22nd Apr 2008 09:22
X5 Retail Group N.V.22 April 2008 X5 RETAIL GROUP N.V. LAUNCHES USD 1.0 BILLION RIGHTS OFFERING TO FINANCE ACQUISITION OF KARUSEL HYPERMARKET CHAIN Amsterdam, 22 April 2008 - X5 Retail Group N.V. (the "Company"), Russia'slargest food retailer in terms of revenue (LSE ticker: "FIVE"), today announcesthe launching of an offering of rights to acquire Global Depositary Receipts ("GDRs") (the "Offering"), following the decision of the Supervisory Boardyesterday based on the authorisation by the Extraordinary General Meeting ofShareholders. • The Offering comprises an offering of rights to acquire 2 new GDRs ("New GDRs") for every 9 existing GDRs held by holders of GDRs on 18 April 2008 (the " Record Date"). In total, 48,106,700 New GDRs will be issued. Each GDR represents 0.25 of an ordinary share of the Company. The subscription price (" Subscription Price") for the New GDRs is USD 21.32 per New GDR (excluding the Depository's issuance fee of USD 0.05 per new GDR), representing a 34.4% discount to the closing price on 21 April 2008, which equates to a 30.0% discount to the Theoretical Ex Rights Price (TERP). • The gross proceeds of the Offering will amount to USD 1,026 million and are intended to fund the cash portion of the purchase price for Formata Holding B.V., the owner of the Karusel hypermarket chain ("Karusel"), and any associated rebranding, restyling and integration costs. The final purchase price of Karusel is yet to be determined, but is expected to be up to USD 970 million. As previously announced, the Company has an option to pay up to 25% of the purchase price for Karusel with new shares in the Company, at approximately USD 33 per GDR.* • Alfa Group controls approximately 43% of the GDRs of the Company and has an economic interest in an additional approximately 5% of the GDRs of the Company which are subject to a financing arrangement with a Bank. Alfa Group is fully supportive of the Offering and has irrevocably committed to take up the entitlement to the New GDRs, relating to the total of 48% of the GDRs of the Company, pursuant to an agreement with the Bank. Certain members of the Company's management and senior employees, including Lev Khasis, the Company's CEO, have also committed to take up their entitlements. The Offering (other than in respect to the GDRs that have been irrevocably committed) is being fully underwritten by the Joint Bookrunners. • The subscription period (the "Subscription Period") for New GDRs begins on 22 April 2008 and ends on 2 May 2008. The roadshow for the Offering will begin today. Bookbuilding by the underwriters for unsubscribed New GDRs (the " Rump Offering") will take place upon the close of the Subscription Period. Settlement of the New GDRs subscribed for during the Offering is expected on 7 May 2008 and closing of the Rump Offering on 9 May 2008. • Existing holders of GDRs as at the Record Date will be entitled to participate in the Offering, providing they can certify that they are (i) "qualified investors" (within the meaning of the Prospectus Directive of the European Union) located outside the United States who subscribe in accordance with Regulation S under the Securities Act; or (ii) "qualified institutional buyers" (as defined by Rule 144A under the U.S. Securities Act of 1933). • Rights to acquire the New GDRs will not be tradable and any New GDRs which are not subscribed for by the end of the Subscription Period may be offered for sale by the underwriters in the Rump Offering. If the Rump Offering is executed at a higher price per GDR than the Subscription Price, the proceeds resulting from the difference between the Rump Offering price and Subscription Price (net of certain expenses) will be paid to certain GDR holders pro-rata on the basis of unsubscribed GDRs. GDR holders who will be entitled to this excess payment are those who choose not to participate or who are not eligible to participate in the Offering and GDR holders who subscribed for only a portion of their entitlement. • Citi and Goldman Sachs International are Joint Global Coordinators of the Offering. Alfa Capital Markets, Citi and Goldman Sachs International are Joint Bookrunners and Underwriters. BNP PARIBAS, Commerzbank Corporates & Markets, ING and Raiffeisen Centrobank are Co-Lead Managers. Commenting on today's announcement, Lev Khasis, Chief Executive Officer of X5Retail Group N.V., said: "The Offering that we have announced today will enable us to finance theacquisition of Karusel. This acquisition will significantly strengthen ourleadership in the fast-growing Russian retailing sector, giving us a presenceacross store formats unmatched by any of our competitors. It is a majorstrategic advance for the Company and we therefore feel it is important to giveour current shareholders priority in benefiting from Karusel's contribution toour growth strategy. We look forward to presenting this transaction to ourshareholders today and over the next ten days." Karusel Overview At the end of 2007, Karusel was the fifth largest hypermarket operator in Russiaboth by revenue and by selling area with selling area of approximately 115thousand square meters at 31 December 2007. For the year ended 31 December 2007, Karusel reported net sales of USD 831.1million. Its EBITDA for 2007 was USD 70.2 million and its net profit was USD19.9 million. For the first quarter of 2008, Karusel net sales increased by 67%year-on-year to USD 252.5 million, according to its preliminary unauditedresults. For the same period, the average ticket in the Karusel hypermarkets wasUSD 22.97 (net of VAT). Karusel owns and operates hypermarkets located in St. Petersburg and North Westof Russia, the Moscow region, Nizhny Novgorod, Dzerzhinsk, Volgograd andIzhevsk. There are currently 23 hypermarkets operating under the Karusel brand.Three more hypermarkets are under construction. Strategic Rationale The acquisition of the Karusel hypermarket chain will represent a significantmilestone in the development of the Company's business and will enable theCompany to: • reinforce its position as Russia's largest food retail operator in terms of revenue and significantly increase its lead ahead of its closest competitors; • immediately establish a leading position in the hypermarket format, the fastest growing food retail format in Russia; • enhance the Company's scale and efficiencies in the regions of its operations as Karusel's stores are complementary to X5's existing regional presence; • enhance X5's asset base with high quality locations and real estate ownership; and • extract significant synergies from the combination of the two businesses. - Ends - * As provided in the Call Option Agreement, the Share Consideration is based on the volume weighted average price of an X5 ordinary share for the 30-day period immediately prior to the date of the Option Notice. Note to Editors: X5 Retail Group N.V. is Russia's largest food retailer in terms of sales. TheCompany was created as a result of a merger between Pyaterochka (soft discounterchain) and Perekrestok (supermarket chain) on 18 May 2006. As at 31 March 2008, X5 had 731 Company managed soft discount stores located inMoscow (321), St. Petersburg (249) and other Russian areas (161), 183 Companymanaged supermarkets across Central Russia and Ukraine, including 108 stores inMoscow (Moscow region and Yaroslavl region), and 16 Company managedhypermarkets. As at 31 March 2008, X5's franchisees operated 711 stores across Russia andKazakhstan. X5's net sales for the full year 2007 reached USD 5,320 mln, an increase of 53%year-on-year. Gross profit for the period totaled USD 1,404 mln, EBITDA amountedto USD 479 mln. Full year 2007 net income reached USD 144 mln. X5 Retail GroupN.V.'s net retail sales for the first quarter 2008 increased 61% year-on-year inUSD terms and reached USD 1,775 mln. X5's share capital currently consists of 54,120,038 issued ordinary shares equalto 216,480,152 GDRs, including 942,278 ordinary shares (3,769,112 GDRs) held bythe Company as Treasury shares. For further details please contactAnna Kareva Elena CherkalovaIR Director PR ManagerTel.: +7 (495) 980-2729, ext. 22 162 Tel.: +7 (495) 950-5577e-mail: [email protected] e-mail: [email protected] Important Disclaimers This announcement includes statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identifiedby the fact that they do not only relate to historical or current events.Forward-looking statements often use words such as" anticipate", "target", "expect", "estimate", "intend", "expected", "plan", "goal" believe", or otherwords of similar meaning. By their nature, forward-looking statements involve risk and uncertainty becausethey relate to future events and circumstances, a number of which are beyond X5Retail Group N.V.'s control. As a result, actual future results may differmaterially from the plans, goals and expectations set out in theseforward-looking statements. Any forward-looking statements made by or on behalf of X5 Retail Group N.V.speak only as at the date of this announcement. Save as required by anyapplicable laws or regulations, X5 Retail Group N.V. undertakes no obligationpublicly to release the results of any revisions to any forward-lookingstatements in this document that may occur due to any change in its expectationsor to reflect events or circumstances after the date of this document. *** This document is an advertisement for the purposes of applicable measuresimplementing Directive 2003/71/EC (such Directive, together with any applicableimplementing measures in the relevant home Member State under such Directive,the "Prospectus Directive"). A prospectus prepared pursuant to the ProspectusDirective will be published, which, when published, can be obtained from(www.londonstockexchange.co.uk). These materials are not an offer for sale of securities in the United States.Securities may not be offered or sold in the United States absent registrationwith the United States Securities and Exchange Commission or an exemption fromregistration under the U.S. Securities Act of 1933, as amended. X5 Retail GroupN.V. has not registered, and does not intend to register any portion of anyoffering in the United States and does not intend to conduct a public offeringof GDRs in the United States. In any EEA Member State that has implemented the "Prospectus Directive, thiscommunication is only addressed to and is only directed at qualified investorsin that Member State within the meaning of the Prospectus Directive. This communication is only being distributed to and is only directed at (i)persons who are outside the United Kingdom or (ii) investment professionalsfalling within Article 19(5) of the Financial Services and Markets Act 2000(Financial Promotion) Order 2005 (the "Order") or (iii) high net worthcompanies, and other persons to whom it may lawfully be communicated, fallingwithin Article 49(2)(a) to (d) of the Order (all such persons in (i), (ii) and(iii) above together being referred to as "relevant persons"). GDRs are onlyavailable to, and any invitation, offer or agreement to subscribe, purchase orotherwise acquire such GDRs will be engaged in only with, relevant persons. Anyperson who is not a relevant person should not act or rely on this document orany of its contents. This document is not a public offer or advertisement of securities in theRussian Federation, and is not an offer, or an invitation to make offers, topurchase, sell, exchange or transfer any securities in the Russian Federation orto or for the benefit of any Russian person or entity. Information contained inthis document is not an offer, or an invitation to make offers, sell, purchase,exchange or transfer any securities in the Russian Federation or to or for thebenefit of any Russian person, and does not constitute an advertisement of anysecurities in the Russian Federation. The securities of X5 Retail Group N.V.have not been and will not be registered in Russia and are not intended for "placement" or "circulation" in Russia. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
X5 Retail