2008-09-05

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Switzerland |

Jelmoli announces update on strategic plan

Switzerland: - Reverse premium to be offered to Pelham Investments to cede control of proposed Real Estate Company - Exit option for shareholders in the Investment Company - Extraordinary Shareholders Meeting to be held at the beginning of November 2008

Jelmoli announced in April 2008 its strategic plan to separate into two independent companies, a Real Estate Company and an Investment Company. The creation of the two stand-alone businesses will take the form of a tax-neutral distribution of the shares in the Investment Company to Jelmoli shareholders. Since then, the Board of Directors of Jelmoli has continuously refined and progressed the strategic plan for the company. With today's announcement, the Board of Directors provides further detail on the magnitude of the proposed reverse premium to Pelham and introduces a mechanism in the Investment Company which allows shareholders to choose to either stay invested or exit a significant part of their position in the Investment Company. As the preparations for the implementation of the strategic plan are largely completed, the Board of Directors intends to present the strategic plan to shareholders for approval in an extraordinary shareholders meeting at the beginning of November.

The Real Estate Company

The Real Estate Company, which will continue to operate under the name of Jelmoli Holding AG, will be the second largest public real estate company in Switzerland with a book equity value of approximately CHF 1.6 billion and a capital structure at the lower end of the previously communicated loan-to-value (LTV) range of 40% to 50%. The House of Brands and Bonus Card will remain with the Real Estate Company and will provide significant value upside through the further optimisation of these retail operations together with the most valuable property assets in the portfolio. The parti¬ci¬pation in Tivona will also remain with the Real Estate Company.

As compensation for ceding control in the Real Estate Company, the Board of Directors will propose to offer the current controlling shareholder, Pelham Investments S.A. ("Pelham"), a reverse premium of 50,000 new Real Estate Company bearer share equivalents at nominal value, which represents a premium of approxima¬tely 18% on Pelham's stake in the Real Estate Company. Once shareholder and other regulatory approvals have been granted, the Real Estate Company's share capital will comprise of one registered share class once trading in its stock commences. Bearer shares will be converted into registered shares at a ratio of 1:5. The reverse premium offered to Pelham will translate into 250,000 registered shares which will be issued to Pelham with the exclusion of subscription rights of other shareholders. The share¬holding of Pelham in the Real Estate Company will thereby increase from 25.2% to 29.8% of shares issued, while at the same time voting rights will decrease from 52.9% to 29.8%.

"With its high quality real estate portfolio, significant retail exposure, conservative capital structure and further upside potential, the Real Estate Company will be uniquely positioned on the SWX. The removal of the dual class shareholder struc¬ture addresses a key concern of many of our shareholders and will contribute to the attractiveness of the Company in the capital markets", said Christopher Chambers, Chairman of the Board of Directors.

The Investment Company

The Investment Company's assets will comprise liquid funds, the less conservative participations in Russia, Algeria, Seiler Hotels and the non-core retail businesses of Molino, Beach Mountain and Fundgrube. As previously indicated, the Invest¬ment Company will have a book equity value of approximately CHF 1 billion prior to the cash exit option introduced with this announcement. The dual class shareholder structure in the Investment Company will be maintained and Pelham will continue to be the controlling shareholder. As the Investment Company will have to establish a track record in the capital markets, the Board of Directors proposes to give shareholders the option to either stay fully invested in the Company or to exit a significant part of their position. As a result, Jelmoli will offer a cash exit option for shareholders in the Investment Company through a share buyback program. Shareholders will receive tradable put options which will allow them to put back shares to the Investment Company at a discount of 15% to book equity, up to a total amount of CHF 400 million.

"While we believe that the current market environment offers multiple attractive opportunities for an investment company with liquid funds, shareholders will be given the choice to either participate in the value creation potential of the Invest¬ment Company, or to sell their shares back to the Investment Company at an attractive price. While providing liquidity for shareholders, the buyback program will also have a stabilizing effect on the share price of the Investment Company which will be to the benefit of all shareholders which choose to stay invested," added Christopher Chambers.

Extraordinary Shareholders Meeting
Jelmoli will invite its shareholders to vote on the proposed strategic plan at an extra¬ordinary shareholders meeting scheduled to take place at the beginning of November 2008. Once shareholder and other approvals have been granted, it is envisaged that the shares of the newly listed Investment Company will be distributed to shareholders and commence trading in January 2009.

"It has been the goal of the Board of Directors to develop a strategic solution that is in the best interest of the company and acceptable to all shareholders. We believe that this proposal, which the Board of Directors will put to shareholders at the beginning of November, removes key impediments to value creation and the further development of both companies. The Board of Directors is convinced that the presented strategic plan is an attractive and balanced proposal. It will now be up to shareholders to decide," said Christopher Chambers.

The completion of the proposal is subject to shareholder approval, approval by the SWX Swiss Exchange and the Swiss Takeover Board, filing of the respective listing documents with the SWX and further legal and tax review.

Dr. Jörg Neef, Hirzel for Jelmoli Holding AG - 2008-09-05

Announcement by Jelmoli Holding AG. The originator takes responsibility for its content.