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Preliminary Results, Amendment to Convertible Securities & Management Agreement and New Investment Focus



2013-02-28 08:10:26 -


EUROCASTLE INVESTMENT LIMITED
        FOR IMMEDIATE RELEASE
Contact:
International Administration Group (Guernsey) Limited
Company Administrator
Attn:  Mark Woodall
Tel:  +44 1481 723450

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO
THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO
DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

Preliminary Results, Amendment to Convertible Securities & Management Agreement
and New Investment Focus

Guernsey. 28 February 2013 - Eurocastle Investment Limited (Euronext Amsterdam:
ECT) ("Eurocastle" or the "Company") hereby announces its preliminary
results
for the 12 months ended 31 December 2012.

Highlights

* The Company expects to report that its NAV has decreased by €55.6 million
(€0.18 per share) to €307.3 million or €0.46 per share(1) mainly as a result
of share dilution reflecting interest accruing on the convertible debt
(€0.10 per share) and a decrease in the fair value of the Company's
investment property (€0.10 per share), which has been partially offset by
gains realised from senior debt repurchases net of impairment losses within
Eurocastle's Debt Investment portfolio.

* The Company has secured a 12 month extension of the senior loan on the Drive
portfolio to January 2014 with interim amortisation targets to be met
through an agreed sales programme.  Eurocastle remains in constructive
discussions with the lenders of the junior facility which matured in January
2013.

* As at 31 December 2012, Eurocastle had a corporate cash balance of €38.8
million.

* The Company proposes to clean up its capital structure by re-striking the
conversion price in its outstanding Convertible Securities from €0.30 to
€0.05 per share and converting all such outstanding convertible debt into
ordinary shares.

* Conditional on such conversion, the Company has reached agreement to rebase
the management fee calculation under its management agreement with FIG LLC,
an affiliate of Fortress Investment Group LLC ("Fortress"), which will
preserve capital for investment.

* The Company sees opportunities in moving its investment focus to distressed
Italian debt and real estate.

(1)( )The NAV disclosed is on a fully diluted basis and excludes the negative
NAV of the Mars Floating portfolio as this financing is non-recourse to the
Company and not callable as a result of any changes in the value of the assets.

Summarised Balance Sheet 2012 2011
(unaudited) (audited)
€'000 €'000

Cash and cash equivalents 141.3 117.7

Real Estate investment property 2,020.3 2,201.8

Debt investments 456.1 494.2

Other assets 31.7 57.1
---------------------------------------------------------------------------
Total assets 2,649.4 2,870.8
---------------------------------------------------------------------------
Interest bearing debt financing (2,251.0) (2,405.9)

Other liabilities (106.3) (102.0)
---------------------------------------------------------------------------
Total liabilities (2,357.3) (2,507.9)
---------------------------------------------------------------------------


Net assets 292.1 362.9

Net assets €/share 0.44 0.64



Net assets of the Mars Floating Portfolio (15.2) 5.7



Adjusted net assets(2) 307.3 362.9

Adjusted net assets €/share 0.46 0.64



Summarised Income Statement 2012 2011
(unaudited) (audited)
€'000 €'000

Rental and service charge income 167.7 121.1

Interest income 23.9 25.2

Net impact of sale of Mars Fixed 6.8 (9.4)

Decrease in fair value of investment properties (94.7) (28.8)

Other than temporary impairment on securities (16.7) (41.0)

Interest expense (87.2) (80.8)

Service charges and property operating expenses (57.0) (41.2)

Other operating income / (expenses) (14.8) (16.1)
---------------------------------------------------------------------------
Net (loss) / profit before taxation (71.9) (71.0)

Taxation (9.7) (1.1)
---------------------------------------------------------------------------
Net (loss) / profit after taxation (81.7) (72.1)
---------------------------------------------------------------------------

(2) Excludes the negative net assets of the Mars Floating portfolio.

The Company expects to publish its audited financial statements for the year
ended 31 December 2012 in the second half of March 2013.

Amendments to Convertible Securities and Management Agreement

Eurocastle also announces that it has today posted to the holders of its
€75,000,000 20 per cent. perpetual subordinated convertible securities (the
"Series A Convertible Securities") and the holders of its €24,750,000 20 per
cent. perpetual subordinated convertible securities (together with the Series A
Convertible Securities, the "Convertible Securities") a notice seeking their
consent to certain amendments to the conditions of the Convertible Securities.
The amendments, if approved by the requisite majority of securityholders, would
authorise Eurocastle to mandatorily convert all but not some of the outstanding
Convertible Securities (total expected balance as at 28 February 2013 of €166.5
million) on or prior to 31 May 2013 at a Conversion Price of €0.05 per ordinary
share, resulting in the issue of new ordinary shares representing in excess of
96% of the resultant aggregate number of ordinary shares in issue. The
Conversion Price of €0.05 is equal to the 90 day trailing average price of the
Company's ordinary shares as quoted on Euronext.

If the securityholders approve the amendment to the conditions of the
Convertible Securities, Eurocastle currently expects to exercise the mandatory
conversion right promptly following the effective date of the amendment.

Eurocastle and Fortress, its investment manager, have agreed to make certain
amendments to the management and advisory agreement pursuant to which Fortress
manages Eurocastle's assets, with the effectiveness of such amendments being
conditional upon the conversion of all of the outstanding Convertible
Securities. The agreed amendments would (i) reduce the amount payable by
Eurocastle to Fortress as annual management fee by resetting the capital base
upon which such fee is calculated from an amount equal to aggregate equity
proceeds raised to €300 million plus an amount equal to the proceeds of any
future issue of equity share capital; and (ii) similarly reset the capital base
upon which Fortress's entitlement to incentive compensation is calculated.

Taken together, Eurocastle believes that these measures will simplify the
capital structure of the company, reduce the Company's ongoing operating costs
thus freeing up additional capital for investment, and re-align the investment
manager's incentives. If market conditions permit, the Company may seek to raise
additional capital through the issue of further shares in order to make new
investments. Subject to profits being available for the purpose, the Company
also intends to resume regular dividend payments.

New Investment Opportunities

Concurrently, Eurocastle is intending to pursue new investment opportunities in
the Italian real estate market. Fortress believes there is the potential for
attractive gross unlevered returns through investment in Italian non-performing
loans and other real estate assets. Fortress has had a significant presence in
Italy since 2000 both as an investor in non-performing loans and through its
ownership of Italfondiario, the largest independent non-performing loan servicer
in Italy.

Enquiries

Mark Woodall Tel: +44 1481 723450


Holders of Convertible Securities wanting further information should contact
Anson Registrars Limited, the Registrar and Principal Paying, Transfer and
Conversion Agent for the Convertible Securities, on +44 1481 711301 or
registrars@anson-group.com.

This announcement does not constitute or form part of any offer or invitation to
purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue,
or any solicitation of any offer to sell, otherwise dispose of, issue, purchase,
otherwise acquire or subscribe for, any security in the United States.

The securities mentioned herein have not been, and will not be, registered in
the United States under the US Securities Act of 1933 (the "Securities Act").
Securities may not be offered or sold in the United States absent registration
or an applicable exemption from the registration requirements of the Securities
Act. There will be no public offer of the securities mentioned herein in the
United States.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO
THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO
DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION.

Neither the content of Eurocastle's website (or any other website) nor the
content of any website accessible from hyperlinks on Eurocastle's website (or
any other website) is incorporated in this announcement.

Forward-Looking Statements

Some of the statements contained in this announcement may include forward-
looking statements which reflect Eurocastle's or, as appropriate, the Directors'
current views with respect to future events and financial performance.
Statements which include the words "expects", "believe",
"intend", "plan",
"project", "anticipate", "would" and similar statements of a
future or forward-
looking nature identify forward-looking statements for the purposes of the US
federal securities laws or otherwise.

All forward-looking statements address matters that involve risks and
uncertainties. Accordingly, there are or will be important factors that could
cause Eurocastle's actual results to differ materially from those indicated in
these statements. These forward-looking statements speak only as at the date of
this announcement. Undue reliance should not be placed on the forward-looking
statements in this press release, which are based on information available to
Eurocastle as of the date hereof. The financial information included in this
press release reflects Eurocastle's current preliminary estimates, is subject to
the completion of the Company's year end financial review process and is subject
to change. Actual results for the 12 months ended 31 December 2012 could differ
in material ways from the preliminary results and outlook provided herein.
Subject to any continuing obligations under the Listing Rules and the Disclosure
and Transparency Rules, Eurocastle undertakes no obligation publicly to update
or review any forward-looking statement contained in this announcement, whether
as a result of new information, future developments or otherwise.



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Source: Eurocastle Investment Limited via Thomson Reuters ONE
[HUG#1681673]


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