Echo Investment : Current report No. 4/2017

Current report No. 4/2017

Publication of inside information regarding the conclusion of agreements deemed material in view of the company's business concerning the indirect acquisition of the 'Galeria Młociny' real property in Warsaw

Pursuant to Article 17(1) of Regulation No. 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC (the 'MAR'), the management board of Echo Investment S.A. (the 'Company') hereby discloses inside information.

The management board of the Company hereby announces that on 9 March 2017 the Company, Echo Prime Assets B.V. ('EPA', a wholly owned subsidiary of the Company), Echo Polska Properties N.V. ('EPP') and Echo Polska Properties (Cyprus) PLC ('EPPC'), a company from EPP's Group (jointly, the 'Purchaser'), and Broomfield Investments, Catfield Investments sp. z o.o., Powell Real Estate International B.V., Taberancle Limited, Taberancle Investments Limited and Elsoria Trading Limited (jointly, the 'Sellers') concluded certain agreements regarding the acquisition of 100% of the shares in the share capital of Rosehill Investments sp. z o.o. ('Rosehill'), which is the indirect owner, through its wholly owned subsidiary Berea sp. z o.o. ('Berea'), of a real property situated in Warsaw in the district of Bielany, in the vicinity of ul. Zgrupowania AK 'Kampinos' (the 'Real Property') (hereinafter, the 'Transaction'). On the Real Property, construction of the 'Galeria Młociny' shopping centre is currently in progress.

The Transaction involved the execution of a share purchase agreement regarding 10,000 shares in the share capital of Rosehill, which constitute 100% of the shares in Rosehill (the 'Shares'), of which 3,000 shares constituting 30% of all the shares in the share capital of Rosehill were acquired by the Company (the 'SPA').

The purchase price to be paid by the Company for the 30% of the Shares was determined at EUR 6,592,363.02. However, such price may be changed as a result of an auditor's verification of the values used by the parties to determine the price (the 'Purchase Price'). Regardless of the Purchase Price, the Company agreed to repay a sum equal to 30% of the loans extended to Rosehill by some of the Sellers in the total amount of EUR 5,917,216.76 (hereinafter, jointly with the Purchase Price, the 'Financing'). Simultaneously with the execution of the SPA, an entity from the Company's group extended a loan to Berea for the repayment of liabilities owed to the general contractor of the investment undertaking regarding the construction of 'Galeria Młociny' in the total amount of up to approximately PLN 70,020,000.

The SPA is unconditional (no consent of the President of the Antimonopoly Office is required) and the shares, except for one share, which was transferred to the Company at the time of execution of the SPA, will be transferred to the Purchasers only after the payment of the entire Purchase Price has been made and all other performances comprising the Financing have been satisfied. The Purchaser and the Seller may withdraw from the SPA in the circumstances stated in the Agreement, which are related to non-compliance with the provisions of the agreement.

The Company's future satisfaction of any performances comprising the Financing has been or will be secured in favour of the Sellers by way of the payment by EPA of EUR 3,000,000 to an escrow account (provided that such sum will be credited towards the Purchase Price) and the submission by the Company to enforcement directly under a notarial deed and a non-endorsable bill of exchange with respect to the payment of the amount of EUR 9,509,579.78.

The parties plan to close the transaction (which should be understood as the payment of the Financing and the acquisition of the Shares) no later than on 1 June 2017.

Moreover, the Company executed, inter alia, the following agreements within the scope of the Transaction: (i) a shareholders agreement between the Company and the other Purchasers governing, inter alia, the rules of the corporate governance of Rosehill and Berea; and (ii) a property construction management agreement between the Company and Berea, with the Company becoming the construction manager and the lease agent of the shopping centre.

Legal basis: Article 17(1) of the MAR - inside information