XXI Century Investments Public Ltd Project and Funding Update (0695K)

TIDMXXIC

RNS Number : 0695K

XXI Century Investments Public Ltd

24 July 2013

24 July 2013

XXI Century Investments Public Limited

("XXI Century" or the "Company")

Project and Funding Update

The Company provides the following update to the market to coincide with the end of its half year to 30 June 2013.

Vyrlytsa Project

As previously announced the Company has established a partnership with Auchan, an international retail chain of supermarkets and hypermarkets. The Investment Agreement in relation to the development of an Auchan hypermarket on the Vyrlytsa lake, Bazhana Lane highway site in Kiev (the "Vyrlytsa Project") was signed in April 2012. There are also ongoing negotiations on the development of other sites in Kiev and regions in Ukraine.

Other agreements

In January 2013 the Company signed an Investment Agreement with a major DIY operator, Leroy Merlin. The Investment Agreement is in relation to the development of a DIY hypermarket at the Vyrlytsa,site.

There are on-going negotiations with both Auchan and Leroy Merlin in respect of exchange of bank guarantees which is a key condition to obtaining financing for development of the initial phase of the Vyrlysta Project.

Funding requirements

As announced in November 2012 the Company's subsidiary Barwen Holding Limited signed a loan agreement with the subsidiary of the Company's significant shareholder DCH IMMO Limited (the "Loan Agreement"), according to which the Group will be provided with USD 38 million for the development of the Vyrlytsa Project subject to certain conditions.

The Company has commenced discussions with DCH IMMO Limited ("DCH IMMO") in relation to the fulfilment of these conditions and a further announcement will be made in due course. To date the Company has used its existing cash resources to fund on-going expenses in relation to the Vyrlysta Project in the region of US$3.5 million. In the event of further delays or issues arising in relation to any potential drawdown of the DCH loan, the Company would not be able to commence the initial phase of development of the Vyrlytsa Project which could also result in additional expenses being incurred by the Company.

As previously announced, the management of the Company continues to explore options with regard to financing arrangements with several leading local and foreign banks operating in the Ukraine to fund its developments. The availability of bank financing in the Ukraine for the development and construction of projects is limited by the substantial write-offs and delinquencies that local banks experienced following the impact of the global financial crisis on Ukraine's economy.

In the context of the Company's continued ongoing losses and expenses incurred in relation to the Vyrlytsa project which have been funded by the Company's existing cash rather than through development capital, the Board continues to recognise the need to supplement the Company's cash resources both for its development projects and ongoing working capital requirements. Accordingly, the Directors have instituted measures to preserve cash and discussions with providers of finance are on-going to secure additional funding in order for the Company to continue with its activities. The Company is also exploring other financing options including the disposal of non-core assets.

Discussions with providers of finance including Ovaro Holding Limited (a company which currently holds 58.26 per cent. of the issued ordinary shares of the Company and which is jointly owned by DCH IMMO and Bremille Investments Limited) have been initiated. The Company currently has sufficient working capital to fund its immediate running expenses, following which it will be reliant on the financial support of its existing substantial shareholders, with the details of such support dependent on the outcome of negotiations between the parties.

The significant progress that has been made in the restructuring of the Group's liabilities and the agreements with Auchan and Leroy Merlin are positive developments. However, there remain significant risks primarily in relation to the Ukrainian macro environment.

Although the Ukraine's real estate sector is still vulnerable to weaknesses in its major markets, the Directors and management anticipate that the Ukrainian real estate market and property values are on a path of slow recovery. The Directors believe that the general long-term outlook for the Ukrainian real estate market and its participants is cautiously optimistic.

The Company will continue to focus on securing additional funding to enable it to deliver on its planned developments and overall strategy.

Enquiries:

 
XXI Century Investments Public Limited   [phone] 
                                          [e-mail] 
 
 Irina Tkachenko, Investor Relations Manager 
Shore Capital & Corporate Limited        [phone] 
Anita Ghanekar / Toby Gibbs 
 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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