Convertible bond to develop shopping mall (0988E)
01 4월 2011 - 3:00PM
UK Regulatory
TIDMSQB
RNS Number : 0988E
Squarestone Brasil Limited
01 April 2011
1 April 2011
Squarestone Brasil Limited
(the "Company" or "Squarestone Brasil")
Funding arrangements to develop Golden Square shopping mall to
completion &
option to develop jointly at least three additional shopping
malls in Brazil
Squarestone Brasil Limited (AIM: SQB.L, SQBW.L), the
Anglo-Brazilian real estate development and investment company,
today announces that it has, via its wholly owned subsidiary SB
Brast Participacoes S.A., signed agreements with a leading
Brazilian investment bank and an experienced US private equity real
estate group (the "Bondholders") to fund and develop to completion
Golden Square Shopping Mall.
Under the funding arrangements through a Convertible Bond (the
"Bond"), the Bondholders have committed R$192.5m to SB Brast
Participacoes S.A. ("SB Brast"), a wholly owned subsidiary of
Squarestone Brasil, to assist in funding the acquisition of the
remaining 50 per cent that it does not already own of the Golden
Square shopping mall development project and importantly also
provides Squarestone Brasil with the funds to construct the project
to full completion. Construction of the 31,000 sq m net leasable
area ("NLA") scheme is expected to begin in the next three weeks
and Golden Square is expected to open by Q3 2012. Prior to this
transaction Squarestone Brasil owned a 50 per cent interest in
Golden Square.
Golden Square shopping mall is a flagship development for
Squarestone Brasil, opening up an entirely new growing 'A' and 'B'
class consumer market for Squarestone Brasil to access. Upon
completion, Golden Square will be a 31,000 sq m NLA mall on three
levels, designed and built to international shopping mall standards
combined with the local culture, tastes and fashions of Brazil that
is intended to deliver the optimal tailored retailing experience
targeting the ABC region of Sao Paulo. Golden Square's goal is to
redefine the local retail experience based on international
standards, hosting both domestic and international retailers under
one roof and presenting a distinctive retail offer that currently
does not exist in this part of greater Sao Paulo.
The Bond is under terms consistent with local market practice.
The coupon on the Bond during the development phase of Golden
Square has a margin of 3.25 per cent above the benchmark SELIC rate
(Bank base rate in Brazil) currently at 11.75 per cent and
decreasing to a margin of 0.75 per cent above SELIC after Golden
Square has substantially opened. Both coupon rates are index-linked
as are rents. The interest shall accrue until six months after
Golden Square has substantially opened at which point, interest
becomes payable on a monthly basis and amortised over five
years.
The Bond can be converted into equity of SB Brast for a period
of up to seven months after Golden Square has substantially opened.
The Directors of Squarestone Brasil currently expect conversion to
occur since projected returns to the Bondholders are significantly
higher following conversion. Conversion will result in Squarestone
Brasil's final equity position in Golden Square being a minimum of
33 per cent. Any interest accrued is discounted from the
outstanding balance of the Bond for the purposes of the
conversion.
Additionally, under an option agreement (the "Option Agreement")
signed with Squarestone Brasil, the Bondholders have the right to
buy 49 per cent of the management company of Squarestone Brasil,
Squarestone Brasil Administracao E Participacoes S.A., subject to
conversion of the Bond into equity of SB Brast and also providing
50 per cent of the required equity for the funding of three
additional malls.
The Board of Squarestone Brasil believes that the Bond and
Option Agreement:
-- underline not only support of Squarestone Brasil's management
and ambitions but also their confidence in the potential of Golden
Square;
-- will be the first of a series of shopping mall developments
in Brazil and unlock the potential value in Golden Square;
-- remove the need to raise construction financing for Golden
Square, that would cause a delay to the start of construction;
-- bring added value to Squarestone Brasil from the association
and support of one of the leading Brazilian Investment Banks and an
experienced real estate investment fund manager; and
-- place Squarestone Brasil in an excellent position to
capitalise on the significant shopping mall opportunities in
Brazil.
Squarestone Brasil will pay a total consideration of R$95.2m to
acquire the remaining 50 per cent of Golden Square that it does not
already own and to settle the outstanding amount owed by
Squarestone Brasil for its original 50 per cent acquisition.
Squarestone Brasil will make an initial payment of R$60m, R$40m of
which will come from its own cash reserves with the remaining R$20m
from the Bond advance. The balance of the total consideration is
deferred until the opening of the mall.
James Morse, Chief Executive of Squarestone Brasil,
commented:
"Squarestone Brasil is delighted to have two such strong
partners working together with us in Brazil. We believe that these
agreements will help us deliver on our strategy and ambitions to be
a leading developer and manager of Brazilian shopping malls and,
together, we now represent a significant force in this space. We at
Squarestone Brasil look forward to a long and successful
partnership on Golden Square and at least three other shopping mall
developments in Brazil.
These agreements emphasise Squarestone Brasil's capabilities in
and commitment to the Brazilian shopping mall sector and will allow
us to bring a new generation of shopping malls to Sao Paulo."
For further information contact:
Squarestone Brasil Limited Tel: +44 (0)20 7074 1800
James Morse, Chief Executive
Robert Sloss, Executive Director
Tim Barlow, Executive Director
Liberum Capital (Nominated Adviser Tel: +44 (0)20 3100 2000
and Broker)
Chris Bowman
Kreab Gavin Anderson (PR Adviser) Tel: +44 (0)20 7074 1800
James Benjamin squarestone@kreabgavinanderson.com
Natalie Biasin
Notes to editors
Squarestone Brasil
Squarestone Brasil Limited (AIM: SQB.L, SQBW.L) is an
Anglo-Brazilian real estate investment and development company
specialising in the Brazilian shopping mall sector. The Company
combines local real estate market knowledge with international
expertise in retailing, construction and development and is focused
on introducing to the Brazil shopping mall sector international
standards in terms of design, construction, operation and asset
management.
Squarestone Brasil Limited is a Guernsey registered and
domiciled company with an operational subsidiary in Sao Paulo. Its
Ordinary Shares and Warrants are traded on AIM where it was
admitted to trading in April 2010. The business carried on by
Squarestone Brasil was co-founded in 2007 by James Morse, Tim
Barlow and Robert Sloss.
Further information on Squarestone Brasil is available from the
Company's website: www.squarestone.com.br
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
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