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Meinl European Land Limited

euro adhoc: Meinl European Land Ltd.
Mergers - Acquisitions - Takeovers / MEINL EUROPEAN LAND LIMITED RESTRUCTURING AND EUR800 MILLION INVESTMENT BY CPI/GAZIT HOLDINGS LIMITED

  Disclosure announcement transmitted by euro adhoc. The issuer is responsible
  for the content of this announcement.
Company Information
20.03.2008
St. Helier, Jersey, 20 March 2008. In September 2007, the Board of 
Directors of Meinl European Land Limited ("MEL" or the "Company"), 
the central and eastern European focused property owner and 
developer, began the process of a strategic review, the purpose of 
which was to identify and implement improvements to the Company´s 
management, corporate governance and reporting arrangements and 
processes, as well as a review of the Company´s capital structure and
financing.
As a result of this process, which involved the examination of third 
party proposals and other alternatives, MEL and CPI/Gazit Holdings 
Limited ("CPI/Gazit"), a joint venture between Gazit-Globe Ltd 
("Gazit"), a multinational real estate investment company listed on 
the Tel Aviv Stock Exchange (TASE:GLOB), and CPI Capital Partners 
Europe LP (and its parallel funds), a real estate fund advised by 
Citi Property Investors, a business unit of Citibank International 
plc ("CPI") today announce that they have signed an agreement by 
which CPI/Gazit will make a strategic investment of up to EUR800 
million in the Company. In addition, a transformation of MEL´s 
governance and management structure will take place.
The Company has been engaged in discussions with strategic investors 
since the beginning of 2007. The signed agreement with CPI/Gazit 
entails a significant restructuring and repositioning of the Company 
enabling it to internalise management, to adopt international best 
practice corporate governance arrangements, and focus on building out
its development pipeline. In the face of market illiquidity and 
increased volatility in international debt and equity markets, the 
funding flexibility and strengthened balance sheet provided by this 
cash infusion will allow the Company to pursue growth opportunities 
that would not otherwise be available.
Highlights of the transaction are as follows:
  • EUR800 million of underwritten new investment in MEL comprising a subscription for EUR500 million of convertible securities and in connection with a capital increase a EUR300 million rights issue to MEL certificate holders, which will be underwritten by CPI/Gazit.
  • The management of MEL will be internalised through the termination of the Meinl European Real Estate ("MERE") management contract (with a one year orderly handover) and the recruitment of a new executive team. All other contractual and operational ties with Meinl Bank and its affiliates will be severed. The internalisation of the Company´s management will align MEL-investor and management interests.
  • Gazit and CPI will receive board representation and the board will be reconstituted with a majority of independent directors. The board will comprise a number of well respected international real estate experts and be chaired by Chaim Katzman, the current chairman of Gazit-Globe.
  • Simplification of MEL´s ownership structure - upon closing, all partly paid shares in the Company and the shares underlying the repurchased certificates will be cancelled.
  • CPI/Gazit´s commitment to make its cash injection is not subject to any financing contingency. It will be funded from both parties´ internal cash resources and committed lines of credit of Gazit and funds of CPI Capital Partners Europe LP.
  • The transaction is subject to regulatory and MEL-investor approval and receipt of MEL´s 2007 audited financial statements, as well as other customary conditions.
In addition:
  • This strategic partnership will allow the Company and its certificate holders to benefit from Gazit´s and CPI´s financial and operating strength and public market corporate expertise. Gazit has 20 years´ experience of developing, owning and managing shopping centres across the world.
  • In line with industry best practice and to reflect the value placed on the MEL's operational management and employees, a reward package will be put in place to incentivise staff and ensure that project profitability is the key driver of all efforts.
  • The Company will endeavour to regain its investment grade rating as soon as possible.
Commenting on the deal, Georg Kucian, Chairman of MEL, said: "The 
proposed transaction represents a very positive outcome for 
certificate holders.  The introduction of new capital will enable MEL
to accelerate its expansion in Eastern Europe, while the adoption of 
strong corporate governance measures and management restructuring 
will help regenerate confidence in the Company. We are pleased to 
have Gazit and CPI as investors in MEL and believe they will be able 
to make a material contribution to the continuing development of the 
Company."
Commenting on the deal, Chaim Katzman, chairman of Gazit-Globe Ltd, 
said: "We believe MEL has enormous potential to deliver investor 
value, which the Company has been unable to capitalise upon.  It has 
a portfolio of 160 high quality assets diversified across 11 
countries, offering considerable mid to long term growth potential, 
particularly in the rationalisation, value maximisation and 
completion of the Company´s development pipeline.  The capital 
injection we are proposing with CPI offers certificate holders an 
opportunity to benefit from that potential and this deal allows the 
Company to take control of its management base which will serve to 
enhance the portfolio. It means we can start working towards a 
brighter future for the benefit of all investors.
"Our initial priorities are to create predictable and sustainable 
cash flows from the underlying assets, as well as setting out a 
steady growth profile through accretive developments and 
acquisitions.  We are also committed to establishing a strong and 
transparent relationship with the investment community and to 
incentivising and rewarding our most valuable asset - our staff.
"CPI is Citi´s global real estate investment platform and as our 
partner, will enhance financial rigour and bring reputational 
integrity to the governance of the Company. We embrace CPI´s 
operational contribution given its specialist knowledge and 
experience in investing in real estate and entity level platforms in 
mature and emerging markets."
Roger Orf, head of CPI Europe added: "The transaction we are 
proposing will allow Meinl European Land to focus on the existing 
portfolio and future development of its land bank.  The capital 
injection will have an extremely positive effect on the Company´s 
balance sheet and, ultimately, the credit rating.  It provides the 
Company with the ability to self finance and will improve the terms 
on which it can source external finance in these difficult times, all
of which will help re-establish its position as a leading property 
owner in Central and Eastern Europe.
"We believe that Gazit brings to the transaction an outstanding team 
of highly qualified and experienced professionals who understand how 
to manage and develop retail assets around the world and importantly 
have significant experience in managing listed vehicles to the 
highest fiduciary standards.  We look forward to a long and 
productive relationship with Chaim and his team and the various MEL 
constituencies.
Financial details of the transaction
The EUR800 million underwritten investment will comprise the 
following elements:
  • The Company will issue EUR500 million Subordinated Convertible Debt Securities (the "Convertible Securities") to CPI/Gazit with the following principal terms: - Maturity of seven years - Annual cash coupon of 10.75% - At the option of CPI/Gazit, the Convertible Securities are convertible into MEL certificates at a price of EUR9.00 per certificate. These are subject to standard anti-dilution provisions - MEL can force conversion at any time following 36 months after their issue date if MEL certificates trade for 60 consecutive days at a price that is greater than 135% of the conversion price - CPI/Gazit can force MEL to redeem the Convertible Securities at any time after the later of the date of completion of MEL´s medium term note programme and the five year anniversary of the date of issue of the Convertible Securities.
  • CPI/Gazit will in connection with a capital increase underwrite a EUR300 million rights issue of newly issued MEL certificates according to the following principal terms: - The holder of every 29.57 MEL certificates will be eligible to subscribe for six newly issued MEL certificates at an issuance price of EUR7 per certificate and two warrants for every six certificates for no additional consideration. - CPI/Gazit has the option to subscribe for up to EUR200 million of additional certificates at a price of EUR7, and one additional warrant for every 6 optional certificates for no additional consideration. The EUR200 million option is reduced by the value of any certificates taken up under the rights issue pursuant to the underwriting obligation. This option will expire six months following completion of the rights issue. - CPI/Gazit will fully underwrite the EUR300 million rights issue - CPI/Gazit will receive 30 million warrants. - All warrants have an exercise price of EUR7 and will expire four years following closing of the Transaction. - The rights issue will be conducted within six months following the approval of the transaction by MEL certificate holders.
Details relating to the termination of the contracts with MERE and MB
MERE and MB affiliates have various contracts with MEL, terminable on
notice periods of up to six years.
To terminate these contracts, and for MERE and MB to enter into a 
three year non-compete and to procure 12 months of transitional 
consultancy services, MEL will pay a total consideration of EUR280 
million, of which EUR160 million will be in cash,  EUR80 million in 
convertible securities and EUR40 million in MEL certificates. As part
of this agreement MB is required to vote in proxy with CPI/Gazit.
The convertible securities and MEL certificates will be issued at the
same price and upon the same terms and conditions as the rights issue
and convertible securities but they will not be entitled to any 
warrants.  A portion of this amount is subject to a staggered three 
year lock-up to ensure that there is an orderly management transition
and thereby assist in providing the best platform for the future 
growth of the Company.  Some of the securities will be subject to 
restrictions on transfer or disposal.
Following completion of the transaction, MEL will adopt a new name 
that has yet to be selected.
Improvement in governance
Upon Closing, the existing Directors of MEL will resign and a new 
Board of Directors will be appointed to include a majority of 
Independent Directors as defined under New York Stock Exchange rules 
and to continue to comply with Jersey regulatory requirements.
The new Board of Directors will consist of eight directors. Subject 
to certain minimum total investment conditions, CPI/Gazit will have 
the right to name up to four members, including the chairman.
The Company is pleased to announce that a number of world class real 
estate experts have already agreed to join the board of directors 
upon closing. These include Professor Peter Linneman, the principal 
of Linneman Associates; Albert Sussman Professor of Real Estate, 
Finance, and Public Policy at the Wharton School of Business, 
University of Pennsylvania; and Thom Wernink, Chairman of Citycon and
a non-executive director of a number of Continental European-based 
property and investment companies including Segro plc and a former 
chairman of EPRA.
The appointment of a full time chief executive officer, chief 
financial officer and head of acquisitions will be announced in due 
course, once the transaction has closed.
Conditions to closing and timetable
The transaction is subject to a number of conditions including:
-       The obtaining of certain MEL-investor approvals
-       Receipt of MEL´s 2007 financial year audited financial statements
-       Compliance with certain minimum balance sheet covenants
-       No event occurring which would cause a material adverse effect for MEL
-       Cancellation of MEL´s partly paid shares and certificates controlled by
MEL
-       Certain other conditions that are standard for a transaction of this
nature.
MEL is committed to consummating a transaction as expeditiously as 
possible and believes that the transaction can be closed in the 
second quarter of 2008.
An explanatory circular will be sent to certificate holders as soon 
as practicable in connection with the shareholders´ meeting.
MEL, MERE and MB have entered into customary exclusivity arrangements
with CPI/Gazit.
Citi and Deutsche Bank acted as joint advisor for CPI/Gazit; the 
Company was advised by Merrill Lynch. Skadden, Arps, Slate, Meagher &
Flom (UK) LLP were legal counsel to CPI/Gazit; Linklaters LLP was 
legal counsel of CPI and Freshfields Bruckhaus Deringer acted as 
legal counsel to the Company. Meinl Bank was advised by Lazard.
Notes to editors:
About Gazit-Globe Ltd Gazit is a leading multinational real estate 
investment company with in excess of EUR8 billion of properties under
control in the United States, Canada, Europe, Israel and Brazil. 
Gazit and its public subsidiaries are corporate governance leaders in
their markets and are governed by world class Boards of Directors. 
Gazit actively pursues growth opportunities, both organically and 
through strategic and accretive acquisitions.
About Citi Property Investors CPI is a global real estate investment 
manager with offices in major financial centers and with more than 
$12.9 billion in assets under management as of February 1, 2008. CPI 
employs more than 125 real estate professionals and its senior 
leaders have an average of more than 20 years of commercial real 
estate experience. CPI is the real estate investment center of Citi 
Alternative Investments which as of December 31, 2007 had EUR59.2 
billion of un-levered assets under management.
About Meinl European Land MEL is a real estate investment and 
development company whose primary focus is on retail assets in 
central and eastern Europe. At 30 September 2007 it had 160 operating
investment properties with a market value of approximately EUR1.8 
billion and 34 committed development projects with an expected 
investment value of EUR3.4 billion. In addition, it has established a
land bank of over 1.5 million sqm.  The Company has been listed on 
the Vienna Stock Exchange since 2002and is currently capitalised at 
EUR1.5 billion.
end of announcement                               euro adhoc

Further inquiry note:

On behalf of Meinl Europe Land:

London
Citigate Dewe Rogerson
Michael Berkeley
Sarah Gestetner
Sally Marshak
+44 (0)20 7638 9571

Austria
Trimedia
Bernhard Hudik
+43-676-84244381
+43-1-5244300

Germany
Citigate Dewe Rogerson
Alexander H. Engelhardt
Eva Pratsch
+49 (0)69 90 500 200

On behalf of Gazit-Globe Ltd and Citi Property Investors:

London
Financial Dynamics
Stephanie Highett
Richard Sunderland
+44 (0)20 7831 3113
Richard.sunderland@fd.com

Austria
Dr. Viktor Bauer PR GmbH Dr Viktor Bauer
Mag. Anita Köninger
+43 (0)1 320 95 45 17

Germany
AB Financial Dynamics
Ivo Lingnau
+49 (0)69 920 37133

Branche: Real Estate
ISIN: AT0000660659
WKN: 066065
Index: Prime.market
Börsen: Wiener Börse AG / official market

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