3rd Dec 2007 09:03
Alpha Tiger Property Trust Limited03 December 2007 03 December 2007 Alpha Tiger Property Trust Limited £12.1 MILLION COMMITMENT TO ACQUIRE 74% EQUITY INTEREST IN A BUSINESS PARKDEVELOPMENT IN NOIDA (INDIA) Highlights • Excellent opportunity to develop a business park within Noida, a high growth office market in the National Capital Region ("NCR") of India with one of the leading developers of business parks in North India • Transaction expected to deliver high total returns to shareholders • Development expected to be completed within 24 months • Alpha Tiger now has conditionally committed 74% of total equity raised at flotation Introduction Alpha Tiger Property Trust Limited (the "Company" or "Alpha Tiger") is delightedto announce that it has successfully entered into an agreement to acquire a 74per cent. equity interest in a business park project ("Logix Technova") inNoida, in the NCR, near Delhi, India. The Company will invest in partnershipwith Logix Group ("Logix"), one of the leading developers of business parks inNorth India, in a Special Purpose Vehicle ("SPV") incorporated for the purposesof holding and developing the land which is the subject of the transaction.Logix, together with certain original allottees are the existing owners of theSPV. The Company together with Logix will develop approximately 575,000 squarefeet of business park and other support facilities at the site. The estimated gross purchase price to be paid by the Company for 74 per cent. ofthe equity (voting and economic rights) in the SPV is INR 1005 million (£12.1million). This amount shall be satisfied in stages. Initially INR 200 million(£2.4 million) will be paid, further to the satisfaction of certain conditionsprecedent, with a further INR 200 million (£2.4 million) being released to theSPV upon, inter alia, receipt of statutory approvals to commence construction(anticipated by end of January 2008). The SPV will issue to the Company a FullyConvertible Debenture ("FCD") instrument in respect of this initial INR 200million investment, with such FCD instrument accruing a coupon of 13.56 percent. per annum. The same terms shall also apply to the second tranche of INR200 million. These initial amounts will be utilised by the developer in theconstruction of the business park. Upon the earlier of either the SPV achieving 90 per cent. of the leaseable areabeing contracted to prospective tenants and 24 months from the date of thetransaction, Alpha Tiger shall convert the FCDs and accrued coupon into equityin the SPV and subscribe for further equity to achieve 74% of voting andeconomic ownership of the SPV. Prior to this conversion mechanism, the Companyshall retain a 5 per cent. voting interest in the SPV. The Development The total area of the site is approximately five acres with 30 per cent.permissible site coverage for business park development. This would potentiallyallow for 575,000 square feet of landmark development together with theprovision of other support facilities. The SPV is in the process of obtaining the final development approvals tocommence construction with such statutory approvals likely to be obtained by theend of January 2008. The preliminary architectural drawings have been preparedfor submission to the local authorities for approval, and these have beenreviewed by Alpha Tiger. The SPV has entered into a development agreement with VC Solutions PrivateLimited for the construction of the buildings and the development is forecast tobe completed and occupied within 24 months (by December 2009). Location Noida is a large planned surburban township located South-East of Delhi, withinthe NCR. Given Noida's proximity to Delhi (25km to CBD), the area has evolvedinto an established location for IT/IT Enabled Services businesses seeking alarge pool of skilled resource, with over 1 million people residing in Noida anda further 7 million people within the catchment area. The site is located at Sector-132 within the Noida Master plan 2021 and iscategorised as an institutional zone on which office and institutional usagesare permitted. The site is situated just off the main Noida Expresswayconnecting Noida with the satellite township of Greater Noida, which itself isdeveloping as a residential and institutional satellite for Noida. Noida has attracted a substantial number of significant industrial and corporateoffices including Oracle, Hewitt associates, Samsung, Barclays, Adobe, Xansa andPerot Systems. Given the substantial development of the area, Noida has become apre-eminent retail destination within the NCR including the development of oneof the largest shopping malls in the NCR, Great India Place, with approximately1 million square feet of operational retail space. Transaction Structure Alpha Tiger will ultimately acquire a 74 per cent. equity interest in the SPVand this will be achieved in stages within a 24 month period. Consideration willbe satisfied using the existing cash resources of the Company. The key terms ofthe investment are as follows: Stage 1 - First closing - no later than 15 December 2007 • Subject to certain conditions precedent (which maybe waived by the Company), Alpha Tiger will acquire a 5 per cent. equity interest in the SPV for a nominal sum and shall additionally subscribe for FCDs, such FCDs accruing a fixed coupon of 13.56 per cent. per annum. Payment of accrued interest in respect of the FCDs is in the form of a bullet payment to be converted into equity at completion of Stage 3. This initial capital will be utilised by the SPV to commence construction. • The SPV will arrange a third party loan facility to fund the proposed construction of the business park. The land will be provided as security against the loan facility. Any shortfall in funding in excess of the loan facility to complete the construction project is the exclusive responsibility of Logix and any such shortfall funding will be provided as a subscription for new (non voting) equity. Stage 2 - Second closing - expected by 31 January 2008 • Upon the completion of certain conditions precedent, principally the receipt by the SPV of approval to commence construction from the local authorities, Alpha Tiger will subscribe for a further INR 200 million (£2.4 million) of FCDs, issued by the SPV. Such FCDs will also attract an accrued coupon of 13.56 per cent. per annum with such compounded coupon to be converted into equity at Stage 3. Again such capital will be utilised by the SPV to partially fund the construction project. Stage 3 - Completion - expected before December 2009 • Alpha Tiger shall convert the FCDs and accrued coupon into equity and purchase a further equity interest after: (a) 24 months from the exchange of binding contracts or, at the option of Logix, (b) when over 90 per cent. of the leaseable area is contracted to prospective tenants. The completion mechanism for the purchase of further equity will be as follows: o The asset value of the SPV shall be calculated by capitalising at a pre-agreed discount rate the annualised rental profits and the net profit of other ancillary income of the SPV; o The net asset value ("NAV") of the SPV shall be calculated by deducting from the asset value calculated above any tenant security deposits and any other liabilities (including the third party debt secured on the SPV). Based on this NAV, Alpha Tiger shall acquire an additional equity interest in the SPV to equate to an aggregate 74 per cent. voting and economic equity interest. Such incremental consideration shall be the residual balance after the deduction of the FCDs' principal amount and the accrued interest from 74 per cent. of the calculated NAV; o Further to the completion mechanism, Alpha Tiger shall own 74 per cent. and Logix shall own 26 per cent. of the voting and economic rights of the SPV. Investment rationale This investment by Alpha Tiger represents an excellent opportunity toparticipate in the high growth office market of the NCR, with a strong localpartner focused on business park development. The project is being promoted byLogix, one of North India's established real estate companies, which hassuccessfully developed other business parks within Noida. This transaction is an opportunity for Alpha Tiger to establish a solid platformfor it to undertake other investments in similar office developments in the NCR. In addition, the site is located approximately 10 minutes from the westernborder with Delhi, and 25 minutes from the northern border. This is a definiteadvantage over the alternate office micro-markets in Noida, that are locatedalong congested access roads resulting in longer access times from Delhi andfrom other residential sectors within Noida. This transaction represents an attractive investment for the Company with acoupon rate of 13.56 per cent. on the initial capital, and the calculation ofour ultimate equity interest undertaken at an attractive discount rate whichwill provide adequate downside protection for investors. Alpha Tiger equity commitments This transaction, together with the equity commitment assumptions outlinedwithin the framework agreement with Xansa Plc, as announced on 29 May 2007, meanthat the Company now has total equity conditionally committed in excess of £53million or approximately 74 per cent. of net equity proceeds raised at the timeof flotation. Brad Bauman, Fund Manager to Alpha Tiger commented: "This investment represents an excellent opportunity for Alpha Tiger toparticipate in the high growth office market in the National Capital Region ofIndia, with a strong partner focused on business park development. Thetransaction is expected to deliver excellent returns to shareholders, which isin line with the Company's objective to achieve high total returns, whilstproviding adequate downside risk protection." An exchange rate of £1 = INR 83 is used in this announcement. Contact: Alpha Tiger Property Trust LimitedDavid Jeffreys, Chairman, Alpha Tiger +44(0)1481 723 450Brad Bauman, Alpha Tiger Fund Manager +91(0) 9980 001122Phillip Rose, CEO, Alpha Real Capital +44(0)20 7591 1609 Panmure Gordon, Nominated Adviser to the CompanyRichard Gray/Andrew Potts/Stuart Gledhill +44(0)20 7459 3600 Notes to Editors: About Alpha Real Capital LLP Alpha Real Capital is a value-adding international property fund managementgroup with operations in the Indian and other international real estate markets. Alpha Real Capital was established by Phillip Rose and Sir John Beckwith. Alpha Real Capital is the Investment Manager to Alpha Tiger. Alpha RealCapital's Indian CEO, Brad Bauman is Fund Manager to Alpha Tiger. He has 18years' experience in the real estate and finance industries, and has beenresponsible for Alpha Real Capital's Asian investment programme since 2005. About Alpha Tiger Property Trust Limited Alpha Tiger is a Guernsey registered closed-ended investment company investingin and developing Indian real estate. The Company floated on AIM in December2006, raising £75m. Further information is available at www.alphatigerpropertytrust.com About Logix Group Logix Group, based in North India, has been a front runner in establishing andpromoting the IT/ITES industry in India and has established more than 25 IT/ITESfacilities in the region. In aggregate, Logix Group has completed over 4 millionsq ft of IT facilities and has established a prime address for softwaredevelopment centers, back offices, operations and call centers. Logix Group hasa motivated team of experienced professionals to produce truly internationalclass facilities. Logix Group's IT park developments include Logix Park, Logix Techno Park, LogixInfotech Park and Logix Cyber Park. Logix Galaxia (IT Special Economic Zone) isunder development. Further information is available at www.logixgroup.in This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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