Closing of a transaction comprising the indirect acquisition of the majority stake of shares in Archicom S.A.

Referring to current reports no. 4/2021 dated 18 February 2021, and 12/2021 dated  8 April  2021, the Management Board of ECHO Investment S.A. (“Issuer”) informs that on 22 April 2021, in performance of the preliminary share purchase agreement dated 17 February 2021 (“Preliminary Agreement”), the Issuer concluded, with Mrs Dorota Jarodzka-Śródka, Mr Kazimierz Śródka and Mr Rafał Jarodzki (“Sellers”), the final share purchase agreement concerning the acquisition of all shares in DKR Investment sp. z o.o with its registered office in Wrocław (“DKR Investment Shares”) and all shares in DKR Invest S.A. with its registered office in Wrocław (“DKR Invest Shares”), resulting in direct acquisition of DKR Investment Shares and DKR Invest Shares, and thus indirect acquisition of the majority stake of 16,945,487 shares, representing in aggregate approximately 66.01% of the share capital carrying in aggregate 21,039,375 votes at the general meeting, which represents approximately 65.99% of the total number of votes in Archicom S.A. (“Archicom”) whose shares are admitted to trading on the main market of the Warsaw Stock Exchange. As agreed by the parties in the Preliminary Agreement, Archicom Polska S.A., a subsidiary of Archicom carrying out the development business outside the territory of the city of Wrocław and adjacent municipalities, as well as Archicom Studio Projekt spółka z ograniczoną odpowiedzialnością sp.k., a subsidiary of Archicom carrying out architectural and design services business, were excluded from the scope of the transaction (jointly, “Transaction”).

Additionally, in performance of the Preliminary Agreement, on 21 April 2021 the Management Board of the Issuer adopted a resolution concerning the issuance of unsecured bearer bonds with an aggregate nominal value of PLN 188,000,000, bearing interest at an annual rate of 5% (“Bonds”). Bonds were issued on 22 April 2021. The issue price for the bonds was equal to the nominal value. The purchase of the Bonds was offered to the Sellers, who accepted the purchase offer and acquired the Bonds pursuant to the resolution of Issuer’s Management Board dated 22 April 2021 concerning allotment of the Bonds. Issuance of the bonds was not subject to the obligation to draw up a prospectus or an information memorandum. Bonds will be registered in the depository maintained by Krajowy Depozyt Papierów Wartościowych S.A. and admitted to organized trading on the ASO Catalyst market and maintained by the Warsaw Stock Exchange pursuant to the terms of issue corresponding to existing bond issues by the Issuer.

The total price for DKR Investment Shares and DKR Invest Shares was PLN 428,611,000 (“DKR Price”). Part of the DKR Price in the amount equal to the aggregate nominal value of the Bonds was paid by way of set-off against the Sellers' obligation to pay the issue price for the Bonds.  

The closing of the Transaction was preceded by the restructuring of the Archicom group, including in particular:

1. the sale to Mrs Dorota Jarodzka-Śródka and Mr Rafał Jarodzki of all shares held by Archicom in the share capital of Archicom Polska S.A., being a company conducting development activities particularly in the cities of Kraków, Łódź, Poznań and Trójmiasto, i.e. outside the Archicom group's core area of operations comprising of the city of Wrocław and adjacent municipalities, in consideration for a total price of PLN 131,000,000 (the "Archicom Polska Price"), payable in two instalments, where:
   1. the first instalment (in an aggregate amount of PLN 77,500,000) was paid on the day of closing of the Transaction, partly by way of transfer of Bonds (with an aggregate nominal value of PLN 37,000,000) for the benefit of Archicom, and for the remainder by the transfer of the Issuer's consideration made to Archicom in respect of Dorota Jarodzka-Śródka and Rafał Jarodzki, in connection with the payment of the DKR Price; and
   2. the second instalment, in the amount of PLN 53,500,000, increased by interest accrued thereon over the period from 22 April 2021, until the date of payment of the second instalment, calculated at an annual interest rate of 5%, shall be payable by no later than 15 June 2023;
2. the sale to Ms Dorota Jarodzka-Śródka and Mr Kazimierz Śródka of all shares held (indirectly) by Archicom in the share capital of Archicom Studio Projekt sp. z o.o. and withdrawal by Archicom (as a limited partner) from Archicom Studio Projekt spółka z ograniczoną odpowiedzialnością sp.k, a project company providing architectural and design services to Archicom group companies, in respect of which transactions (sale and withdrawal) Archicom received the total consideration in the amount of PLN 2,400,000; and
3. the sale by DKR Investment sp. z o.o. of 2,132,964 shares in the share capital of Archicom, representing in aggregate 8,31% of Archicom's share capital and carrying 4.246.578 votes at Archicom’s general meeting, representing in aggregate approx. 13,32% of the total number of votes in Archicom (“Remaining Sellers’ Shares”) to DKRA sp. z o.o. with its registered office in Wrocław (“DKRA”) in which Mrs Dorota Jarodzka-Śródka and Mr Rafał Jarodzki are the shareholders (“DKRA Shareholders”). The sale of the Remaining Sellers’ Shares took place outside the regulated market on the basis of final share purchase agreement dated 16 April 2021, and was settled on the same date.

Furthermore, in connection with the Transaction, the Issuer and the DKRA Shareholders entered into an option agreement pursuant to which the Issuer will be entitled to acquire, or designate an entity to acquire, by 15 March 2023 from DKRA Shareholders, all of the shares in the share capital of the DKRA, which holds the Remaining Sellers’ Shares, on substantially the same terms as the acquisition of the DKR Investment Shares and the DKR Invest Shares made under the Transaction, whereby the consideration for such acquisition will be increased by the amount of interest accrued annually at the rate of 6% from 15 March 2021 until the date of the exercise of the call option. In case the Issuer does not exercise its aforementioned option right, on the basis of the option agreement, the DKRA Shareholders shall be entitled to sell all shares in the share capital of the DKRA to the Issuer.

Upon the acquisition of DKR Investment Shares and DKR Invest Shares by the Issuer, the resignation of Mr Waldemar Jan Olbryk from the Issuer’s Management Board became effective (please see the Issuer’s current report No. 9/2021 dated 15 March 2021).

Legal grounds: Art. 17(1) of Regulation (EU) No 596/2014 of the European Parliament and of the Council on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC – inside information, §5 point 4 pursuant to §9 of the Regulation of the Minister of Finance of 29 March 2018 on current and periodic information provided by issuers of securities and conditions for recognising as equivalent information required by the laws of a non-member state.