Lewis Charles Romania Property Fund Limited Disposal

 
TIDMLCSR 
 
LEWIS CHARLES ROMANIA PROPERTY FUND LIMITED 
 
                                    AIM: LCSR 
 
    Lewis Charles Romania Property Fund sells its Ploiesti Retail Development 
                         Project to Blackpearl Property 
 
Lewis Charles Romania Property Fund ('LCSR' or 'the Company') announces the sale 
today  of  S.C. Retail Park Magnolia S.R.L. ("Magnolia")  which was a subsidiary 
of  the  Company and which holds a prime retail  site in Ploiesti ,  Romania  at 
which it is planned to develop the Zenith Project ("the Project"). 
 
Although  the  Project  is at an advanced stage of planning,  it  has  not  been 
possible,  despite significant efforts, to secure development  finance  for  the 
construction  of the scheme in the current financial markets.   The  Board  has, 
accordingly, carefully reviewed the available options. They have concluded  that 
the  future  of  the  project will be best progressed through  the  disposal  of 
Magnolia  and in turn this will de-risk the exposure for LCSR whilst  preserving 
as  much  of  the potential opportunity afforded by the Project as possible  for 
shareholders. 
 
Consequently, the Board has agreed the sale as recommended by the Fund Managers, 
which  has  been  achieved  by disposing of all of the  shares  in  Magnolia  to 
Blackpearl  Property Limited ("Blackpearl") for a nominal consideration.   Under 
the  arrangement,  LCSR  has  entered  into  a  profit  sharing  agreement  with 
Blackpearl, where it is entitled to receive 50% of the future profits  from  the 
Project.  Two of the Fund Managers will join the Board of Magnolia to  represent 
the  Company's interests. The Company retains no liabilities in connection  with 
Magnolia,  including  in respect of the EUR 3.63 million  of  third  party  debt 
within  Magnolia,  nor does it have any further future funding obligations  with 
regard to the Project. 
 
LCSR  has  an  existing  relationship with the development  team  of  Blackpearl 
Property,  who  have  a  joint  venture residential  development  at  Mogosoaia, 
Bucharest.  In addition, Blackpearl and its fellow investors hold a  substantial 
property  portfolio  in Romania, comprising developments in  Central  Bucharest, 
Ploiesti,  Baia  Mare, Ghimpati and Targu Mures.  Their sister company,  Alchemy 
Development  Management,  has an established office in Bucharest,  Romania  with 
experienced  architectural, legal, development, project management  and  finance 
teams.   Blackpearl has links with a number of financial institutions in Romania 
and  successfully  secured  funding for the initial  development  stage  of  the 
Mogosoaia residential project. 
 
Blackpearl currently intends to continue the development of a retail project  in 
phases,  thereby  de-risking the Project and rolling it out in  accordance  with 
market demand. 
 
Magnolia  has  been held on the Company's balance sheet at cost  of  EUR  19.792 
million.  This  is  comprised of an equity investment in  Magnolia  of  EUR  6.0 
million  which will be written off and  loans to Magnolia of EUR 13.792 million, 
which  it  is  expected will be provided against in full in the  accounts.   Any 
profits  due  to the Fund under the profit share arrangements will  be  used  to 
repay  the  outstanding  EUR 13.792 million loan to  Magnolia.   Accordingly  it 
anticipated that the Company's next published accounts will reflect a charge  of 
the  full EUR 19.792 million. The board is nevertheless hopeful that the  build- 
out  of the Project over the next few years will see a significant part of  this 
value being recaptured. 
 
Westhill SRL ("Westhill") was previously appointed to manage the development  on 
behalf of Magnolia, and this contract has now been terminated. 
 
 
 
 
                                       END 
 
Ed Portman, Ben Way 
Conduit PR 
+ 44 (0) 207 429 6607 / + 44 (0) 7733 363 501 
 
Loraine Pinel, Mark Anderson, 
Lewis Charles Securities Limited 
+ 44 (0) 207 456 9100 / + 44 (0) 7876 560 787 
 
Robert Finlay, Travis Inlow 
Canaccord Adams 
[phone]