The fulfillment of conditions precedent of the transaction with Kinepolis Group - second multiplex in Poznan to be run by Cinema City
The Board of Managing Directors of Cinema City International N.V. (the "Company") is happy to announce that conditions precedent to a transactions between the Company's wholly-owned subsidiary - Cinema City Poland sp. z o.o. and companies from Kinepolis Group - Kinepolis sp. z o.o. and Kinepolis Poznan sp. z o.o. ("Kinepolis Group") to operate a 18-screen multiplex in Poznan previously run by Kinepolis Group are being met.
Generally, the transaction includes the acquisition of assets necessary to operate a multiplex, transfer of rights and obligations arising from certain agreements and arrangements related to Kinepolis Group cinema activity in Poznan (including, inter alia, labour contracts) and transfer of non-material assets of an organised part of Kinepolis enterprise, including the market position and clientele, under the conditional agreement on the sale of an organised part of enterprise (constituting a complex of material and non-material components) concluded between Cinema City Poland sp. z o.o. and Kinepolis sp. z o.o. on 22 August 2006.
The agreement has been concluded on certain conditions precedent, including inter alia, the obtaining of consent of the President of the Office for Competition and Consumer Protection to concentration. Pursuant to a decision No. RPZ - 38/2006 of the President of the Office for Competition and Consumer Protection dated 29 December 2006 proceedings relating to concentration consisting in acquiring by the company of an organized part of an entrepreneur Kinepolis sp. z o.o. that were initiated by Cinema City Poland sp. z o.o. are discontinued. The decision provides that the intention of concentration in question is not subject to the notification to the President of the Office for Competition and Consumer Protection.
The transaction includes also lease of 18 out of 20 cinema auditoria located in the building owned by Kinepolis Group in Poznan in which previously Kinepolis Group operated its multiplex. Two lease agreements to that effect were executed on 22 August 2006 between Cinema City Poland sp. z o.o. and IT Poland Development 2003 sp. z o.o. (the Company's wholly-owned subsidiary) on one hand and Kinepolis Poznan sp. z o.o. on the other hand. The said agreements are concluded for 10 years with an option to prolong lease for another 5 years and contain standard clauses typical for such agreements.
The Company envisages that the closing of the transaction will take place in the foreseeable future, probably within upcoming two weeks. The Company will inform on the closing by way of a current report.
As a result of this transaction, the Company is to run the multiplex under the name 'Cinema City Kinepolis' in Poznan: with 18 screens (two remaining auditoria will continue to be run by Kinepolis Group and will be used for events or commercial purposes), whereas Kinepolis Group will remain the owner of the land and buildings and will continue to manage the real estate activities.
"Cinema City Kinepolis" is to be the Company's second multiplex operated in Poznan. The transaction reflects the Company's strategy of growth in the Polish market and is to be financed from 2006 IPO proceeds, credit loan facility and the Company's own funds.
Legal grounds: Art. 56.1.1 of the Act of 29 July 2005 on public offering and conditions governing the introduction of financial instruments to trading in the organised trading system and on public companies.
Signatres of persons authorised to represent the Company Mr. Israel Greidinger - proxy