X5 Retail Group N.V. to Acquire Pyaterochka Franchisee in Rostov and Considers Other Franchisee Buy-Out Opportunities
29 Dec 2008
Amsterdam, 29 December 2008 - X5 Retail Group N.V., Russia's largest retailer in terms of sales (LSE ticker: “FIVE”), today announced that it has signed an agreement to acquire 100% of the business and assets of OOO Agrotorg-Rostov - a Pyaterochka franchisee in the Rostov region - for a total consideration of RUR 400 mln (approximately US $15 mln), including refinancing of debt owed to B.I.N.BANK and trade accounts payable to suppliers and employees. In order to refinance the debt of OOO Agrotorg-Rostov X5 and B.I.N.BANK have signed a credit agreement in the amount of RUR 282 mln to be repaid in 1.5 years.
As a result of the transaction, X5’s will strengthen its geographic presence in the south of Russia, with a better balanced multi-format store portfolio. X5 Retail Group plans to operate 15 of the Pyaterochka soft discount stores acquired in the transaction (about 7 thousand. sq. m. of net selling space), 10 of them owned properties, and will consider potential sale of some real estate assets at a future date. Currently in addition to leased premises OOO Agrotorg-Rostov owns retail premises and an office building in Rostov and the region with the total area of 14 thousand. sq. m.
Lev Khasis, X5 Retail Group CEO, commented:
“We have always considered franchisee buy-outs as part of X5’s expansion strategy. In current market conditions, we have increased our focus on these potential opportunities as a consequence of the liquidity situation many players are facing. The buy-out of OOO Agrotorg-Rostov is the first transaction in an inevitable process of Russian retail consolidation, and we are considering other potential buy-outs of franchisee businesses or assets. X5 is acting as a source of strength in Russian retail, ensuring that stores continue to operate and stabilizing payments to suppliers to maintain the flow of deliveries to the consumer.”
Mikhail Shishkhanov, the President of B.I.N.BANK pointed out:
“In a difficult economic environment, B.I.N.BANK commits to work with clients that have been affected by volatile financial market conditions. We are pleased with this agreement with X5 that will provide for the refinancing of OOO Agrotorg-Rostov’s debt and thus will enable its continuous trading activity.”
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