Aktuální report č. 13 / 2021

Signing a conditional agreement on the transfer of shares of Budimex Nieruchomości sp. z o.o.

The Management Board of Budimex SA (“Budimex”), with reference to current report No 42/2020 of 3 July 2020, report No 53/2020 of 28 August 2020, report No 57/2020 of 29 September 2020, report No 68/2020 of 24 November 2020, report No 73/2020 of 30 December 2020, report No 10/2021 of 15 February 2021, report No 11/2021 of 22.02.2021 and report No 12/2021 of 22.02.2021, informs that on 22.02.2021, directly after obtaining the consent of the Supervisory Board on the same day, Budimex concluded a conditional agreement on the sale (“Agreement”) of shares in its direct wholly-owned subsidiary - Budimex Nieruchomości sp. z o.o. with its registered office in Warsaw (“Company” and “Shares”, respectively). Under the Agreement, CP Developer S.ar.l. with its registered office in Luxembourg (“Purchaser”) – a company established to facilitate the conclusion of the Agreement by entities related to Cornerstone Partners sp. z o.o. with its registered office in Warsaw and Crestyl Real Estate s.r.o., a company incorporated under Czech law with its registered office in Prague, undertook to purchase the Shares and Budimex undertook to sell them.  

The object of the transfer is 1,314,666 shares with a nominal value of PLN 500 each, constituting 100% of the Company's share capital, entitling to 100% of votes at the Company's Shareholders' Meeting. The book value of the Shares in Budimex’s accounting books is PLN 717,519,000.

The total selling price of the Shares was set at PLN 1,513,000,000 and will be reduced by the value of dividend for 2020, which will be paid to Budimex by the Company before the conclusion of the agreement transferring the ownership of the Shares (dispositive agreement). The Agreement also contains standard provisions for such types of agreements, which stipulate that the price may be reduced in the event of damage or unauthorised outflow of funds from the Company's assets, each time by the amount agreed by the parties to the Agreement.

The agreement transferring the ownership of the Shares (dispositive agreement) will be concluded after the Purchaser obtains the consent of the President of the Office of Competition and Consumer Protection to concentration by way of purchase of the Shares (condition precedent). This condition, in accordance with the provisions of the Agreement, should be fulfilled within 6 months from the date of conclusion of the Agreement.

The Agreement provides for the parties’ right to withdraw from the Agreement in certain cases. In particular: (i) Budimex will be entitled to withdraw from the Agreement if the Purchaser fails to document the financing guarantee for the purchase of the Shares by 7 May 2021; (ii) the Purchaser will be entitled to withdraw from the Agreement in the event of a material breach of certain provisions of the Agreement by Budimex.

The Purchaser is obliged to pay a deposit in the amount of PLN 10 million in two equal tranches, respectively, within 5 and 15 business days from the signing of the Agreement (“Deposit”), which shall be forfeited to Budimex in the cases specified in the Agreement.

Budimex provided standard assurances concerning the title to the transferred shares and undertook to compensate for any resulting damage specified in the Agreement. The maximum limit of Budimex’s liability (if any) under the Agreement was set at 100% of the price with a sublimit of PLN 300 million for tax liabilities. The Agreement does not impose on Budimex the obligation to pay contractual penalties, whereas the Buyer is obliged to pay a guarantee sum of PLN 10 million in the cases specified in the Agreement, in particular in the event of failure to enter (for reasons other than those provided for in the Agreement) into the dispositive agreement. The payment of the above-mentioned guarantee sum will be settled with the Deposit amount.

The decision to sell the Shares was preceded by a review of strategic options, launched in July 2020. In the Management Board’s opinion, the negotiated price for the Company corresponds to the fair value and constitutes the highest offer obtained in the course of identification of potential investors’ interest in purchasing shares of Budimex Nieruchomości sp. z o.o., of which Budimex informed in current reports 68/2020 and 73/2020.

Upon and subject to the conclusion of the dispositive agreement, Budimex will recognise in the separate financial statements a pre-tax profit of approximately PLN 755 million, while in the consolidated financial statements it will recognise a pre-tax profit of approximately PLN 690 million. The above values are estimates, which were calculated on the basis of balance sheet data as at 31 December 2020, and may change after the final settlement of the effect of the transaction in the accounting books and the final settlement of costs related to the transaction.

There are no links between Budimex or the persons managing or supervising Budimex and the Purchaser of the Shares and its managers.

The Management Board of Budimex notes that the exclusivity was granted to a group of three investors acting jointly and, during the negotiations, the bidders ultimately decided to conclude the Agreement through a special purpose vehicle related to two entities belonging to the above-mentioned group of investors.

Budimex points out that the ownership of the Shares will be transferred after the conclusion of the dispositive agreement and, until such time, Budimex does not resign from other strategic options referred to in report No 42/2020.

At the same time, Budimex and the Company expect the commencement of negotiations on determining the rules of provision of construction services by Budimex to the Company in the event of conclusion of the dispositive agreement.

Budimex has decided to communicate this confidential information to the public due to its importance for the activities of Budimex, in particular as regards the areas of business. The value of the assets being transferred exceeds 2% of the total assets and, at the same time, the value of the transaction exceeds 2% of the sales revenue from the last annual statements of the Budimex Group.