Global City Holdings
Dla prasy


Signing of agreement and completion of transaction of sale of Bulgarian real estate assets to Israel Theatres Ltd (22 April 2010)

With reference to the current reports no 6/2010 dated 3 March 2010 and 8/2010 dated 25 March 2010, the Board of Managing Directors of Cinema City International, N.V. (the “Company”) hereby announces, that on 21 April 2010, the Company signed an agreement (the “Sale Agreement”) with Israel Theatres Real Estate Holding B.V. and Pan-Europe Finance B.V. (both subsidiaries of Israel Theaters Ltd. ("IT")) for the sale (the “Transaction”) of all of the Company’s assets related to real estate development and related activities in Bulgaria (the “Assets”) and the parties simultaneously completed the Transaction. Israel Theatres Real Estate Holding B.V. and Pan-Europe Finance B.V. (together, the "Buyers") paid EUR 76.2 million to the Company in initial consideration for their purchase of the Assets.

Below are the main parameters of the Sale Agreement:

[1] The Assets include: the Mall of Ruse project in the city of Ruse (which is in an advanced construction stage); the Mall of Stara Zagora (which is still in its planning stages); and RESB (a real estate development and management company which is involved in building and leasing the Assets).

[2] The Buyers assume all of the Company’s outstanding real estate development related obligations in Bulgaria, including the completion of the Company’s post-sale commitments relating to the Mall of Plovdiv,

[3] The Transaction was effected through the sale of shares in subsidiaries of the Company which directly or indirectly hold the assets,

[4] In addition to the initial consideration of EUR 76.2 million, a further amount of EUR 15 million is, payable by the Buyers to the Company on the date which is nine months after the opening of the Mall of Ruse, but in no event later than 18 months following the closing of the Transaction.

[5] The total purchase price of Euro 91.2 million is based on a valuation performed by an internationally recognized third-party valuator of the Assets, obtained by the Company in connection with the preparation of its 2009 audited financial statements and which has been adjusted to reflect the closing balance sheets of the relevant companies,

[6] The Sale Agreement also provides that the Buyers will pay an additional earn-out amount to the Company, based upon a percentage of any gains the Buyers realize from a disposal of the Assets prior to the end of the year 2014. The earn out is equal to 72.5% of any gains made by the Buyers prior to the first anniversary of the closing of the Transaction, 62.5% of any gains realized between the first and second anniversaries and 25% of any gains realized between the second anniversary and the end of 2014. The Buyers will be solely responsible for any losses they may suffer following the Transaction.

[7] IT guarantees all of the obligations of the Buyers under the Agreement.

[8] In connection with the Buyers and IT securing the financing for the Transaction, the Company agrees to refrain from borrowing any additional funds if such borrowings would result in IT, on a fully consolidated basis (together with the Company), breaching certain EBITDA to debt ratios. This covenant is not expected to impact upon the Company's current cinema development plans. This covenant will remain in force so long as IT remains the majority shareholder of the Company.

[9] The Company agrees not to engage in shopping mall development activity in Bulgaria in the next 5 years.

The proceeds of the transaction will be used to substantially reduce CCI group debt. Following the closing of the transaction the Company's debt will decrease to approx EUR 30 million. The payment of the remaining part of the purchase price (of EUR 15 million) will further reduce the Company’s debt.

The Company intends to use the excess cash and freed up leverage to fund the expansion of the Company’s movie theatre activities, both in its current region of operation and potentially to new locations as well.

Press release