Unitech Corporate Parks Plc Shareholder Update (4065N)

TIDMUCP

RNS Number : 4065N

Unitech Corporate Parks Plc

18 May 2015

Unitech Corporate Parks Plc ('UCP' or the 'Company')

Shareholder Update

The Board of UCP is today providing an update on the status of work which has been ongoing to recover certain funds placed with two financial institutions, SREI Infrastructure Finance Limited ('SREI'), ATEN Portfolio Managers Services Private Limited and ATEN Capital Private Limited (together 'ATEN'), as well as on other matters.

Recovery of funds from SREI and ATEN

As previously disclosed in the Company's half yearly statement of results, two of the Indian joint venture companies in the Company's group, Unitech Realty Projects Limited ('G1') and Unitech Developers and Project Limited ('G2') had previously placed funds on deposit with SREI and ATEN. The Company was entitled to 60% of these funds, totalling GBP15.76 million, at the date of completion of the Company's disposal of the entire share capital of Candor Investments Limited to BSREP India Office Holdings PTE. Ltd ('Brookfield'), and since the funds had not been repaid it gave rise to an adjustment to the consideration due to the Company of a corresponding amount.

Pursuant to the sale and purchase agreement entered into by the Company and Brookfield, the right to receive any amount recovered with respect to these monies was effectively assigned to UCP and Brookfield and its group companies are required to provide information and assistance which is reasonably required for the purposes of recovering these funds.

In seeking to recover the funds the Company has facilitated and directed the commencement of legal actions by the relevant joint venture companies against the deposit holders, SREI and ATEN, and has lodged petitions for injunctive relief under section 9 of the Indian Arbitration Act 1996.

In addition, formal complaints have been made by UCP to the Reserve Bank of India and the Securities and Exchange Board of India, two Indian regulatory bodies who have jurisdiction over SREI and ATEN.

The Company continues to work actively towards the recovery of these funds although the timing and eventual amount recovered cannot be estimated with certainty.

Withholding of amount due to Nectrus

The Board is of the opinion that the transactions placing funds with SREI and ATEN were not conducted in accordance with Group Treasury policy and accordingly represented breaches by Nectrus Limited ('Nectrus'), a Cypriot company ultimately controlled by Unitech Limited, of the investment management agreement entered into, inter alia, between the Company and Nectrus. Nectrus has been notified of these breaches and of the Company's claim for GBP18.2 million of damages arising from the non-recovery of the funds placed on deposit and the past and anticipated costs associated with attempts to recover the funds. The Company cannot currently estimate the timing and resolution of this claim.

In light of this claim against Nectrus, the Company withheld GBP18.2 million from the cash return which would otherwise have been payable to Nectrus pursuant to the B share distribution earlier this year. The Company will release the appropriate proportion of these funds to Nectrus to the extent that amounts are recovered from SREI and ATEN.

Submission of 31 March 2015 tax return

The Company has started the process of making a tax return in India. The Board continues to be advised that no tax will be payable although the Company has no certainty as to how quickly or otherwise the tax return will be dealt with.

Further distribution to shareholders

In light of the uncertainties in relation to the recovery of funds from SREI and ATEN and the timeframe in which the Company's tax return will be dealt with, it continues to be difficult to estimate the timing and amount of any further distribution to shareholders. The Company will continue to keep shareholders informed of material developments and will provide a further update at the time of the announcement of its results for the financial year ended 31 March 2015, which is expected to be released towards the end of September.

For further information please contact:

 
 Westhouse Securities Limited                  Tel: [phone] 
                                                6118 
 Alastair Moreton 
 
 IOMA Fund and Investment Management Limited   Tel: [phone] 
                                                681250 
 Philip Scales 
 Graham Smith 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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