correspond with the terms and conditions of the New Bonds (with the exception that the Existing Bonds after amendments of the terms and conditions will continue to have an unaltered nominal amount and will not be secured).The Cash AlternativeFor each Existing Bond with a nominal amount of SEK 10,000, a paymentin cash is offered of:* SEK 2,925, including accrued interest for each Existing Bond according to Bond Loan No. 2 equivalent to 29.25 per cent of its nominal amount; and* SEK 3,300, including accrued interest for each Existing Bond according to Bond Loan No. 3 equivalent to 33.00 per cent of its nominal amount.* The Company undertakes to pay up to SEK 35 million in accordance with the Cash Alternative. An acceptance of the Cash Alternative entitles the Bond Holder primarily to receive cash consideration as set out above. However, if the acceptance of the Cash Alternative aggregates to a value that exceeds SEK 35 million the Bond Holder will be entitled to a cash consideration reduced pro rata[5] for each Bond holder having accepted the Cash Alternative, as well as a consideration in accordance with the Exchange Alternative to the extent cash consideration is not received (i.e. New Bonds, Convertibles and cash consideration in accordance whit the terms and conditions of the Exchange Alternative). If the consideration in the Exchange Alternative includes a fraction of a New Bond or of a Convertible, the number of New Bonds and Convertibles received will be rounded downwards to the next integer and the fraction of a New Bond or a Convertible will be paid in cash. However, the total amount of the Cash Alternative may, under the circumstances set out in the section "Financing" below, exceed SEK 35 million.* By accepting the Cash Alternative the Bond Holders consent to the fact that no interest is paid on 16 November 2009 in accordance with the terms and conditions of the Existing Bonds, and also that the terms and conditions of the Existing Bonds are amended so that they will, in all vital aspects, correspond with the terms and conditions of the New Bonds (with the exception that the Existing Bonds will continue to have an unaltered nominal amount and will not be secured).Essential Terms and Conditions for the New Bond Loans* The total amount of the bond loan (the "New Bond Loan" or "Bond Loan No. 4") will at the most amount to SEK 797,396,345[6].* Annual interest of 10 per cent to be paid in cash, or if the Company so decides, an annual interest of 13 per cent in total (3 per cent cash and 10 per cent in the form of New Bonds).* A term up to and including 16 November 2014, with the option for the Company to wholly or partially repay the loan prematurely.* The Company undertakes not to, without approval from the holders of the New Bonds, take up additional loans with better or the same right to the security that will secure the Company's undertakings according to the New Bond Loan, nor take up additional loans with the same or higher priority as the New Bond Loan, with the exception of an additional bond loan with an amount of up to SEK 25 million with a term of up to three years and that runs with up to 15 per cent interest ("Bond Loan No. 5") that may be taken for the purpose of partially financing the Cash Alternative or enable potential payments exceeding SEK 35 million in accordance with the Cash Alternative.* If the Company disposes of certain real estates or shares in certain companies directly or indirectly owning real estates, the Company undertakes to wholly or partially use the proceeds to primarily repay Bond Loan No. 5 and secondarily repay the New Bond Loan, and under certain circumstances reinvest parts of the proceeds in certain real estates, whereby pledged securities in the disposed assets shall be released.* The Company undertakes to ensure that, for as long as the New Bond Loan is not fully repaid, the outstanding nominal amount of the New Bond Loan never exceeds 60 per cent of the Company's total assets, as well as not distribute any dividend or carry out any other form of value transfers to the Company's shareholders.* The New Bond Loan will be secured.The complete terms and conditions of the New Bond Loan will be setout in the prospectus which will be distributed to the Bond Holdersin connection with the commencement of the acceptance period.Essential Terms and Conditions for the Convertible Loan* The total amount of the convertible loan (the "Convertible Loan") will at the most amount to SEK 332,932,600.* The Convertible Loan runs without interest and matures on 16 December 2014.* Holders of Convertibles can at any time until and including 30 November 2014 request conversion into class B shares of the Company at a conversion rate of SEK 43.90 per share.* The terms and conditions of the Convertibles entitle the holders the same right as the Company's shareholders to participate in rights issues in the Company and in other aspects include customary recalculation clauses.* The Company undertakes not to, without the approval from the holders of the Convertibles, take up additional loans with better or the same right to the security that will secure the Company's undertakings according to the Convertible Loan, nor take up additional loans with the same or higher priority as the Convertible Loan, except for Bond Loan No. 5.* If the Company disposes of certain real estates or shares in certain companies directly or indirectly owning real estates, the Company undertakes to wholly or partially use the proceeds to primarily repay Bond Loan No. 5 and secondarily repay the New Bond Loan and under certain circumstances reinvest parts of the proceeds in certain real estates, whereby pledged securities in the disposed assets shall be released.* The Convertible Loan will be secured.The complete terms and conditions of the Convertible Loan will be setout in the prospectus, which will be distributed to the Bond Holdersin connection with the commencement of the acceptance period.FinancingThe Offer will be financed through the issue of the New Bonds andConvertibles together with the Company's cash balance which will beincreased by approximately SEK 17,5 million by proceeds from the saleof Grifon that will be received on 2 November 2009. In addition,according to the terms and conditions of the New Bond Loan and theConvertible Loan, the Company has the right to take up Bond Loan No.5 provided that such loan is taken for the purpose of partiallyfinancing the Cash Alternative or enable potential payments exceedingSEK 35 million in accordance with the Cash Alternative. The Companymay also up to an amount corresponding to the New Bond Loan's initialamount, i.e. excluding interest paid in the form of New Bonds, divestin the market New Bonds that will not be transferred to those whoaccept the Offer, provided that the proceeds are used to financepotential payments exceeding SEK 35 million in accordance with theCash Alternative.SecurityAll of the Company's undertakings pursuant to the New Bond Loan andthe Convertible Loan will be secured through a pledge over the sharesof the Swedish subsidiaries that indirectly own the real estatesGustaf, Oscar and Magnus, 50 per cent of the real estate Fontanka 57and 65 per cent of the real estate Apraksin together with the calloption that entitles its holder to acquire the remaining 35 per centof the real estate Apraksin. The above mentioned assets shallprimarily be pledged for the benefit of holders of bonds in Bond LoanNo. 5, secondarily for the benefit of the holders of New Bonds, andthirdly for the benefit of the holders of Convertibles.CONDITIONS OF THE OFFERThe Offer is conditional upon:1. the Offer being accepted by Bond Holders to an extentcorresponding to 95 per cent of the total outstanding nominal amountaccording to the Bond Loans[7];2. that the extraordinary general meeting of the Company to beheld on 5 November 2009, in accordance with the board of directors'proposal, resolves to authorise the board of directors to resolve toissue Convertibles within the scope of the Convertible Loan; and3. that the Offer is not wholly or partially rendered impossibleor made severely difficult to carry out by legislation or any otherregulation, court ruling, official ruling or correspondingcircumstance, that exists or can be reasonably expected to exist,which is beyond Ruric's control and which Ruric could not reasonablybe expected to predict at the time of the announcement of the Offer.The Company reserves the right to withdraw the Offer in the eventthat it becomes clear that any of the conditions above are notfulfilled or cannot be fulfilled. However, with regard to conditionNo. 3 such withdrawal will only be made provided that the nonfulfilment of such condition is of material importance to theCompany's acquisition of the Existing Bonds.The Company reserves the right to waive, in whole or in part,condition No. 1 and condition No. 3 above.ACCEPTANCE PERIODThe acceptance period of the offer begins on 23 October 2009. TheOffer can be accepted at the latest at 17.00 CET on 5 November 2009.The Company reserves the right to extend the acceptance period of theOffer and to postpone payment of the consideration in the Offer. Ifthe acceptance period is extended the Bond Holders that have acceptedthe Offer have the right to withdraw their acceptances during theextended acceptance period.MARKET QUOTATION OF NEW BONDS AND CONVERTIBLESMarket quotation of the New Bonds and the Convertibles will takeplace as soon as possible after completion of the Offer.INDICATIVE TIMETABLE[8]8 October 2009 Publication ofnotice convening an extraordinary general meeting of Ruric22 October 2009 Publication ofprospectus23 October- 5 November 2009 Acceptance period ofthe Offer5 November 2009 Extraordinary general meeting of Ruric9 November 2009 Announcement ofthe outcome of the Offer17 November 2009 Settlement of theconsideration of the OfferAPPLICABLE LAW, ETC.Disputes concerning the Offer will be settled by a Swedish courtexclusively by the application of Swedish law, whereby the firstinstance will be Stockholm district court.This press release neither has nor will be, directly or indirectly,distributed or announced in the United States, Australia, Canada,Japan, New Zealand or South Africa. The Offer is not submitted to(and acceptance will not be permitted from) persons in thesecountries or persons in any other country where participation wouldrequire additional documentation, registration or measures other thanthose pursuant to Swedish law.This press release has been made public in Swedish and English. Inthe event of a conflict between the English and the Swedish languageversions, the Swedish language version shall prevail.AMENDMENTS TO THE CONDITIONS OF EXISTING BONDSDuring the acceptance period of the Offer, the Company will ask theBond Holders whether they consent to or dispute certain amendments tothe conditions of Bond Loan No. 2 and Bond Loan No. 3, conditional onthe completion of the Offer, in order for the conditions tocorrespond, in all vital aspects, with the terms and conditions ofthe New Bonds (with the exception that the Existing Bonds willcontinue to have an unaltered nominal amount and will not besecured). According to the conditions of Bond Loan No. 2 theamendments require consent from creditors holding at least 80 percent of the outstanding loan amount. However, amendments regardingpostponement of the redemption day and payment of interest requirethe consent of all creditors. According to the conditions of BondLoan No. 3 consent from creditors holding at least two-thirds of theoutstanding loan amount is required, except for amendments regardingthe interest rate, interest amount or postponement of the redemptionday, which require the consent of creditors holding at leastthree-fourths of the outstanding loan amount. Further informationabout the proposed amendments to the terms and conditions will be setout in the prospectus.AMENDMENTS TO THE ARTICLES OF ASSOCIATIONBased on the negotiations preceding the Offer, the board of directorshas resolved to propose that the Company's general meeting makes adecision, conditional upon the Offer being completed, on certainamendments to the Company's articles of association. According to theproposed amendments the number of votes per class A share will bereduced from 10 to 4 votes per share and a resolution to issueshares, warrants or convertibles with deviation from theshareholders' preferential rights will require a majority of at leastthree quarters of the votes cast as well as the shares represented atthe meeting.STATEMENTS FROM MAJOR SHAREHOLDERS AND BOND HOLDERSThe major Bond Holders Alecta Pensionsförsäkring, Proventus, NordeaFonder and the Gadd Group, holding in total Existing Bondscorresponding to approximately 45.2 per cent of the Bond Loans[9](approximately 40,8 per cent of Bond Loan No. 2 and approximately50.4 per cent of Bond Loan No. 3)[10] have, in respect of theExchange Alternative, indicated a positive view towards acceptance.The Company's major shareholders, ÿhman J:or AB, Cancale FörvaltningsAB and Nils Nilsson, holding in total approximately 21.7 per cent ofthe outstanding shares and approximately 61.9 per cent of theoutstanding votes, have undertaken to vote in favour of the board ofdirectors' proposal to authorise the board of directors to issueconvertibles and to amend the articles of association at anextraordinary general meeting. on 5 November 2009.ADVISORSHQ Bank is the financial advisor and Mannheimer Swartling AdvokatbyråAB is the legal advisor to Ruric in connection with the Offer.[1] The board members Tom Dinkelspiel and Harald Kjessler have notparticipated in the board's decision regarding the Offer due toconflict of interest.[2] Equivalent to 60 per cent of the Existing Bond's nominal amountand 5.5 percentage units accrued interest on the Existing Bond duringthe period 16 November 2008 - 16 November 2009.[3] Equivalent to slightly more than 40 per cent of the ExistingBonds' nominal amount.[4] Equivalent to the remaining accrued interest of 3.0 or 10.5percentage units respectively on the Existing Bond during the period16 November 2008 - 16 November 2009.[5] Pro rata-reduction will be made in proportion to the total amountof the Bond Loans held by each Bond Holder for which the CashAlternative is accepted.[6] Including a loan amount of SEK 544,632,500 based on fullacceptance of the Exchange Alternative, and a loan amount of SEK252,763,845 based on full exercise of the Company's right to payinterest in kind, in the form of New Bonds.[7] Based on a total outstanding nominal amount of SEK 831,500,000,i.e. excluding Ruric's own holdings of Existing Bonds.[8] Provided that the board of directors do not resolve to extend theacceptance period.[9] See footnote 12.[10] See footnote 12.http://hugin.info/141656/R/1345844/323161.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 06.10.2009 - 08:59 Uhr
Sprache: Deutsch
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"OFFER ON EXCHANGE / ACQUISITION OF BONDS ISSUED BY RURIC, PROPOSED
AMENDMENTS TO TERMS AND CONDITION"
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