MIG HOLDINGS S.A.
Announcement
The Board of Directors of the company under the name "MARFIN INVESTMENT GROUP HOLDINGS S.A." ("MIG"), pursuant to article 289 of the Stock Exchange Regulation regarding the increase of the share capital by ? 418 million and the raising of approximately euro 5.19 billion and, specifically, in the case of paragraph 4 c concerning acquisitions not determined at the time of the abovementioned share capital increase, wishes to inform investors that it has proceeded with the acquisition of 66.67% of the Serbian chain of commercial real estate "JSC ROBNE KUCE BEOGRAD" ("RKB").
On 29.10.2007, "VERANO MOTORS D.O.O." ("VERANO") was declared the highest bidder at the public tender for the sale of RKB, conducted by the Organization of Privatizations of Serbia, with an offer for euro 360 million. On 28.12.2007, VERANO paid RKB the agreed consideration of euro 360 million and thereby acquired ownership of the entirety of shares in RKB. According to the relevant agreement, the entirety of RKB shares was automatically transferred from VERANO to the company under the name "TAU MOTORS BEOGRAD D.O.O." ("TAU"), owned by 66.67% by "MIG REAL ESTATE SERBIA BV" (a wholly-owned subsidiary of MIG) and by 33.33% by VERANO. The completion of the transfer of RKB shares to TAU is subject to the necessary approvals by the competent Competition Authority of Serbia.
About RKB
RKB has historically been the largest chain of department stores in the former Yugoslavia and one of the leading chains in Europe, owning a significant portfolio of 232,000 sq.m. of real estate in key locations across the largest cities of Serbia and Montenegro. Its portfolio includes the following:
- Thirty two (32) department stores in the largest cities of Belgrade, nine (9) of which are located in the center of Belgrade,
- Three (3) departments stores and (1) logistics center in Montenegro and
- One (1) logistics center and one (1) office building in Belgrade.
RKB was founded in 1966, but since 1997, started facing financial difficulties during the transition of Serbian economy to a free market, resulting in its bankruptcy in 2002. The Organization for Privatizations of Serbia is expected to use part of the proceeds from the sale of RKB for the service of RKB's liabilities. According to a relevant court judgment, any indebtedness to third parties after the acquisition of RKB shall exclusively encumber the Organization for Privatizations of Serbia and not the purchaser.
The real estate assets of RKB are found in prime locations in the largest cities of Serbia and Montenegro, thereby serving a broad range of business activities such as retail shops, telecommunication shops, restaurant-cafes, bank branches etc. Furthermore, the above acquisition will allow the purchaser to exploit RKB's real estate assets without restriction, potentially developing new uses and activities depending on the location and refurbishment plan. In the following months, MIG and VERANO intend to spend around euro 75 million for the refurbishment and reformation of the real estate assets, which is expected to be a key factor in their value enhancement.
About VERANΟ
VERANΟ is part of the Verano Group and is one of the two leading real estate companies in Serbia, with a portfolio of more than 250,000 sq.m. of real estate and considerable experience in the development of department stores.
The participation of MIG in RKB was partly financed through the proceeds of the recent share capital increase of MIG. In particular, MIG's interest in TAU amounts to euro 76.7 million, the interest of VERANO in TAU amounts to euro 38.4 million, while the remaining euro 360 million of the acquisition price was financed through a euro 250 million bank loan.
Valuation
The management of MIG retained the "Investment Bank of Greece S.A." to conduct a valuation of RKB. Moreover, the independent firm King Sturge d.o.o., part of the international independent firm of real estate services King Sturge International Group, conducted a valuation of the investment in RKB on behalf of TAU's management.
The "Investment Bank of Greece S.A." took into consideration but did not rely on the above valuation. It rather opted for conducting an independent valuation of the investment in RKB.
Valuation methods
The above valuation was based on the following methods:
- Discounted cash flows method, on the basis of the business plan of TAU for RKB, with forecasts for the period 2008-2017. The above method calculates the present value of the entirety of RKB's future free cash flows, discounted at the weighted average cost of capital of the business, taking into account current rates of taxation.
- Current market value method of RKB's real estate portfolio, on the basis of expected rents for the first 12 months of full lease of the real estate assets to tenants, as well as on the basis of current yields of comparable commercial real estate in the Serbian market.
METHOD Minimum valuation Maximum valuation
Discounted cash flows euro 548.1 million euro 683.3 million
Current market value euro 607.5 million euro 793.0 million
On the basis of the above, the "Investment Bank of Greece S.A." concluded that the price of euro 360 million in respect of the acquisition of RKB is fair and reasonable and that the valuation methods applied were appropriate for this specific case.
MIG also informs that, further to its announcement of 31.12.2007 regarding the acquisition of RKB, and in accordance with article 289 para. 4c of the Stock Exchange Regulation, the report of the Board of Directors will be posted at its website (www.marfininvestmentgroup.com) and at the website of the Stock Exchange (www.ase.gr).
On 29.10.2007, "VERANO MOTORS D.O.O." ("VERANO") was declared the highest bidder at the public tender for the sale of RKB, conducted by the Organization of Privatizations of Serbia, with an offer for euro 360 million. On 28.12.2007, VERANO paid RKB the agreed consideration of euro 360 million and thereby acquired ownership of the entirety of shares in RKB. According to the relevant agreement, the entirety of RKB shares was automatically transferred from VERANO to the company under the name "TAU MOTORS BEOGRAD D.O.O." ("TAU"), owned by 66.67% by "MIG REAL ESTATE SERBIA BV" (a wholly-owned subsidiary of MIG) and by 33.33% by VERANO. The completion of the transfer of RKB shares to TAU is subject to the necessary approvals by the competent Competition Authority of Serbia.
About RKB
RKB has historically been the largest chain of department stores in the former Yugoslavia and one of the leading chains in Europe, owning a significant portfolio of 232,000 sq.m. of real estate in key locations across the largest cities of Serbia and Montenegro. Its portfolio includes the following:
- Thirty two (32) department stores in the largest cities of Belgrade, nine (9) of which are located in the center of Belgrade,
- Three (3) departments stores and (1) logistics center in Montenegro and
- One (1) logistics center and one (1) office building in Belgrade.
RKB was founded in 1966, but since 1997, started facing financial difficulties during the transition of Serbian economy to a free market, resulting in its bankruptcy in 2002. The Organization for Privatizations of Serbia is expected to use part of the proceeds from the sale of RKB for the service of RKB's liabilities. According to a relevant court judgment, any indebtedness to third parties after the acquisition of RKB shall exclusively encumber the Organization for Privatizations of Serbia and not the purchaser.
The real estate assets of RKB are found in prime locations in the largest cities of Serbia and Montenegro, thereby serving a broad range of business activities such as retail shops, telecommunication shops, restaurant-cafes, bank branches etc. Furthermore, the above acquisition will allow the purchaser to exploit RKB's real estate assets without restriction, potentially developing new uses and activities depending on the location and refurbishment plan. In the following months, MIG and VERANO intend to spend around euro 75 million for the refurbishment and reformation of the real estate assets, which is expected to be a key factor in their value enhancement.
About VERANΟ
VERANΟ is part of the Verano Group and is one of the two leading real estate companies in Serbia, with a portfolio of more than 250,000 sq.m. of real estate and considerable experience in the development of department stores.
The participation of MIG in RKB was partly financed through the proceeds of the recent share capital increase of MIG. In particular, MIG's interest in TAU amounts to euro 76.7 million, the interest of VERANO in TAU amounts to euro 38.4 million, while the remaining euro 360 million of the acquisition price was financed through a euro 250 million bank loan.
Valuation
The management of MIG retained the "Investment Bank of Greece S.A." to conduct a valuation of RKB. Moreover, the independent firm King Sturge d.o.o., part of the international independent firm of real estate services King Sturge International Group, conducted a valuation of the investment in RKB on behalf of TAU's management.
The "Investment Bank of Greece S.A." took into consideration but did not rely on the above valuation. It rather opted for conducting an independent valuation of the investment in RKB.
Valuation methods
The above valuation was based on the following methods:
- Discounted cash flows method, on the basis of the business plan of TAU for RKB, with forecasts for the period 2008-2017. The above method calculates the present value of the entirety of RKB's future free cash flows, discounted at the weighted average cost of capital of the business, taking into account current rates of taxation.
- Current market value method of RKB's real estate portfolio, on the basis of expected rents for the first 12 months of full lease of the real estate assets to tenants, as well as on the basis of current yields of comparable commercial real estate in the Serbian market.
METHOD Minimum valuation Maximum valuation
Discounted cash flows euro 548.1 million euro 683.3 million
Current market value euro 607.5 million euro 793.0 million
On the basis of the above, the "Investment Bank of Greece S.A." concluded that the price of euro 360 million in respect of the acquisition of RKB is fair and reasonable and that the valuation methods applied were appropriate for this specific case.
MIG also informs that, further to its announcement of 31.12.2007 regarding the acquisition of RKB, and in accordance with article 289 para. 4c of the Stock Exchange Regulation, the report of the Board of Directors will be posted at its website (www.marfininvestmentgroup.com) and at the website of the Stock Exchange (www.ase.gr).