Cinema City sells 50% of its shares in shopping center in Bulgaria
A subsidiary of Cinema City International N.V. ('Cinema City') has signed an agreement on sale of 15% of the shares (half of the stake held) in the company Rilon Bulgaria, which is building a modern shopping mall in the city of Plovdiv, Bulgaria.
The shopping center in Plovdiv (Bulgaria's second-largest city, with a population of about 400,000) is to be completed by the end of 2008 or early in 2009. The project, is being realized by Rilon Bulgaria, in which Cinema City has held 30% of the shares since the end of last year.
'The sale of half our shares in the Plovdiv shopping center is being made in accordance with our announced plans,' said Moshe J. Greidinger, CEO of Cinema City, the largest multiplex cinema operator in Central & Eastern Europe and Israel. 'We are carrying out this project in a manner very similar to the way Cinema City carried out earlier investments at Sadyba Best Mall in Warsaw and the Mall of Sofia in Bulgaria.'
'Activity on the shopping center market is part of our growth strategy,' the CEO added. 'We participate in creating the centers, and in the next step we sell our shares, retaining the right to operate a multiplex in space that we lease. This allows us to develop the Cinema City chain of multiplexes in attractive locations, while at the same time giving us the chance to enjoy additional benefits from activities on the real estate market.' At the shopping center in Plovdiv, Cinema City plans to operate a 10-screen multiplex in leased space.
Under the agreement that has just been signed, Cinema City is selling half of the shares it has held in Rilon Bulgaria (15%) to two leading private equity groups active on the real estate market: the U.S.-based GE Real Estate Central and Eastern Europe ('GE') and Quinlan Private ('Quinlan') from Ireland. The transaction closing (i.e. transfer of shares and payment) is expected to occur within 2 months.
After the closing, GE and Quinlan will control a total of 50% of the shares of Rilon Bulgaria. The remaining shares will be held by the Cinema City group (15%), the company Octif Development (15%), and the original owner of the real estate on which the center is being built (20%). GE and Quinlan also signed an agreement with the remaining shareholders under which they undertake to buy out the remaining 50% of the shares of Rilon Bulgaria just before the opening of the shopping center. The price will be determined according to a model set forth in the agreement.