Asset sales and distributions to shareholders (4694W)

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RNS Number : 4694W

Nordic Land PLC

18 November 2010

Nordic Land Plc

18 November 2010

Update on asset sales and distributions to shareholders

The Board of Nordic Land Plc ("Nordic Land" or the "Company") has published today a circular to shareholders recommending a proposal for the Company and its subsidiaries (the "Group") to commence winding up and convening a shareholder meeting to be held on 6 December 2010 to consider the proposal.

The circular also provides an update on the sale of the properties at Sicklaon ("Sickla") and expected distributions to shareholders.

Update on the sale of Sickla

Following approval by shareholders for the disposal of the Group's property portfolio at a general meeting of the Company held on 7 October 2010, Nordic Land completed the sale of its two largest properties, Terminalen 1 in Helsingborg and Lackareran 3 in Borlange on 15 October 2010.

However, as has been announced previously, the sale of Sickla has had to be postponed because Lehman Brothers International (Europe) ("Lehman Brothers"), in its capacity as security agent for the bank borrowings and as holder of the mortgage certificates for Sickla, has not been able to locate these mortgage certificates. Without the mortgage certificates the sale could not proceed as planned as they are required to confirm to the buyer that there are no outstanding mortgages or charges on Sickla. Under the terms of the original sale agreement, the Group was contractually obliged to deliver the mortgage certificates to the buyer and so Lehman Brothers' inability to deliver the mortgage certificates for Sickla to the Group would have caused the Group to be in breach of the sale agreement. Accordingly the Group has renegotiated the terms of the sale agreement such that the it is no longer obliged to deliver the mortgage certificates for Sickla to the buyer and, instead, out of the gross consideration of SEK 35 million, the sum of SEK 12 million (the Sickla Retention Amount) will be retained by the buyer and released to the Group when the original or replacement mortgage certificates for Sickla are provided to the buyer. In addition, the buyer will take second charges on the escrow accounts relating to the Terminalen and Borlange sales to protect it from the legal risk of there being a charge secured on Sickla, and evidenced by the Mortgage Certificates, in excess of the Sickla Retention Amount These charges are to be released on delivery of the original or replacement mortgage certificates to the buyer. Under the terms of the revised agreement, the Sickla Retention Amount is guaranteed by the parent company of the buyer, Atrium Ljungberg AB, a listed Swedish property company with a market capitalisation of SEK 10.6 billion as at 17 November 2010. In addition it has been agreed that the Group will be granted a pledge over the mortgage certificates for Sickla as security for the Group in the event that payment of the Sickla Retention Amount is not made when due. These revisions to the terms of the sale agreement for Sickla are set out in an amendment which was agreed on 18 November 2010.

The changes to the sale agreement for Sickla do not affect the estimate of the net cash resources of the Group which are available to be distributed to shareholders. However, because of the need to fund the Sickla Retention Amount, the amount of the initial distribution will be reduced with a corresponding increase in the final distribution. Further information on the distributions is set out below.

Initially, completion of the sale of Sickla was postponed until 10 November 2010 to allow further time for Lehman Brothers to locate the mortgage certificates for Sickla. Completion has now been scheduled for 24 November 2010. As a result of this delay in completion, the Directors believe that the proposed timing of the first distribution will be delayed from December 2010 to January 2011.

As well as continuing to search for the original mortgage certificates for Sickla, Lehman Brothers has also initiated the process of obtaining replacement certificates. However, obtaining replacement certificates is expected to take approximately 12 months.

Distributions to Shareholders

The Directors intend to distribute the estimated net cash resources of the Group to shareholders by way of two cash distributions, after allowing for all costs associated with the property disposals and the estimated costs of winding up the Group. Provided that the proposal to wind up is approved by shareholders, the total distribution is expected to be approximately 22 pence per share.

At the time of publishing the circular to shareholders recommending the proposal to sell the Group's properties and at the date of the meeting of Shareholders to approve the disposal on 7 October 2010, the amount of the total distribution was expected to be 23 pence per share. The reduction to 22 pence per share is a result of additional legal and administration costs arising in connection with that shareholder meeting costs incurred in connection with the negotiations with Lathe, additional legal costs in Sweden in connection with completion of the disposals and recent adverse changes in the SEK:GBP exchange rate.

The Directors intend that the Shareholder Distribution will be made in two stages:

-- the initial distribution, which is expected to total approximately 10 pence per share, is expected to be distributed in January 2011 (the "Initial Distribution"); and

-- the final distribution, which is expected to total approximately 12 pence per share, will be made once the escrow and retention amounts are released which is expected to be in the first quarter of 2012 (the "Final Distribution").

At the time of publishing the circular to shareholders recommending the proposal to sell the Group's properties and at the date of the meeting of Shareholders to approve the disposal on 7 October 2010, the Initial Distribution was expected to be approximately 15 pence per share and the Final Distribution 8 pence per share. However, the amount of the Initial Distribution has been reduced, and the amount of the Final Distribution correspondingly increased, because of the inability of Lehman Brothers to locate the mortgage certificates for Sickla and the consequential agreement that part of the consideration from the sale of Sickla will be retained until the original or replacement mortgage certificates can be delivered to the buyer, as described above.

The Directors intention is to return the expected net cash resources of the Company to shareholders as soon as is practicable and they may determine that it is appropriate to make changes to the number and amount of the distributions to be made to shareholders. For example, if the Sickla Retention Amount is released to the Group appreciably before the expected time of the Final Distribution, either because Lehman Brothers locates the mortgage certificates for Sickla or because the replacement mortgage certificates are obtained sooner than expected, then the Directors may, at that time, make an earlier distribution of the amount made available from the release of the Sickla Retention Amount.

Further information is included in the circular to shareholders dated 18 November 2010 which is available on the Company's website.

For further enquiries:

Nordic Land Plc

Ray Horney, Chairman Tel: [phone]

(c/o Bankside Consultants)

SP Angel Corporate Finance LLP

Robert Wooldridge/Tercel Moore Tel:[phone]

Matrix Corporate Capital LLP Tel: [phone]

Stephen Mischler

Bankside Consultants

Simon Rothschild/Louise Mason Tel: [phone]

This information is provided by RNS

The company news service from the London Stock Exchange

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