Dragon-Ukrainian Prop. & Dev. PLC Adoption of a new management agreement (7361Q)
December 01 2016 - 8:29AM
UK Regulatory
TIDMDUPD
RNS Number : 7361Q
Dragon-Ukrainian Prop. & Dev. PLC
01 December 2016
1 December 2016
Dragon-Ukrainian Properties & Development PLC
("DUPD" or the "Company")
Adoption of a new management agreement
The Board of DUPD announces certain modifications to the
existing investment management arrangements through amendments to
the final two year period of the investment management agreement
with the Company's investment manager, DCM Limited (the "Investment
Manager") (the "Fourth Revised Management Agreement").
The existing management agreement (the "Third Revised Management
Agreement"), which was entered into in early 2014, expires on 31
December 2016 unless a certain level of distributions, being
US$42.4 million, have been made to DUPD shareholders by 31 December
2016. The Board and the Investment Manager agree that this
threshold will not be met due to the difficult and unforeseen
market conditions of the previous three years. As such, the Board
has decided to amend the management arrangements with the
Investment Manager for the final two years with certain
modifications to the terms.
Mark Iwashko and Lou van der Heijden (the "Independent
Directors") believe these amendments will better align the
interests of the Investment Manager with those of the Company's
shareholders and will continue to incentivise the Investment
Manager to maximise the disposal proceeds of the Company's
properties and cash returns to shareholders in a controlled and
timely manner.
The Fourth Revised Management Agreement is essentially the same
as the Third Revised Management Agreement, with the following key
amendments:
Reduction in the Fixed Component of the Investment Manager
remuneration (Management Fee)
-- 2017: a management fee of US$1.25m (reduced from US$1.50m
under the Third Revised Management Agreement which would have been
payable if the automatic extension had occurred)
-- 2018: US$1.00m (reduced from US$1.40m under the Third Revised
Management Agreement which would have been payable if the automatic
extension had occurred)
If DUPD sell the right to the development of the third phase of
Obolon Residences, the management fee will be reduced to US$1.00m
per annum.
Simplified Performance Fee
The tiered level of performance fees based on distributions to
DUPD shareholders has been replaced with a fixed performance fee of
5 per cent. of all distributions to DUPD shareholders.
Distributions will continue to include cash dividends, share buy
backs and other returns of capital, and also in-specie
distributions.
Term
The Fourth Revised Management Agreement will become effective on
1 January 2017 and will expire on 31 December 2018.
Related Party Transaction
Under the AIM Rules for Companies, the Manager is deemed to be a
related party of the Company, and the entry into the Fourth Revised
Management Agreement is deemed to be a related party transaction
for the purposes of Rule 13 of the AIM Rules for Companies.
The Independent Directors consider, having consulted with the
Company's nominated adviser, Panmure Gordon (UK) Limited, that the
terms of the Fourth Revised Management Agreement are fair and
reasonable insofar as the Company's shareholders are concerned.
For further information, please contact:
Dragon Ukrainian Properties & Development Plc
(www.dragon-upd.com)
Tomas Fiala +380 44 490 7120
DCM Limited (Investment Manager)
Eugene Baranov / Volodymyr Tymochko +380 44 490 7120
Panmure Gordon (UK) Limited
+44 (0)20 7886
Richard Gray / Andrew Potts 2500
This information is provided by RNS
The company news service from the London Stock Exchange
END
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