Conclusion of a sale and subscription of shares contract with Redefine Properties Limited by the Issuer and Echo Prime Properties B.V. as well as disclosure of delayed confidential information concerning circumstances related to negotiations with Redefine Properties Limited

Legal basis: art. 56 (1.2) of the Public Quotations Act – current and periodical information, art. 56 (1.1) of the Public Quotations Act – confidential information
The Management Board of Echo Investment S.A. ("the Issuer") hereby reports that on March 1st, 2016 the Issuer and a subsidiary of the Issuer – Echo Prime Properties B.V. ("the Company") concluded a sale and subscription of Company"s shares contract ("the Contract") with Redefine Properties Limited with its seat in Rosebank in the Republic of South Africa ("Redefine"). In accordance with the Contract the Issuer undertook to sell and Redefine undertook to buy shares in the Company ("the Shares Offered for Sale") while Redfine also undertook to subscribe new shares in the Company ("the New Shares") (jointly referred to as "the Shares") ("the Transaction"). The number of Shares Offered for Sale and the New Shares will be determined before they are purchased by Redefine ("the Closure") so that after purchasing them Redefine will hold 75% plus one share in the total number of shares in the Company whereas the Issuer will hold 25% minus one share in the total number of shares in the Company (including the New Shares). On the Closure day entities controlled by the Company will be owners or perpetual usufruct holders of the following properties (indirectly via Company"s subsidiaries): A4 Business Park in Katowice (stage 1 and 2), Astra Park in Kielce, Malta Office Park in Poznań, Oxygen in Szczecin, Park Rozwoju in Warsaw (stage 1 and 2), West Gate in Wrocław, Amber in Kalisz, Galaxy in Szczecin, Galeria Echo in Kielce, Galeria Olimpia in Bełchatów, Outlet Park Szczecin in Szczecin, Pasaż Grunwaldzki in Wrocław, Centrum Handlowe Echo in Przemyśl, Galeria Sudecka in Jelenia Góra, Galeria Veneda in Łomża, Centrum Handlowe Echo in Bełchatów ("the Properties"). The agreed transaction value of the Properties amounts to EUR 1,188,000,000 ("the Property Value") while the total value of the Properties disclosed in an interim report from Q3 2015 which was published by the Issuer amounted to PLN 4,480,705,000. The price of the New Shares and the Shares Offered for Sale will consist of the following:
1. the issue price for the New Shares, which will correspond to the amount the Company and its subsidiaries ("the Group") earmark for the reduction of the Group"s financial obligations towards banks and entities controlled by the Issuer in a way which is stipulated in the Contract ("the Issue Price") and
2. a preliminary price for the Shares Offered for Sale, which will correspond to an amount equalling 75% of the Valuation before the Increase (calculated as the Property Value minus an estimated net debt, plus an estimated value of the working capital) and the Issue Price, decreased by the Issue Price ("the Preliminary Sales Price"). The Preliminary Sales Price will be adjusted to the actual net debt and working capital after the Closure in accordance with provisions of the Contract. Furthermore, on the Closure day, a resolution will be passed on increasing the Company"s share capital by EUR 9,775,000, on the basis of which the Issuer and Redefine will acquire 25% and 75% of new shares respectively and will pay 25% and 75% of the total issue price to the Company. The entire amount of EUR 9,775,000 will be paid immediately (in the form of a privileged dividend) by the Company to the Issuer. The Closure will be subject to the fulfilment of the following conditions precedent: 1. acquiring the European Commission"s Consent;
2. the completion of the restructuring which involves moving all the shares/stocks in companies being partners of the entities that are owners of holders of perpetual usufructs  of the Properties  to the Company;
3. obtaining all the necessary consents for the transaction resulting from the Contract (the above-mentioned consents may include specific conditions included in the Contract); and
4. conclusion of specified agreements which are included in the Contract.
The Parties undertook to strive for the fulfilment of the above-mentioned conditions as quickly as possible, but not later than until October 31st, 2016. The Closure of the Transaction is to take place on the date specified by the Contract when all the above-mentioned conditions have been fulfilled. In the case not all the conditions are fulfilled until the date specified above, the Contract will be terminated unless the parties agree before that date that the deadline for the fulfilment of all the conditions is to be extended. The Contract also provides for other situations, in which it can be terminated by a given party. The Contract also provides for the conclusion of other agreements related to the Transaction on the Closure day, including an agreement of the partners concerning the Company to be signed by the Issuer, Redefine and the Company ("the Partners" Agreement"), which regulates issues regarding cooperation of the Issuer and Redefine as part of the Company, consultancy agreements, agreements concerning the first offer rights, agreements concerning the management of the development process, agreements concerning the extension of Galaxy and Outlet Park on the basis of which the Issuer (as the developer) will be carrying out the above-mentioned projects, agreements concerning property management by an Issuer"s subsidiary as well as other agreements and documents. The Partners Agreement states that Redefine can sell its shares to co-investors in the future on the condition that the sale will not result in decreasing the share of Redefine to less than 45% of all the shares in the Company.
Consultancy agreements provide for the appointment of Griffin Real Estate sp. z o.o. as the leading consultant of the Company in terms of Company management and asset management. On the basis of the first offer right the Issuer will grant the first offer right regarding the purchase of the following properties: Gdańsk Tryton, Katowice A4 (stage 3), Katowice Kościuszki, Kraków Opolska I, Kraków Opolska II, Kraków Opolska III, Łódź Symetris I, Łódź Symetris II, Wrocław Nobilis and Wrocław Sagitarius ("the First Offer Right Properties") to a firm affiliated with the Company. The above-mentioned facilites are property of subsidiaries which are 100% owned by the Issuer. The first offer right which is to be granted to the Company with regard to the above-mentioned properties will be executed in accordance with principles indicated in the first offer right. Furthermore, the first offer right envisages that the entity controlled by the Company will invest 25% of the capital which was invested and the future capital necessary to complete the construction work and finalize the commercial projects carried out on the First Offer Right Properties. The above-mentioned investment will be financed from an increase of the Company"s capital amounting to EUR 20,646,294 (with the reservation for an upward adjustment on account of the capital contributed in 2016 before the Closure of the Transaction). The above increase of the capital will be financed by the Issuer and Redefine by way of acquiring 25% and 75% of new shares respectively and the payment of 25% and 75% of the total amount of the increase.
 Because of the investment, the entity controlled by the Company will be entitled to a 25%-share in the profits from the First Offer Right Properties on the conditions stipulated in the First Offer Right. In all other respects the Agreement contains typical provisions which are popularly used in such agreements like this. Neither the Contract nor other agreements related to the Transaction provide for contractual penalties. The Contract was considered significant because its value exceeds 10% of the Issuer"s equity. Furthermore, the Management Board of the Issuer announces that on the 24th of February 2016, in accordance with provisions of art. 57 of the act of the 25th of July 2005 on public quotations and conditions of introducing financial instruments to organized trade and on public companies ("the  Public Quotations Act") and §2 (1.1) of the regulation of the Minister of Finance of the 13th of April 2006 on the type of information that may affect the issuer's reasonable interest and manner of proceeding of the issuer in connection with delaying public disclosure of confidential information, the Issuer delayed the disclosure of the confidential information concerning the receipt of a written offer concerning the conclusion of the Contract from Redefine in the course of negotiations.
Legal basis:  art. 56 (1.2) and art. 56 (1.1) of the act on public quotations and conditions governing the introduction of financial instruments to organised trading and public companies of the 29th  of July 2005 and §5 (1.3) and  §9 of the Regulation of the Minister of Finance of the 19th of February 2009 concerning current and periodical information published by issuers of securities and terms of recognizing as equivalent information required by laws of a non-Member State. Signatures of people representing the Company:
Piotr Gromniak – President of the Board
Rafał Kwiatkowski - Proxy