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2007

Increase of share capital


ARCO VARA AS
ANNOUNCEMENT, 15.06.2007

On 15 June 2007 the shareholders of Arco Vara AS decided to increase the share capital of Arco Vara AS as follows:

1. To increase the share capital of Arco Vara AS with supplementary contributions by 275 000 000 kroons by issuing 27 500 000 new shares with the nominal value of 10 kroons each share. The new amount of the share capital of Arco Vara AS will be 952 841 500 kroons.

2. To exclude the pre-emptive right of existing shareholders to subscribe for new shares in the course of share capital increase. To grant the right to subscribe for all new shares to AS SEB Eesti Ühispank for the purpose of conducting the initial public offering of shares of Arco Vara AS.

3. The subscription for the new shares by AS SEB Eesti Ühispank shall take place on 20 June 2007 in Tallinn.

4. The new shares shall be issued at a premium which amount shall be 28 kroons per share.

5. The new shares shall be paid for by monetary contributions only. Thedate of payment shall be 20 June 2007. The new shares shall be paid for by wire transfer to the Company's bank account at ASSEB Eesti Ühispank in such way that the money is received on the above-referred bank account by the above-referred due date.

6. The Management Board of the Company shall have the right to extend the period of subscription for the new shares or cancel the new shares that have not been subscribed for during the period of subscription. The Management Board may exercise such rights within 15 days as of the end of the subscription period.

7. The new shares to be issued in the course of the share capital increase will be eligible for dividends declared in respect of the financial year commencing on 1 January 2007.

For additional information:

Heigo Metsoja
Investor Relations Manager, Arco Vara AS
This email address is being protected from spambots. You need JavaScript enabled to view it.
tel:+372 6144 654

Results of the initial public offering of shares of Arco Vara AS


ARCO VARA AS
ANNOUNCEMENT, 15.06.2007

The initial public offering (the “Combined Offering”) of shares of Arco Vara AS (the “Company”) ended on 14 June 2007.

In conjunction with the public offering of shares of the Company (the “Shares”) in Estonia and Latvia (the“Retail Offering”) Shares were offered to institutional investors in and outside Estonia and Latvia and to certain employees of the Company and its subsidiaries and joint ventures (the “Group”) in Lithuania, Romania and Bulgaria (the “International Offering”). In addition, a private placement of Shares was made to certain key managers of the Group in connection with their incentive scheme (the“Management Incentive Offering”).

After the offer period the Company and its shareholders Osaühing Toletum and Osaühing HM Investeeringud (the “Selling Shareholders”) fixed the offer price at EEK 38. For investors in Latvia, theoffer price was established at LVL 1.6909, calculated on the basis of the official daily exchange rate published on the web page of Eesti Pank (the Central Bank of Estonia) on 14 June 2007.

The total demand in the International Offering and Retail Offering was 69,235,119 Shares, which is approximately 2.1 times higher than 32,900,000 Shares which is the base number of Shares in the International Offering and Retail Offering (i.e. the total number of Shares in the Combined Offering excluding the Management Incentive Offering and Shares allocated in the course of over-allotments). Thetotal demand in the International Offering was 67,131,069 Shares, while the total demand in the Retail Offering was 2,104,050 Shares.

A total of 39,850,000 Shares were allocated in the Combined Offering (including the Shares allocated in the Management Incentive Offering and over-allotments), of which 27,500,000 were new Shares issued by the Company, 6,950,000 were existing Shares sold by the Selling Shareholders and 5,400,000 were Shares allocated in the course of over-allotments.

37,296,752 Shares (approximately 93.6% of the Combined Offering) were allocated in the International Offering and 1,034,248 Shares (approximately 2.6% of the Combined Offering) were allocated in the Retail Offering, of which 148,601 Shares were allocated to the employees and managers of the Group who were entitled to preferred allocation in the Retail Offering (the“Preferred Managers and Employees”).

Of the Shares offered in the Management Incentive Offering, 1,519,000 shares (approximately 3.8% of the Combined Offering) were sold to the key managers of the Group and the remaining 31,000 shares were allocated to investors in the Retail Offering and International Offering.

After the Combined Offering, the share capital of the Company will be EEK 952,841,500. The Shares allocated in the Combined Offering represent approximately 41.82 per cent of the share capital of the Company after the Combined Offering, assuming that the Global Coordinator of the Combined Offering, Skandinaviska Enskilda Banken AB (publ), exercises its option to purchase from the Selling Shareholders 5,400,000 additional Shares to cover over-allotments (“Over-Allotment Option”). After the Combined Offering Osaühing Toletum will control approximately 38.79 per cent of the votes and Osaühing HM Investeeringud approximately 19.39 per cent of the votes that can be cast in the General Meeting of Shareholders of the Company, assuming that the Over-Allotment Option is exercised in full.

In whole, 1,834 retail investors participated in the Retail Offering. In the Retail Offering, the Shares were allocated as follows.

The purchase orders from one to 750 shares (included) were accepted in full. The part of the purchase orders, which exceeded 750 shares, was rejected.

The Preferred Managers and Employees were granted a preferential allocation. All their purchase orders were fully accepted.

The Shares allocated in the Retail Offering will be transferred to the securities accounts of the investors on or about 20 June 2007. An investor may obtain information about the number of Shares allocated to it/him/her after thesettlement has been completed by submitting an inquiry to the custodian operating its/his/her respective securities account in accordance with the terms and conditions applied by that custodian. The amount in excess of what the investor is required to pay for the Shares will be released to the investor by its/his/her custodian on or about 20 June 2007.

Trading in the Shares is expected to commence on the Tallinn Stock Exchange on or about 21 June 2007.

For additional information:

Heigo Metsoja
Investor Relations Manager, Arco Vara AS
This email address is being protected from spambots. You need JavaScript enabled to view it.
tel:+372 6144 654

Arco Vara IPO was 2,1 times over-subscribed


Announcement,15.06.07
Arco Vara AS

The initial public offering of Arco Vara AS shares closed yesterday with the aggregate demand exceeding the basic number of shares offered 2,1 times. The price of the offer was set at EUR 2,43 (EEK 38) per share.

The base of the offering was 32.9 million shares, of which 27.5 million are new shares to be issued by the company. Additionally, the offer included an over-allocation option and a fixed number of shares were offered as part of the management incentive program. In total, the investors subscribed to 69 235 119 shares, which is approximately 2.1 times more than the basic offer size.

As a result, Arco Vara gains EUR 66.79 million (EEK 1.045 billion) to finance new projects.

Mr Viljar Arakas, CEO of Arco Vara, said the company is entirely pleased with the offering results and with the entire process.

“Over these past weeks I have heard and read hundreds of opinions and statements about Arco Vara both in Estonia and all around the world. There’s been discussion about the timing of the IPO, but the quality of Arco Vara as a company has been out of the question. I wish to thank our employees who constitute the success story that Arco Vara is and our new investors who have had faith in this team,” said Mr Arakas.

Head of corporate finance of the global coordinator of the offering, SEB Enskilda, Mr Henrik Igasta said that markets are full of real-estate offerings of Eastern Europe. “The fact that the management of Arco Vara successfully distinguished itself from the crowd is an achievement in the current climate, an achievement not to go unnoticed also on its home turf, since we saw a clear division of optimists and pessimists. Therefore the result clearly exceeds our expectations,” said Mr Igasta. “This is the third largest IPO in Estonia in ten years, after Eesti Telekom and Tallink Grupp, and it should be noted that the offering was conducted in a much more challenging environment.”

37 296 752 shares (approximately 93.6%) were allocated to institutional investors in Estonia and globally and to company employees outside Estonia and Latvia. 69 institutions from 15 countries participated in the international offering.

1 034 248 shares (approximately 2.6%) were allocated to retail investors through the public offering in Estonia and Latvia. 1 834 retail investors participated in the public offering. Of the latter, 148 601 shares were allocated to Arco Vara employees and management. 1 519 000 shares (approximately 3,8%) were sold within the management incentive program.

Each retail subscriber will receive up to 750 shares, meaning that subscriptions between 1 and 750 shares were accepted in full. Investors subscribing more than 750 shares were allocated 750 shares.

The average subscription of retail investors (except employees and management) was for 1094 shares.

The total shares allocated through the international and public offering were geographically distributed as follows: United States of America 31%, United Kingdom 26%, rest of Europe 19%, Scandinavia 13% and Baltic States 13%.

After the offering the equity of the company is EUR 60 897 671 (EEK 952 841 500). Shares offered constitute approximately 41,82% of company shares, on the condition that the global coordinator of the offering SEB Enskilda realizes in full the option to buy additionally 5,4 million shares for over-allocation from the majority owners of Arco Vara, OÜ Toletum controlled by Mr Arti Arakas and Mr Richard Tomingas and OÜ HM Investeeringud owned by Mr Hillar-Peeter Luitsalu. In the event, former shareholders will altogether control 58,18 percent of votes at the shareholders general meeting.

Shares allocated will be credited to the securities’ accounts of the investors presumably around June 20th, trading with the shares on the Tallinn Stock Exchange will commence presumably on June 21st.

Arco Vara was established in 1992 in Estonia and within 15 years has grown to become the leading real-estate company in the Baltic States, covering brokering, development and construction. The company has offices in 25 cities in Estonia, Latvia, Lithuania, Ukraine, Bulgaria and Romania. At the conclusion of the first quarter the group and its joint ventures employed a total of 546 people. The audited consolidated revenues for 2006 totaled EUR 31m, with the net profit at EUR 13.9m.

Further information:
Heigo Metsoja
Arco Vara AS investor relations’ manager
This email address is being protected from spambots. You need JavaScript enabled to view it.
tel: +372 6144 654

Linstow acquired 50% of a Arco Vara development project in Latvia


According to an agreement signed on 29.06.07 Arco Vara AS's subsidiary Arco
Investeeringute AS and Arco Vara's head of Latvian operations Mr. Viktors
Savins continue the Bišumuižas II development project with a third counterpart,
Linstow Baltic SIA, who acquired a 50% stake in the Bišumuižas nami SIA.

Arco Investeeringute AS and Mr. Viktors Savins sold respectively a 40% and 10%
share in the company to Linstow for the nominal value (respectively 800 LVL and
200 LVL) and after the transaction Bišumuižas nami SIA will within four months
pay Arco Vara AS and Mr. Viktors Savins EUR 19.22 mln for the Bišumuižas II
development project - EUR 15.376 mln to Arco Vara AS and EUR 3.844 mln to Mr.
Viktors Savins.

As the result of the transaction Arco Vara group will receive consolidated
revenue of approximately EUR 7.5 mln in the second quarter. Arco Vara's
consolidated and unaudited net profit in the first quarter of 2007 was EUR 4.4
mln. Arco Vara will publish the full financial results for first half of 2007
in Week 35.

The sold project's value in the group's consolidated accounts reflected the
acquisition price of EUR 0.89 mln.

Information about the conditional sales agreement reached between the parties
on May 18th 2007 has been previously published in the listing documents of Arco
Vara AS.

After the closed deal Arco Investeeringute AS retains a 40% stake in Bišumuižas
nami SIA and Mr. Viktors Savins retains a 10% stake. The transaction will
require approval from the Latvia's competition council to be enforced.

According to available information Bišumuižas nami SIA is not involved in any
judicial disputes or court proceedings. As the head of Latvian operations of
Arco Vara was party to the transaction as the seller of a separate 10% stake,
the transaction qualifies as a transaction with a connected person according to
Tallinn stock exchange regulation.

Bišumuižas nami SIA acquired the Bišumuižas II development project on 24.04.07
by purchasing Sportings Riga SIA from Arco Vara AS and Viktors Savins. The
material property of Sportings Riga SIA is a property in Riga located on Zalu
Street 8, size 111 596 m2. It is proposed to possibly develop 1085 apartments
on the property.

Linstow Baltic SIA's parent company Linstow AS is part of the Anders Wilhelmsen
Group and a leading real estate developer in Norway, whose one major focus is
developing hotels and retail premises in the Baltic States and in Scandinavia.

1 EUR=15,6466 EEK
1 EUR=0,7028 LVL
1 LVL=22,4779 EEK

Further information:
Heigo Metsoja
+ 372 614 4654
This email address is being protected from spambots. You need JavaScript enabled to view it.

Concluding a loan contract


On 14.08.2007 Arco Capital EOOD, a subsidiary of Arco Vara AS, and Raiffeisen
Bank signed a loan agreement in order to finance "Madrid" development project.
The value of the contract is mEUR 13,5. According to the conditions precedent
the loan must be secured by the mortgage on the land. Interest rate is 3m
Euribor+3,5% and must be repaid by 20.06.2010.
 
The plot has a construction right of 24 700 m2 of gross space. In three years
the company constructs there residential and commercial spaces.
 
1 EUR=15,6466 EEK
 

Additional information:
Heigo Metsoja
+372 6144 654
This email address is being protected from spambots. You need JavaScript enabled to view it.