Raven sells business to Russian management as it cancels UK shares

Raven Property Group will sell its entire 20m sq ft business to its Russian management team as the company’s shares are cancelled in the UK. The business will be sold to Prestino Investments, a Cypriot company controlled and managed by Igor Bogorodov. Chair Richard Jewson said: “In these extraordinary times it has become necessary to take extraordinary measures in order to protect all employees and stakeholders in our business. The combination of volatile markets and the continual risk of sanctions and counter sanctions necessitates this transaction. We hope and pray for peace.” Following news that the firm was to be banished from the FTSE index next week, Raven announced this morning it plans to wind up the business. It said: “The board of Raven is deeply saddened by the events in Ukraine and sincerely hopes for a peaceful resolution as soon as possible. “The events which began on 24 February 2022 and the subsequent impact of sanctions have made it impracticable for the business to continue in its current form. “The board believes this to be the most effective way to meet any further sanction and counter sanction requirements. In light of the transaction and the matters set out in this announcement, including the conditionality surrounding the exercise of the put option, it is the board’s intention that the listings of the company’s shares be cancelled.” The transaction has been structured as a put option for nominal cost in the Raven’s favour, allowing it to dispose of the entire issued ordinary share capital of Raven Russia (Holdings) Cyprus Ltd (being the existing owner of all of the group’s Russian assets and related debt) to its Russian management team, for nominal consideration. The put option will be conditional on the company’s cancellation of the London listing of its ordinary shares. The subsequent completion of the disposal will be conditional on satisfaction of any required regulatory and other approvals. Raven will retain an economic interest in RRHCL via its existing unsecured loans, totalling £41m and Rub1.1bn, as well as through its £678m of non-voting shares. However, it added that “due to the current circumstances in Russia, the introduction of international sanctions and Russian counter sanctions”, as well as exchange controls limiting the movement and conversion of roubles to hard currency, Raven is “unable to assess the current value of these loans and preference shares or the ability of RRHCL to service these loans or preference shares in the future at this time”. Raven’s statement asserted that the business was in good shape, despite the current situation. Prior to the restructuring, the unaudited balance sheet of RRHCL at 31 December 2021 showed net assets of £437m, including the loans and share premium account noted above. The unaudited net operating income for the year to 31 December 2021 was £108m. The Russian business had collected 97% of all rent due in the year to date and assets were 97% let. But it added that “sanctions and counter sanctions are severely limiting the company’s ability to access funds from its Russian subsidiaries and exchange controls are limiting the ability to convert roubles into alternative currencies, even at the current punitive exchange rates”. It added that the uncertainty caused by international sanctions and Russian counter sanctions “make any estimate of the current net asset value of the company and RRHCL or any assessment of their future income profile unfeasible at this time”. Given the “fundamental change in the company’s business and current political uncertainties”, Raven has delayed the issue of its 2021 results until further notice. It added that it was unlikely that it would pay the preference share coupon for the quarter ending 31 March 2022. To send feedback, e-mail piers.wehner@eg.co.uk or tweet @PiersWehner or @EGPropertyNews Photo by Tom Swinnen from Pexels