Firm disposes of 100,000-m[sup]2[/sup] land plot for under EUR 2m

A subsidiary of Lewis Charles Sofia Property Fund has sold a 100,000-m² plot of development land in Bulgaria for less than EUR 2 mln to generate enough cash to survive the credit freeze.

The land near the Sofia Business Park has outline permission for residential development and was valued by Forton International at end-June 2008 at EUR 27 mln.

The fund's subsidiary Splendid Investment has entered into an agreement under which Enderton Company Assets (ECA), a firm registered in the British Virgin Islands, will acquire the share capital of Black Sea Properties whose sole asset is the land. Splendid has undertaken to transfer aggregate debt of EUR 2.4 mln due to it from BSP to ECA for EUR 1.7 mln. ECA has committed itself to procure the repayment by BSP of a EUR 135,000 debt due to Splendid.

Splendid has the option to reacquire the land and associated loans from ECA for EUR 4 mln. The option must be exercised by 15 December 2009.

Lewis Charles Sofia Property said the transactions will provide Splendid with cash for general corporate purposes. Chairman Charles Burton commented: 'These are exceptionally difficult conditions in which to raise cash, and the transaction was arranged against the backdrop of the continuing severe shortage of bank finance.'

'The directors, whilst mindful of their responsibility to ensure that the company has sufficient cash to continue its operations, were determined to preserve as much of the value of the company's portfolio as possible. We were especially anxious to avoid a 'fire sale' which would have permanently damaged the value of the company’s excellent property portfolio.'