Sale of AVTO Union

RNS Number : 9875Q

Equest Investments Balkans Ltd

22 April 2009

 



22 April 2009

EQUEST INVESTMENTS BALKANS LIMITED

SALE OF SHAREHOLDING IN AVTO UNION HOLDING LIMITED

In its pre close trading update issued on 31 March 2009, Equest Investments Balkans Limited ('EIB' or the 'Company') noted that as a result of the economic climate, the Bulgarian car market is experiencing a very significant drop in new car demand which has been exacerbated by the limited supply of available leasing financing in the market. It also announced that Avto Union AD, its Bulgarian wholesaler and distributor of automotive products and services, was in discussions with its lending bank to restructure the EUR 16 million loan (including overdue interest payments) related to the construction of the Avto Union Center. This facility is guaranteed by Avto Union and its operating companies.

In the light of these adverse developments in the market and as part of EIB's non core asset disposal program, EIB has re-evaluated its position in regards to its investment in Avto Union and today announces that it has entered into an agreement for the sale of its wholly owned subsidiary, Avto Union Holding Limited, to Eurohold Automotive Group (Eurohold') for Euro 8 million in cash. Avto Union Holding Limited owns an 80% shareholding in Avto Union AD.  

Eurohold, the automotive subsidiary of Eurohold Bulgaria Inc which is a publicly listed holding company on the Bulgarian Stock Exchange, controls the other 20% of Avto Union AD.

Completion is conditional upon receipt of the necessary regulatory approval for the transaction. Consideration will be payable, in two instalments, namely Euro 5.2 million upon receipt of the necessary regulatory approval and Euro 2.0 million after the orderly transfer of operations or latest 15 December 2009. Eurohold will make an initial payment of Euro 0.8 million to EIB, which will be used by EIB to settle the current outstanding obligations of Avto Union AD.   Eurohold will also assume the debt facilities in Avto Union AD referred to above. 

Avto Union AD is a Bulgarian wholesaler and distributor of automotive products and services and sells the Fiat, Lancia, Alfa Romeo, Maserati, Mazda, Opel and Chevrolet brands. It also sells Piaggio, Vespa and Gilera motorbikes, has the Avis Rent-a-Car franchise and distributes Castrol and BP lubricants. Avto Union AD also owns the Avto Union Center. 

Unaudited sales of Avto Union for the 12 month ended 31 December 2008 were Euro 70.5 million and loss before taxation for the period was Euro 1.1 million. The unaudited net assets of Avto Union as at 31 December 2008 were Euro 9.1 million. (Source: Unaudited EIB Group Management Accounts). The fair value of Avto Union Group in the balance sheet of EIB as at 30 June 2008 was Euros 47.9 million. 

EIB will use the net proceeds to help finance other businesses in its portfolio.

Commenting, Petri Karjalainen, Executive Director of the Company, said:

'We are very pleased to have completed this transaction in the prevailing difficult market conditions. This is in line with our strategy of disposing of non-core businesses to raise capital to assist with further debt repayment, to improve liquidity for operations and to enable the Company to focus more closely on its core investments.'

-ENDS-

Enquiries:
Equest Investments Balkans Limited  Tel: + 44 20 7240 7600  Petri Karjalainen  Naomi Kora	Financial Dynamics  Tel: + 44 20 7269 7217  Nick Henderson  David Cranmer
Collins Stewart Europe Limited (Nomad) Tel: [phone] Hugh Field	KBC Peel Hunt Limited (Broker)  Tel: + 44 20 7418 8900  Capel Irwin

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