B.S.D. Crown Ltd. - Company Update: Meinl Bank Deposit

BSD Crown Ltd. (the “Company”)

 (LSE: BSD)

Company Update: Meinl Bank Deposit

Ramat Gan, 20 June 2017

Further to the announcement dated 17 May 2016, the Company hereby updates the market on recent developments in relation to the cash amounts (the "Deposit") of approximately US$30 million deposited by the Company with Meinl Bank (“Meinl”) in Austria in 2013.

The Company has received a notification from Meinl claiming that certain events of default have occurred under the pledge agreement allegedly signed between the Company and Meinl and therefore, under Section 7.01 of such pledge agreement, the collateral posted in a pledged account for the purpose of settling certain obligations of Terminus Ventures Limited (“Terminus”) under a loan agreement between Terminus and the Company has now become due and payable pursuant to such loan agreement. Consequently, Meinl reserves its rights against the Company, secured by a pledge over the Company’s deposit of US$30 million held in Meinl (the “Company’s Deposit”). In addition, Meinl has requested from the Company to increase the pledged deposit for an additional amount of EUR 1,110,212 related to alleged unpaid margins.   

The Company denies any and all claims of Meinl. Without prejudice to any rights, and as stated in the announcement referenced above, the Company has never agreed to use the Deposit as collateral or as a guarantee in favor of any third party. Furthermore, the Company possesses certain documents that indicate that the Deposit is held in Meinl on behalf of the Company, free and clear of any encumbrance.

The Company will continue to seek the return of the Deposit and has instructed its legal advisors to act, on its behalf, in order to explore and pursue all courses of action and  rights regarding the Deposit.

Furthermore, the Company herby announces that on 18 June 2017, the Tel-Aviv District Attorney's Office (Taxation and Economics) notified Mr. Gregory Gortovoy, the former controlling shareholder and chairman of the Company's board of directors, that it is considering filing an indictment against him, subject to a hearing, based, inter alia, on suspicions of theft by authorized personnel, money laundering, fraud, breach of fiduciary duties and falsification of corporate registrations. According to the notification, as of July 2015, Gortovoy has used his position as controlling shareholder and chairman of the board of directors of the Company to conceal the fact that the aforementioned deposits were allegedly pledged in favor of loans given to banks in connection with loans provided by the banks to companies related to Gortovoy.

Enquiries: Joseph Williger, Active Chairman of the Board [e-mail]

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