ATLS Atlas Est.

 

TIDMATLS 
 
RNS Number : 4225L 
Atlas Estates Ltd 
05 May 2010 
 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR 
FROM THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR ANY OTHER JURISDICTION WHERE 
TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION 
 
5 May 2010 
 
Opinion of the board of directors of Atlas Estates Limited on the announced 
Offer by Fragiolig Holdings Limited 
 
 
The board of directors (the "Board") of Atlas Estates Limited ("Atlas"), which 
comprises in its entirety of non-executive directors and has no executive 
directors or management board, are pleased to announce their views on the offer 
(the "Offer") by Fragiolig Holdings Limited ("Fragiolig" or the "Offeror") for 
the entire issued, and to be issued, ordinary share capital of Atlas as 
announced on 16 April 2010 (the "Announcement"). 
 
On that date, Fragiolig acquired 3,325,346 Atlas ordinary shares ("Atlas 
Shares") which Fragiolig announced increased their shareholding, together with 
that of parties acting in concert with it, to 32.95 per cent. of the issued 
share capital of Atlas, thereby triggering a requirement under the UK Takeover 
Code for Fragiolig to make a mandatory cash offer at the same price, being 
GBP0.90 per Atlas Share, to all Atlas shareholders ("Shareholders"). 
 
The Announcement stated that Fragiolig is a wholly owned subsidiary of the Izaki 
Group, an Israel-based real estate development firm and founding shareholder of 
Atlas.  The Izaki Group, together with RP Capital Group, also own and manage 
Atlas Management Company Limited ("AMC"), which provides executive management 
services to Atlas. 
 
The Board's Opinion on the Offer 
 
The Board believes that there are no grounds to assert that the Offer will 
significantly impact the employment level in the Atlas Group. 
 
The Offeror has not provided the Board with any specific information in relation 
to the proposed future strategy that could form a basis for the determination as 
to whether the Offer is in Atlas' best interest and/or the impact on its 
business. 
 
The Offer represents a slight discount to the closing price of GBP0.91 per Atlas 
Share on 5 May 2010 and a premium of approximately 11 per cent. to the closing 
price of GBP0.81 per Atlas Share on 13 April 2010 (being the last dealing day 
prior to the announcement by Atlas that it had received an approach in 
connection with a potential takeover offer) and a premium of approximately 41 
per cent. to the three month volume-weighted average price of Atlas Shares. 
 
The Offer values the entire issued ordinary share capital of Atlas at GBP42.17 
million and represents a substantial discount to the latest published NAV per 
Atlas Share as at 31 December 2009 of EUR2.42 (and adjusted NAV per Atlas Share of 
EUR2.95). 
 
The Board note that the Offer price reflects the price at which a major 
Shareholder was willing to sell its holdings in Atlas to Fragliolig and the 
price now required to be extended to all other Atlas Shareholders. 
 
The Atlas group has a portfolio of investment and development properties in 
Poland, Hungary, Romania, Bulgaria and, pending the completion of a sale, 
Slovakia with a bias towards Poland which currently has a more buoyant property 
market than the other countries.  It has been a difficult business environment 
for the CEE in 2009, as a direct consequence of the global economic and banking 
crisis. The majority of the economies in the region have been in recession and 
are reporting decreases in gross domestic product. As a result there have been 
large reductions in asset valuations and instability in CEE currencies. 
 
The CEE continues to suffer from the reduction in credit and a difficult local 
and  international banking environment. However Atlas has been able to finance 
some of its development projects and is generating some cash flow from the sale 
of completed apartments and the asset valuations contained in Atlas' latest 
published accounts have been prepared on the basis that it would continue to do 
so.  If Atlas had access to additional financial resources, it would have 
proceeded to develop more of its portfolio. 
 
The challenging development environment has coincided with a difficult market in 
which to sell development land, as evidenced by the delayed completion of the 
sale of the Slovakian properties as announced on the 18 January 2010. The result 
is that some of Atlas' assets can neither be developed nor sold on attractive 
terms at present, or in the short term. 
 
In summary, the Atlas group has a development portfolio with potential but is 
currently limited in its financial ability to exploit it, with some attractive 
investment assets such as the Warsaw Hilton and a considerable debt burden. Net 
debt was EUR246,725,000 at 31 December 2009. 
 
Against this background your Board is very conscious of the risks facing the 
Atlas group and its reliance on the continuing support of its lenders. 
Accordingly your Board believes that it will be a considerable time before any 
dividends can be paid to Atlas Shareholders. 
 
However, the Atlas Board believes that the longer term prospects of the Atlas 
Group are good and should be rewarding as and when the CEE property markets and 
credit environments improve.  However there is no certainty as to when and/or if 
this may occur. 
 
The Board, having considered the information currently available to it, 
including the latest published NAV, Atlas' share price performance and having 
regard to the risks and operating constraints highlighted above, believe the 
Offer price to be fair, given it will afford Shareholders an opportunity to 
obtain cash for their Shares in the timescales of the Offer. 
 
Should acceptances of the Offer result in the Offeror's shareholdings reaching 
the prescribed levels to enable it to seek to cancel Atlas' quotation on one or 
both of the exchanges in the future, Atlas Shareholders who do not accept the 
Offer may subsequently find it difficult to realise his/her Atlas Shares in the 
future, should Atlas become an unquoted subsidiary of the Izaki Group. 
 
This announcement is being made pursuant to Article 80 of the Act of 29 July 
2005 on Public Offers and the Conditions for Introducing Financial Instruments 
to the Organized Trading System and on Public Companies (Dz.U. 2005, No. 184, 
poz. 1539, z pózn. zm.) (the "Act on Public Offers"). 
 
A circular to Shareholders complying with the requirements of the City Code on 
Takeovers and Mergers (the "Code"), will be published by Atlas as soon as 
practicable after publication of the offer document. 
 
The Board accepts responsibility for the information contained in this 
announcement. To the best of the knowledge and belief of the Board (who have 
taken all reasonable care to ensure that such is the case) the information 
contained in this announcement is in accordance with the facts and does not omit 
anything likely to affect the import of such information. 
 
Fairfax IS PLC ("Fairfax"), which is authorised and regulated by the Financial 
Services Authority in the United Kingdom, is acting for Atlas and for no one 
else in connection with the subject matter of this announcement and will not be 
responsible to any person other than Atlas for providing the protections 
afforded to clients of Fairfax, nor for providing advice in relation to the 
subject matter of this announcement or any matter referred to herein. Neither 
Fairfax nor any of their subsidiaries, branches or affiliates owes or accepts 
any duty, liability or responsibility whatsoever (whether direct or indirect, 
whether in contract, in tort, under statute or otherwise) to any person who is 
not a client of Fairfax in connection with this announcement, any statement 
contained herein or otherwise. 
 
Enquiries 
 
Fairfax I.S. PLC, Nominated adviser 
      Tel: 020 7598 4045 
James King 
Rachel Rees 
David Floyd 
 
Dealing Disclosure Requirements 
 
Under Rule 8.3(a) of the City Code on Takeovers and Mergers (the "Code"), any 
person who is interested in 1% or more of any class of relevant securities of an 
offeree company or of any paper offeror (being any offeror other than an offeror 
in respect of which it has been announced that its offer is, or is likely to be, 
solely in cash) must make an Opening Position Disclosure following the 
commencement of the offer period and, if later, following the announcement in 
which any paper offeror is first identified. An Opening Position Disclosure must 
contain details of the person's interests and short positions in, and rights to 
subscribe for, any relevant securities of each of (i) the offeree company and 
(ii) any paper offeror(s). An Opening Position Disclosure by a person to whom 
Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 
10th business day following the commencement of the offer period and, if 
appropriate, by no later than 3.30 pm (London time) on the 10th business day 
following the announcement in which any paper offeror is first identified. 
Relevant persons who deal in the relevant securities of the offeree company or 
of a paper offeror prior to the deadline for making an Opening Position 
Disclosure must instead make a Dealing Disclosure. 
 
Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% 
or more of any class of relevant securities of the offeree company or of any 
paper offeror must make a Dealing Disclosure if the person deals in any relevant 
securities of the offeree company or of any paper offeror. A Dealing Disclosure 
must contain details of the dealing concerned and of the person's interests and 
short positions in, and rights to subscribe for, any relevant securities of each 
of (i) the offeree company and (ii) any paper offeror, save to the extent that 
these details have previously been disclosed under Rule 8. A Dealing Disclosure 
by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm 
(London time) on the business day following the date of the relevant dealing. 
 
If two or more persons act together pursuant to an agreement or understanding, 
whether formal or informal, to acquire or control an interest in relevant 
securities of an offeree company or a paper offeror, they will be deemed to be a 
single person for the purpose of Rule 8.3. 
 
Opening Position Disclosures must also be made by the offeree company and by any 
offeror and Dealing Disclosures must also be made by the offeree company, by any 
offeror and by any persons acting in concert with any of them (see Rules 8.1, 
8.2 and 8.4). 
 
Details of the offeree and offeror companies in respect of whose relevant 
securities Opening Position Disclosures and Dealing Disclosures must be made can 
be found in the Disclosure Table on the Takeover Panel's website at 
www.thetakeoverpanel.org.uk, including details of the number of relevant 
securities in issue, when the offer period commenced and when any offeror was 
first identified. If you are in any doubt as to whether you are required to make 
an Opening Position Disclosure or a Dealing Disclosure, you should contact the 
Panel's Market Surveillance Unit on +44 (0)20 7638 0129. 
 
Publication on Website 
 
A copy of this announcement will be published on the Company's website, being 
www.atlasestates.com 
 
Bases and sources 
 
In this announcement, unless otherwise stated or the context otherwise required, 
the following bases and sources have been used: 
i)          the Atlas Share price on a particular date is derived from the 
closing price on such date as quoted by the London Stock Exchange plc; and 
ii)         the NAV per Atlas Share, adjusted NAV per Atlas Share and net debt 
are all derived from the published in Atlas' audited results for the twelve 
months to 31 December 2009. 
 
ENDS 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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