IMMEDIATE REPORT
KARDAN LAND CHINA SIGNS NEW CREDIT FACILITY -
EUROPARK DALIAN REFINANCING
Kardan NV (‘Kardan’) announces the following:
On October 24, 2017 Kardan Land Dalian Ltd. (‘the Project Company’), KLD and KLC entered into
an agreement with two subsidiaries of the investment fund China Hua Rong International Holdings
Ltd.: Hua Rong (China) Investment Management Ltd (‘HR Beijing’) and Hua Rong Holdings
(Shenzhen) Equity Investment Fund Management Ltd. (‘HR Shenzhen’) (together ‘the Fund‘) in
China, with respect to a credit facility (the ‘Credit’) amounting to RMB 900 million (approximately
EUR 115 million) for the Europark Dalian project (the ‘Project’).
The Project Company is a wholly owned subsidiary of Kardan, indirectly held through GTC Real
Estate Holding B.V., Kardan Land China Ltd. (‘KLC’) and Kardan Land Dalian (HK) Ltd. (‘KLD’).
The details of the Credit are as follows:
? The Credit will be made available by HR Shenzhen (RMB 600 million) and HR Beijing (RMB
300 million) for a period of 3 years from the date of the initial drawdown, which can be extended
by one year with the mutual consent of both parties.
? The Credit bears an annual interest rate of 12% payable quarterly1. If, during the first 9 months
from the initial drawdown, HR Beijing will assign its rights with respect to RMB 300 million to
another financial institution, the interest rate will decrease to an average rate of approximately
11%. The decrease in the interest rate is subject to future negotiations and the timing of the
debt assignment
? The Credit will be used to refinance the outstanding debt of the current project loan amounting
to RMB 800 million, the terms of which were disclosed in the Annual Report 2016, and to finance
the operations of the Project Company (RMB 100 million).
? After one year from the initial drawdown, the Project Company may, at any time, repay the
Credit early. During the first year from the initial drawdown, the Project Company may repay the
Credit early subject to the consent of the Fund which will not be unreasonably withheld unless
it was not approved by the Investment Decision Committee of Hua Rong International Holdings
Ltd.
? As collateral for the Credit, KLC has undertaken to guarantee all the liabilities of the Project
Company in accordance with the Credit agreement, KLD has undertaken to pledge all its shares
in the Project Company. The Project Company has agreed to establish a pledge in favor of the
Fund on the land of the Project and on the Project itself (initially a second tier pledge to be
changed into a first tier pledge later).
The Credit includes certain requirements as follows:
? All proceeds from sale of apartments and from rental income will be deposited in a custody
account supervised by the Fund. The Project Company may use the proceeds for working
capital, construction costs, shopping mall operation expenditure, principal and interest payment,
and any other use approved by the Fund.
? Appointment of a director on behalf of the Fund to the Project Company. The Project Company
will need the director’s approval for any transfer or issue of shares that will lead to loss of control
1 In the first year, the interest rate is 9%. In addition, the Project Company has committed to pay commission
amounting to RMB 27 million (representing 3% of the total Credit) and reimbursement of legal fees, immediately
after the initial drawdown. In addition, the Project Company has committed to pay an annual commission of
0.08%.
over KLC, KLD or the Project Company; and for any pledge of assets or obtaining a new loan
which will not be used to repay the Credit.
? The Project Company should meet 2 milestones in relation to sales in the Project. In case the
Project Company fails to meet one of the milestones, a grace period of 6 months shall apply. If
by the end of the grace period the target hasn’t been met, a penalty of 0.05% per day will be
imposed on the missing gap between the sales target and the actual sales.
? The Project Company should meet a milestone in relation to the progress of the construction of
the Project. In case the Project Company fails to meet the milestone, a grace period of 3 months
shall apply. If the target hasn’t been met by the end of the grace period, a penalty of 0.05% per
day will be imposed.
? Meeting Financial Covenants: (a) loan to value (‘LTV’) should be lower than 50%. The current
LTV is estimated at approximately 30%. (b) the total value of guarantees provided by KLC
should not exceed its equity. (c) in case there is a major decrease in the value of the shares of
the Project Company which affects its ability to repay the Credit, KLC group will have to provide
additional collateral.
Any delay in payment under the loan agreement will entitle to Fund to receive penalty interest of
0.05% per day.
The agreement includes provisions with respect to immediate repayment of the Credit under certain
circumstances, including failing to pay the principal or interest, using the Credit funds for other
purposes than it is intended for, breach of a liability or representation, change of control in KLC,
KLD or the Project Company without the approval of the director that was appointed on behalf of
the Fund, breach of a loan agreement or of a collateral of the Project Company, significant adverse
change in the Project Company or KLC, including significant decrease in activities, assets or the
operations of the Project Company or KLC, entering into insolvency procedures etc.
EuroPark Dalian is a mixed-use of project of residential and commercial, including a shopping mall
(Galleria Dalian), two SOHO buildings (Small Office Home Office), two luxury buildings, serviced
apartments building and parking spaces, in a total built area of 327,000 sqm in the city of Dalian, in
China. As of the date of this publication, the Project is expected to include 1,063 residential units at
a marketable area of 109,000 sqm, and 2,000 parking spaces that will be used by the residents of
the buildings and the visitors of Galleria Dalian. As at 30 September 2017, the Project Company
has sold approximately 700 residential units in the Project.