Orco Property Group presents its proposed restructuring plan

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Press Release
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN THE UNITED STATES OF AMERICA
OR INTO ANY OTHER JURISDICTION IN WHICH CIRCULATION OF THE PRESENT PRESS
RELEASE WOULD BE RESTRICTED BY LAW.
Orco Property Group presents its proposed restructuring plan
· Within its draft “plan de sauvegarde”, Orco Property Group SA plans to propose to
bondholders an attractive restructuring mix of new debt and equity of the Company.
· The term sheet proposal to bondholders and a presentation slide are available on
www.orcogroup.com ; bondholders are invited to support this proposal at the General
Assembly to be held in Paris on September 24th.
· Bondholders should be able to recover most of the value of their investment over the next
years and improve their liquidity.
· The proposed restructuring plan would accelerate Orco Property Group focusing on its core
business and cities, and investing in existing projects and land development.
· After the restructuring, the Company aims to target a loan-to-value around 50 % by 2012 and
an immediately improved cash position
Paris, September 9th – Orco Property Group S.A., (“the Company”) the holding company of the Orco
Group, unveils today the main terms of its draft restructuring plan to its creditors.
Under the safeguard procedure, opened last March 25, 2009 by the Commercial Court of Paris, Orco
Property Group S.A. has held, under the chairmanship of Me Laurent Le Guerneve, Court
Administrator, numerous discussions with bondholders and representatives of some bondholders.
Based on those discussions, the Management has built a financial restructuring plan that would allow
the Company to adjust its financial profile to the current market conditions in the best interests of both
bondholders and shareholders.
With its new adjusted financial profile, Orco Property Group would be able to unlock the value of its
real-estate portfolio.
Orco Property Group SA’s draft "Plan de Sauvegarde"
As the first step of the restructuring process, the Committee of the Main Suppliers of the Company,
representing less than 200 000 Euros of pending payments, has accepted a term out over the next 10
years of their claims in its assembly held on September 7, 2009 in Paris.
The ‘plan de sauvegarde’ also includes a term out proposal to beneficiaries of guarantees of Orco
Property Group SA within the Group subsidiaries, contingent to the conditions of exercise of the
guarantees being gathered at the subsidiary level.
As regards the direct liabilities of Orco Property Group being mostly its EUR 411 million bonds in
nominal value, the Court Administrator has convened its bondholders to vote on the draft ‘Plan de
Sauvegarde’ on the 24th of September, 11 am at the Commercial Court of Paris. The draft ‘Plan de
Sauvegarde’ is made available to them at the registered office of Orco Property Group in Luxembourg
and the registered office of its branch in Paris.
In order to prepare such vote, bondholders’ representatives have organized general meetings of
bondholders, mainly aimed at informing bondholders of the safeguard procedure, as further described
below in the “Next Events” section to be held in Orco premises in Luxembourg on the 15th of
September morning, and Orco Property Group is organizing a general information session to be held
for the bondholders on the 17th September morning in Paris.
Key elements of the bond restructuring proposal, part of OPG's “Plan de Sauvegarde”1:
All holders of bonds issued by Orco Property Group S.A. are proposed the same conversion
conditions on the basis of a nominal value of EUR 411 million and would have their bonds exchanged
as part of the Safeguard Plan into a mix of new bonds and shares. .
· Issue of new bonds convertible at EUR 15 with an aggregate nominal value of
EUR 120 million. The new convertible bonds would mature on November 20, 2017, and
interests at the rate of 5 % per annum would be paid annually in cash with the first payment
on November 20, 2010.
· Issue of 11.43 million new shares of the Company, the new shares being fungible with
existing shares (Isin: LU0122624777).
As an indicative current nominal value of the package, a bondholder holding EUR 1000 of
nominal would recover EUR 558.2 assuming the September 9, 2009 closing price of EUR 9.57
per share. This illustrative calculation is the addition of (i) the nominal value of EUR 1000 in bond
nominal value post restructuring at EUR 292 plus (ii) the value of the 27.8 (subject to rounding) shares
received for EUR 1000 bond, valued at EUR 9,57 each, assuming a sale by the bondholders of the
new shares received at such price, the bondholders would then recover a value of Euro 558.2.
Bondholders would become shareholders and would benefit from higher liquidity and potentially profit
from the recovery of the business of the Company.
In particular, as new shareholders, the bondholders would benefit under certain circumstances2 from
the right to subscribe to a capital increase of an aggregate minimum amount of €30,000,000.00 . The
specific bondholders who still hold warrants (that were attached to two of the bonds issue) would also
benefit from the warrants restructuring described below.
The creation of the authorised capital required to implement this financial restructuring under the
procedure de sauvegarde, the agreement with Colony Capital and the proposed issuance of warrants
to all current OPG shareholders would be submitted to a vote of shareholders’ at the next
extraordinary shareholder meeting to be held on September 15, 2009.3
The above proposal remain subject to, and may only be implemented following
- The vote on the ‘plan de sauvegarde’ of the General Assembly of Bondholders at a majority of
2/3rd.
- The approval of the ‘plan de sauvegarde’ by the Paris Commercial Court
As long as a Court approval has not forthcome, none of the Company proposal will come into effect or
be implemented.
1 The term sheet of the proposal to bondholders, together with a presentation slide, is available on
www.orcogroup.com
2 Under the safeguard plan the Company undertakes that if the Company does not achieve, through an offering
and/or placement with new investors and/or existing shareholders, a capital increase of an aggregate minimum
amount of €30,000,000.00 (thirty million Euros) before June 30, 2010, it will, save where such undertaking is
waived with the approval of an ordinary (simple majority) resolution of the holders of the New Convertible
Bonds, use all reasonable endeavours to issue or grant a right to the shareholders to subscribe to a capital
increase of an aggregate minimum amount of €30,000,000.00 (thirty million Euros) before December 31, 2010.
3 Assuming the 50 % quorum is met on September 15, 2009, otherwise to an extraordinary shareholders’
meeting to be reconvened on or around October 20, 2009. A report by the Board of Directors of Orco Property
Group S.A. on the creation of the authorised capital to, amongst others, allows for implementation of the
Safeguard Plan and the Colony placement has been prepared.
Should the bondholders reject the ‘plan de sauvegarde’; the management would expect that the Court
could eventually decide on the term out of all the Company liabilities, with a repayment schedule over
a maximum of 10 years, depending on the Group business plan and cash flow.
Orco Property Group restructuring plan
The key objective of the Draft Safeguard Plan is to restore Group credit ratios and collect cash in
order to ensure the development of existing land bank and resume works on constructions where it
had to be put on hold, so as to create value for its stakeholders.
The business plan supporting the safeguard plan is based on the assumption that credit ratios are
restored through:
· Bond debt restructuring as described above which allows a debt reduction and an improved
balance-sheet
· Local bank loans restructuring in order to extend in time and size existing construction credit lines
in order to finalize projects’ development and insure sale to final customers.
· Cash generation from the sale of existing assets whether existing residential projects or selected
income producing asset sales
· Repayment of the shareholder loans granted by the Company , notably to the hospitality and
Russian ventures, or dividends , particularly on residential developments, where the Company
invested in projects through joint ventures.
· Capital increases in cash through the exercise of warrants by a new equity partner and existing
shareholders, or through the exercise of the restructured warrants – all operations being
described below. Fresh equity injection would reduce the risks of relying on pure asset sales and
allow a faster recovery by allowing development of existing land bank currently financed through
bank debt.
This restructuring proposal is based on the need for the Group to reach a satisfactory indebtedness
and debt service coverage. With the proposed restructuring and a cash collection envisioned at
around EUR 68 million (planned through capital increases as described below), the loan-to-value
should be improved to approx. 50% by 20124. Compared to the EUR 15 Net Asset Value per share as
published in the June 2009 Management Report, the pro forma of June 2009 net asset value after
bond restructuring would reach EUR 19 per share. After both the bonds restructuring, and the
injection of EUR 68 million cash in capital increase in 9.71 million new shares at EUR 7 per share, the
pro forma of June 2009 net asset value would amount to EUR 15,4 per share. After the above dilution
and assuming total exercise of restructured warrants, the pro forma of June 2009 net asset value
would amount to EUR 14,3 per share. 5
An Extraordinary General Meeting of Shareholders will have to take place to approve the creation of
authorised capital necessary to implement these several equity instruments proposals:
· New equity partner
On April 29, 2009, Orco Property Group and Colony Capital entered into exclusive
negotiations on a reserved Share capital increase. On June 22, 2009, , Orco Property Group
and Colony Capital concluded that it was necessary for the management of OPG to implement
and finalize the restructuring of the bond debt. Based on the terms of the amendment signed
on June 22 and for a period up to November 30, ColOG, a company controlled by funds
advised by Colony Capital, would be granted short term warrants (the “Colony Warrants”).
These Colony Warrants would be subject to the approval of the Extraordinary Shareholders
Meeting, and would allow ColOG to subscribe to an issue of Orco Property Group Shares at
EUR 7 per Share up to EUR 80 million. The exercise of the Colony Warrants is subject to the
4 Based on the same asset valuation assumptions for existing assets, than published by the Company in the June
2009 Management Report
5 A dilution table is included in the slides available on www.orcogroup.com
success of the bond restructuring undertaken as part of the Safeguard Court Protection (court
protection from creditors).
· Granting of Warrants to existing OPG Shareholders
Subject to the success of the bond restructuring undertaken as part of the Safeguard Court
Protection (court protection from creditors) and implementation of the Colony Warrants, all
OPG Shareholders would also be granted short term warrants (the “Shareholders Warrants”)
on the basis of one Shareholder Warrant being granted for each existing Share. Shareholders
Warrants would carry a EUR 7 exercise price and a subscription ratio of one new Share for
one Shareholder Warrant exercisable over 1 month.
· Restructuring of existing warrants
In addition to the draft ‘plan de sauvegarde’, it is further proposed that all existing warrants(registered
under ISIN code XS0290764728) prior to the safeguard (excluding for the avoidance of doubt the
Colony Warrants and the Shareholders Warrants) and the warrants registered under ISIN code
LU0234878881) would be restructured at a EUR 7 exercise price, and that the Company can force in
tranches the exercise. The restructuring of existing warrants is subject to the approval of the General
Assembly of Warrantholders that will take place on September 15, 2009 at the registered address of
Orco Property Group in Luxembourg.
***
The description of the above proposal is for information purposes only and does not imply that such
proposals are actually implemented or implemented in the form, as described. They merely describe
the current proposal made in the context of the safeguard plan and require relevant Court approval
prior to their actual implementation. Implementation of described transactions may be made on terms
which may vary from currently proposed terms.
***
Next events
September 15th:
- Shareholders Extraordinary General Meeting of Shareholders held in English in Luxembourg where
Orco Property Group’s shareholder will notably be invited to vote on creation of the authorised capital
necessary to implement the safeguard plan and the Colony placement.
- General Meeting of holders of bonds 2010 (Isin FR0010249599) in Luxembourg at 9 am
- General Meeting of Warrantholders (ISIN XS0290764728) in Luxembourg at 9h30 am
- General Meeting of holders of bonds 2013 (Isin XSFR0010333302) in Luxembourg at 11 am
- General Meeting of holders of bonds 2014 (Isin XS0291838992) in Luxembourg at 2pm
- General Meeting of holders of bonds 2012 (Isin XS0223586420) in Luxembourg at 4pm
September 17th:Information meeting for all holders of bonds of Orco Property Group in Paris at 10 am
in French
Conference call to holders of bonds 2011 (Isin CZ 0000000195) in English and Czech at 3 pm
September 24th: All Bondholders General Assembly convened under the Safeguard Procedure to vote
on the proposed safeguard plan.
October 20th: Reconvened Extraordinary General Meeting of Shareholders (in case the quorum of
50% is not reached at the September 15th meeting)
***
This press release is for information purposes only on the current status of the safeguard procedure of
Orco Property Group. There is no guarantee that the proposals as described in this press release will
actually be implemented or implemented on the terms described in this press release.
The Company may have to make available in due course further information or documents in relation
to certain transactions described hereinabove in accordance with applicable laws. Investors should
consider such additional documents when and as being made available in accordance with applicable
laws.This press release neither constitutes an offer of securities to the public as provided by the
Directive 2003/71/CE of the European Parliament and the Council nor does it constitute or form part of
any offer or solicitation to purchase or subscribe for securities in the United States of America or in any
other jurisdiction where the circulation of the present notice would be restricted by law. The securities
mentioned herein have not been, and will not be, registered under the United States Securities Act of
1933 (the “Securities Act”). Securities may not be offered or sold in the United States except
pursuant to registration or an exemption from the registration requirements of the Securities Act. There
will be no public offer of securities in the United States.
This press release is not for distribution, directly or indirectly, in or into the United States (including its
territories and possessions, any State of the United States and the District of Columbia). The Offer
referenced herein is not being made, directly or indirectly, in or into the United States, or by use of the
mails, or by any means or instrumentality (including, without limitation, e-mail, facsimile transmission,
telephone and the internet) of interstate or foreign commerce, or of any facilities of a national
securities exchange, of the United States and the Offer cannot be accepted by any such use, means,
instrumentality or facility or from within the United States.
***
For more information, visit our Shareholder corner on
www.orcogroup.com, or contact:
Nicolas Tommasini +33 1 40 67 67 23 or at investors@orcogroup.com

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