UPDATE ON DISPOSAL OF PLOT LAND IN GREECE2017-11-21
UPDATE RE 2012 DISPOAL OF SHOPPING CENTRES
Plaza business concept and strategy is to no longer develop commercial centers, but to solve existing bureaucratic or legal issues and dispose its real estate assets.
In the past the Company conducted its activities in the filed of establishing, perating and selling of shopping and entertainment centers, as well as other mixed-used projects (retail, office, residential) in Central and Eastern Europe (starting 1996) and India (from 2006). Following debt restructuring plan approved in 2014 the Group' main focus is to reduce corporate debt by early repayments following sale of assets and to continue with efficiency measures and cost reduction where possible.
Maintain liquidity and debt management
Plaza ended the period with a consolidated cash position of EUR 1.4 million, compared to EUR 44.8 million at the end of 2017.
As of December 31, 2018 the Group's outstanding obligation to bondholders is EUR 80.5 million after all bank loans were repaid or disposed. The outstanding balance of the debt to bondholders is circa EUR 84.3 million as of today.
In November 2016, the Group agreed with its bondholders to amend the terms of the early repayment requirement under the original debt restructuring plan (the "Restructuring Plan"). On March 15, 2017, the Group repaid the required minimum early repayment to its bondholders and thus ontained a deferral of one year for the remaining contractual obligations of the bonds.
In January 2018, a settlement agreement was signed by and among the Company and the two Israeli Series of Bonds ("Settlement Agreement"). In the Settlement Agreement it was agreed, inter alia, to approve:
- New repayment ratios between the two Israeli Series of Bonds (new ratio: Bond A - 39% Bond B - 61%);
- An increase in the level of the mandatory net income;
- New repayment schedule;
- An increase in the compensation to be paid to the Bondholders in the event of successful disposal of Casa Radio Project;
- A waiver of claims to the Company and its directors and officers; and
- To waive the request for publication of quarterly financial reports by the Company.
As a result of settlement agreement signing, Series A Bondholders withdrew their request for immediate repayment.
It is clarified that the Settlement Agreement is a separate agreement among the parties thereto with respect to the Company's restructuring plan, and as such has no effect on the Polish Bondholders.
On January 31, 2018 the Company paid the bondholders total amount of principal and interest of EUR 38.5 million.
In February 18, 2019 the Company paid approximately EUR 400,000 to its Series A and Series B. The bondholders approved the deferral of payment to July 1, 2019.
Information concerning the Group's obligations and commitments to make future payments under contracts such as debt agreements in the 15 months starting April 1, 2018 is aggregated in Note 1(b) of the consolidated financial statements.
The board and management estimate that the Company is unable to serve its entire debt according to the current repayment schedule.
Moreover, following the recent default of purchaser of Bangalore project to meet payments schedule according to the signed amendment agreement (refer to Note 6(b)(1)), and default of purchaser of Chennai Project to complete the sale transcation (refer to Note 6(b)(2)), it is expected that the Company will not be able to meet its entire contractual obligations in the following 12 months.
As of December 31, 2018, the Company is not in compliance with Coverage Ratio Covenant ("CRC") as defined in the restructuring plan. This may entitle the bondholders to declare that all or a part of their respective (remaining) claims become immediately due and payable. In addition, the Minimum Cash Reserve Covenant as defined in Note 17(b)(1)(d) is not maintained as of December 31, 2018. If its continued throughout a period comprising two consecutive quarterly reports following the year-end report on which such breach has been established, then such breach shall constitute an event of default under the trust deeds, and the Bondholders shall be entitled to declare that all or a part of their respective (remaining) claims become immediately due and payable.
Moreover, the Company's financial statements as of December 31, 2017 include an auditor's opinion with emphasis of matter to going concern uncertainty as well as auditor's review report on interim financial statements as of June 30, 2018 include the same. As a result, there is a risk that the bondholders could argue that there are significant doubts with respect to the Company's ability to repay its obligations, which will trigger the immediate repayment of the bonds.
In addition, based on trust deeds, in the case of material deterioration in the Company's business and the existence of significant doubts reagrding the Company's ability to repay the bonds on time, the bondholders may require an immediate repayment of bonds due to the Company's breach of a covenant in the trust deeds.
In the case that the bondholders would declare their remaining claims to become immediately due and payable, the Company would not be in a position to settle those claims and would need to enter to an additional debt restructuring or might cease to be a going concern. As at the date of these financial statements the bondholders have not taken steps to assert thier rights.
Plaza will continuing to reduce corporate level debts by early repayments following sale of assets according to the Company's debt restructuring agreement.
Advancing related permits and approvals for the Casa Radio project in Bucharest, Romania and exploring opportunities for financing and/or partnerships for the development.
2. Sale of assets:
The Company remains focused on completing the disposal of the assets identified for sale and on delivering on its commitments to its stakeholders.
Continuing to reduce corporate debt by early repayments following sale of assets according to the Company’s debt restructuring agreement, following the one year deferral achieved on March 15, 2017, and subject to the settlement agreement signed by and among the Company and the two Israeli Series of Bonds in 2018.
4. General Expenses:
Continue with efficiency measures and cost reduction where possible and continuing strongest cost control initiatives e.g. reduction of manpower, cutting cost of suppliers, advisors etc.