Kardan receives revised LOI for investment in Tahal

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Algemeen advies 10/10/2019 14:59
Amsterdam, October 10, 2019 – Following the press releases dated August 20, 2019 and September 17, 2019, Kardan N.V. (‘Kardan’ or ‘the Company’), active in Real Estate and Water Infrastructure, announces that today it has received a revised letter of intent (‘LOI’) from FIMI Opportunity Funds (‘FIMI Funds’) regarding the investment transaction in its subsidiary Tahal Group International B.V. (‘Tahal’).

Following a due diligence conducted by FIMI Funds, on October 10, 2019, the Company received an updated LOI in connection with an investment in Tahal by FIMI Funds, according to the following principles:

FIMI Funds will invest up to US$35 million ('the Investment Amount’) in Tahal in exchange for allocation of shares in Tahal, as follows: (1) US$ 10 million will be invested upon completion of the transaction (‘the Initial Investment’); (2) FIMI Funds will be granted options exercisable into Tahal shares: (1) during the 12 months period starting as of the completion date of the transaction (the Completion Date”), for an investment of up to US$ 5 million in Tahal; and (3) within 24 months of the Completion Date, for up to US$20 million investment in Tahal.
The investments will be made at a share price that reflects a company value of US$15 million (before the investment).
In exchange for the Initial Investment at the Completion Date, FIMI Funds will receive shares constituting 40% of Tahal’s capital and 51% of the voting rights in Tahal and therefore as of the Completion Date FIMI Funds will have the ability to control Tahal.
Within 30 months from the Completion Date, FIMI Funds intend to list the shares of Tahal for trading on the Tel Aviv Stock Exchange Ltd. (‘TASE’), subject to Tahal’s compliance with the requirements of TASE.
To the extent that FIMI Funds sell their shares in Tahal for a consideration which, together with the dividend distributed to FIMI Funds (to the extent distributed), exceeds 200% of the Investment Amount, FIMI funds will pay to Kardan or its debenture holders that will hold Tahal shares, an additional consideration: (a) 20% of the proceeds received in such sale transaction exceeding 200% up to 250% of the Investment Amount; plus (b) 33% of the consideration exceeding 250% of the Investment Amount, up to a maximum of US$10 million for a and b combined. In addition, if the proceeds of such a sale transaction exceed 350% of the Investment Amount, FIMI Funds will pay an additional 33% of the proceeds exceeding 350% of the investment amount, up to a total of US$5 million. In addition, the shareholders of Tahal will have the ability to also sell their shares in such transaction (Tag Along right).
In the revised LOI FIMI Funds declared that, subject to the approval of the meetings of Kardan’s debenture holders, they are able to complete the negotiations and enter into a detailed agreement within 30 days of the date of such approval. During this period, a 30-day exclusivity period will be given to FIMI Funds, as well as a pledge by the Company, Tahal and FIMI Funds to maintain confidentiality.
Completion of the transaction will be subject to signing an agreement to be concluded between the parties, in which all details will be summarized as is customary in such transactions, obtaining the approval of Tahal’s financing banks for the change of control and credit terms on terms acceptable to the parties, and obtaining the necessary approvals to execute the transaction, if required.
It should be emphasized that the LOI is not binding, that no binding agreement has been signed yet, and that there is no certainty as to whether a binding agreement will be entered into, whether conditions precedent will be fulfilled or whether the transaction will be completed.

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