Market announcement
Luterma
Category
Other price sensitive information
Date
03.06.2008 16:43:30
Title
Termination of sales contract
Message
Alta Capital Partners SCA, which entered into a contract with AS Kalev on 20 Sep 2007 for the sale of shares in the AS Kalev subsidiaries AS Kalev Chocolate Factory, AS Kalev Jõhvi Tootmine, AS Kalev Paide Tootmine, AS Valmetek Invest, AS Vilma and OÜ Maiasmokk, failed to pay the purchase price subject to payment for the shares by the agreed-upon due date - 30 May. For this reason, the seller did not transfer to the buyer the shares in the companies that were the object of the contract of sale. In accordance to the contract of sale of shares signed on 20 September 2007, AS Kalev was obliged to transfer the shares in these foodstuff industry subsidiaries to the buyer after payment of the purchase price, provided that preconditions set forth in the contract were fulfilled. After all of the preconditions were duly fulfilled by AS Kalev by 20 February 2008, the parties entered into an additional agreement whereby they set 31 March 2008 as the completion date for the transaction and the buyer paid 93,879,600 kroons (6 million euros) of the purchase price as a prepayment to the seller. On 31 May 2008 the seller and buyer signed a memorandum of completion of the transaction. In this memorandum of completion, the parties specified the final purchase price of the AS Kalev subsidiaries as 660,273,005 kroons (42,199,136 euros) which the buyer obliged to pay to the seller by 30 May 2008. According to the assessment of the buyer, unfavourable developments on the stock and credit markets did not allow the buyer to pay the purchase price, notwithstanding that the parties postponed the transaction completion date compared to the initial agreement, in good faith, at the request of the buyer. As the buyer did not pay the purchase price in full by the transaction completion date, AS Kalev considers the sale contract terminated. AS Kalev CEO Oliver Kruuda: “It is in any case regrettable that the sale contract was not realized. We fulfilled all of the terms and conditions of the contract and gave the buyer repeated extensions for finding the financing necessary to pay the purchase price. Unfortunately it emerged that despite the efforts on the part of the buyer, the purchase price was not received by AS Kalev by the due date. AS Kalev acknowledges the intent of the buyer to comply with its contractual obligations and is prepared to work with the buyer in every respect during 2008 in the field of the foodstuffs industry.” According to Kruuda, the termination of the contract will allow AS Kalev to commence negotiations with other possible interest parties whose approaches have thus far been rejected in connection with the exclusive buyer's rights given to Alta Capital Partners. According to the initial agreement between the parties, the buyer will pay AS Kalev 140,819,400 million kroons (9 million euros) in compensation for losses and expenses due to the postponement and cancellation of the transaction. Of this compensation amount, 93,879,600 kroons (6 million euros) will be offset by the prepayment paid by the buyer and the remaining 46,939,800 kroons (3 million euros) is to be paid by the buyer to the seller by the end of 2008. AS Kalev appreciates the fact that the buyer is prepared to reach a reasonable agreement with regard to compensation of losses, as protracted and costly judicial disputes in this matter are certainly not in the interests of AS Kalev's shareholders or the parties to the transaction. The situation will not result in material changes in the everyday economic activity of AS Kalev's subsidiaries. Kalev will continue operating in all of its current fields of activity: production and sale of foodstuffs, real estate development and management, and the media. The company plans to develop its fields of activity dynamically. (See also the following AS Kalev's press releases: “Kalev to transfer shares” and “Resolutions of ordinary general shareholder's meeting”, 20.09.2007; “Date of completion of the share sales transaction”, 29.02.2008; and “Share sales transaction completion procedures”, 31.03.2008 ). Allan Viirma Head of the legal service 688 6616