Trading Update (8054A)

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RNS Number : 8054A

Develica Deutschland Ltd

07 February 2011

7 February 2011

Trading update for Develica Deutschland Limited ("DDL" or the "Group")

The Board of Develica Deutschland Limited (the "Board") announces today that the agent to the lenders of DDL's second largest property portfolio (referred to as "Bluestar" and the "Bluestar lenders") in terms of gross assets has issued notice of a breach of the loan to value covenant as set out in the loan agreement.

As a result of the breach of covenant and as required under the loan agreement, the Group has been asked to rectify a breach by way of equity cure which it will be unable to do due to insufficient funds at a Group level. The quantum of the required equity cure is significantly in excess of the Group's cash balance.

This is despite the re-gear of Develica's largest lease with Deutsche Telekom (Office building with c. 33,600 sqm in Bonn) in January 2011. However the market value of the underlying three properties has reached a level that has eroded the equity in its entirety of this part of Develica's property portfolio.

DDL is currently in negotiations with the Bluestar lenders, but under the terms of the loan agreement the breach could result in a cash trap on the facility which has previously contributed c. EUR4m p.a. towards the EUR7m p.a. operating cost.

This, combined with the expiry at the end of March 2011 of the waiver from Citigroup (the Group's largest lender), will have a significant negative impact on the Group's current cash reserves.

The board is urgently analysing how to preserve and maximise the remaining shareholder value in the Group. The Board intends to report to shareholders once it has determined the best course of action.

Contact:

Derek Butler, Chairman, Develica.

Tel: [phone]

Philip Secrett, Grant Thornton Corporate Finance.

Tel: [phone]

This information is provided by RNS

The company news service from the London Stock Exchange

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