10th Jun 2016 16:37
LONDON (Alliance News) - AFI Development PLC said Friday that it has agreed with VTB Bank PJSC to complete a transaction in respect of circa USD614 million of loans by June 15, having previously said the transaction would complete by June 1.
The real estate company, which develops property in Russia, said on March 30 its operating subsidiary AFI RUSS LLC received a letter from VTB, which is involved in loan agreements with two of AFI Development's subsidiaries, Bellgate Construction Ltd and Krown Investments LLC.
According to the letter, the bank had reached the conclusion that the two subsidiaries had experienced "material adverse changes in their financial conditions and there had appeared other circumstances that indicate that their obligations under the loan facility agreements could be not met on time".
Last month, AFI Development said it had been notified in writing that the bank would exercise its rights under its loan facility agreement to accelerate repayment of the USD614.0 million loans unless a transaction is completed with the bank by June 1. The bank added that full transaction documentation would need to be agreed by both parties and finalised by June 1, AFI Development had said at the time.
The transaction referred to by VTB is "currently contemplated" to involve the releasing of AFI Development and its subsidiaries from the loans in exchange for the disposal of three of AFI's properties to the bank.
AFI Development said it has now agreed to complete the transaction by June 15, extending the deadline.
If the transaction is not completed by that date, it is "highly probable that there would be a material adverse effect on the group's operations and on the value of the company's shares," AFI Development said.
Shares in AFI Development closed up 8.1% at USD0.112 on Friday.
By Hannah Boland; [email protected]; @Hannaheboland
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