15th Dec 2005 08:00
Engel East Europe N.V.15 December 2005 15 December 2005 Engel East Europe N.V. Completion of £30 million Placing at a price of 108p valuing Engel East Europe N.V. at £95 million Shares to start trading on AIM today Engel East Europe N.V. ("Engel East Europe", "Engel" or the "Company"), a largeCentral and Eastern European residential property developer, today confirms theplacing of new ordinary shares with institutional investors ("the Placing") andthe publication of the admission document in connection with the admission totrading of its ordinary shares on AIM, a market operated by the London StockExchange plc ("AIM"). Dealings start today. • The Placing, which was oversubscribed, comprises a total of 27.8 million new ordinary shares at 108p per ordinary share (the "Placing Price") issued by the Company and representing approximately 32 per cent of the enlarged issued share capital of the Company. • Based on the Placing Price, the market capitalisation of Engel East Europe on commencement of dealings is approximately £95 million. • Gross proceeds of the Placing are £30 million. • The Company intends to use approximately one-third of the net proceeds of the placing to finance both working capital and existing development projects totalling approximately 10,000 residential units, with total gross projected sales of about €840 million. The remaining two-thirds will be used for residential development projects currently under negotiation involving thousands of additional units throughout the Central and Eastern Europe region (the "CEE Region"), as well as future projects and expansion. • Dealings commence today. The ticker is EEE, the SEDOL number is BOP33N7 and the ISIN number is NL0000051043. • Dawnay, Day Corporate Finance Limited is Nominated Adviser to the Company and KBC Peel Hunt Ltd is the broker. Jacob Engel, founder and executive chairman, said: "We are delighted the Placing has been so well received and welcome our newshareholders in Engel. The Placing and flotation on AIM will allow us and ourshareholders to take full advantage of the exciting growth ahead for residentialproperty development throughout the CEE Region." For further information, please contact: Dawnay, Day Corporate Finance Limited +44 (0) 207 509 4570Gerald Raingold / Sandy Jamieson KBC Peel Hunt Ltd +44 (0) 207 418 8900Capel Irwin Citigate Dewe Rogerson +44 (0) 207 638 9571Rachel Lankester/ Sally Marshak Notes to editors Engel East Europe is a subsidiary of Engel General Developers Limited ("EngelGeneral Developers"), a large Israeli residential developer. Engel GeneralDevelopers has developed numerous residential projects, consisting of thousandsof homes, condominiums, townhouses, duplexes, including entire neighbourhoods,throughout Israel. In 2000, Engel General Developers identified potential in the emerging marketsof the CEE Region and decided to start developing residential projects in theCEE Region. Engel East Europe was established as a holding company for all thedevelopment activities of Engel General Developers in the CEE Region. Engel East Europe is currently involved in the development of approximately10,000 residential units in the Czech Republic, Hungary, Poland, Bulgaria,Germany and Canada with total gross projected sales of about €840 million. Theseresidential projects are in various stages of development. In addition to approximately 10,000 units in the existing projects, the Companyis in various stages of negotiations to purchase land for the development ofthousands of additional residential units, throughout the CEE Region. Engel East Europe maintains regional offices in all the countries in which itoperates, apart from Germany, using small, local management teams, whose numbersare adjusted according to the level of growth in the local developmentoperations. In order to fix its construction costs, the Company typicallyemploys subcontractors on a 'turn-key', fixed cost basis, instead of employingits own construction workers. The Company generally employs a strategy of risk sharing by partnering withfinancial institutions which co-invest in development projects. For example, ineight of its projects in Hungary, Poland and the Czech Republic, the Company haspartnered with the Heitman Fund, a real estate fund. Other partners are a unitof the Austrian bank Volksbank, which owns part of four of the Company's localprojects in the Czech Republic and a fund managed by Lehman Brothers, which hasinvested in three of the Company's Canadian projects. Engel East Europe continues to look for opportunities in emerging Europeanmarkets and the Company's principal objectives are to continue expanding itsbusiness activities in these markets. Engel East Europe employs the followingstrategies to achieve these objectives: • fixing costs and minimising risk in real estate development; • exploiting the management team's experience to identify potential development sites with relatively low land costs and high profit margins, primarily in or within commuting distance of major population centres; • adoption of flexible phased development plans, where the number of residential units in each phase is adjusted to the level of demand; • employing mainly general contractors to construct its development projects on fixed price, ''turn-key'' contracts. The majority of the sales work and the architectural work are provided by third party companies. This minimizes overheads by enabling the Company to maintain a relatively small number of employees. The Company's streamline operations enable it to adjust quickly to changing market conditions; and • agreements with certain vendors, pursuant to which Engel East Europe undertakes to pay for the land through an agreed percentage of future project proceeds, instead of cash payment, thus substantially reducing the Company's development risks. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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