22 August 2024

PLAZA CENTERS N.V.

RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2024

Plaza Centers N.V. ("Plaza" / "Company" / "Group") today announces its results for the six months ended 30 June 2024. The financial information for the half year ended 30 June 2024 and 30 June 2023 has neither been audited nor reviewed by the auditors.

Financial highlights:

·      Consolidated cash position as of June 30, 2024 decreased by circa €1.1 million to app. €4.6 million (December 31, 2023: €5.7 million) as a result of general and legal expenses.

·      €0.9 million loss recorded at an operating level (June 30, 2023: €0.9 million loss) mainly due to general and legal expenses.

·      Recorded loss of €8.9 million (June 30, 2023: €0.6 million), mainly due to finance results on bonds, general and legal expenses.

·      Basic and diluted loss per share of €1.30 (30 June 2023: loss per share of €0.09).

Material events during the period:

Tax authority investigation:

On March 25, 2024 the Company announced that further to its announcement dated March 27, 2023 with regards to the search and seizure operations carried by the Indian tax authorities at the offices of Elbit Plaza India Management Services Private Limited (hereinafter: "EPIM") (which is a private company wholly owned by Elbit Plaza India Real Estate Holdings Limited), EPIM has received a favorable order under which investigation for one of the three years under investigation is completed without imposing any liability on EPIM. Inquiry into the remaining periods of the investigation is continuing and the Company will update on any development.

Update regarding a change Ragnar Trade holdings:

On January 31, 2024 the Company announced that, Ragnar Trade spółka z ograniczoną odpowiedzialnością ("Ragnar Trade") acquired about 343.9 thousand shares of the Company, which amounted to 5.02% of the Company's issued and paid capital. On February 5,  2024 the Company announced that Ragnar Trade acquired share of the Company up to level of 11.70% of the Company's issued and paid capital and on February 19, 2024 it was announced that Ragnar Trade holdings in the Company is decreased to 4.81% of the Company's issued and paid capital, thus Ragnar Trade ceased to be related party of the Company.

Deferral of payment of Debentures and partial interests' payment:

Refer to the below in Liquidity & Financing.

Dutch statutory auditor:

Refer to Note 6(c) in the interim condensed consolidated financial statements as of June 30, 2024.

Update regarding submission of a request for arbitration against Romania with respect to the "Casa Radio" project:

On March 29, 2024 the Company announced that, it has received a further engagement letter ("Further Engagement Letter"), from the Company's primary legal advisers in connection with the arbitration for the "Casa Radio" project (the "Project"). The Further Engagement Letter is in line with Company's projected cash flow that was approved at Bondholders' Meeting from October 11, 2023.

On April 2, 2024 the Company filed its Reply on the merits and counter memorial on jurisdiction at the International Centre for the Settlement of Investment Disputes. The Company's updated full compensation for its losses with respect to the Project is currently estimated to be up to EUR 425,500,000 as at 31 March, 2024.

Key highlights since the period end:

Update regarding submission of a request for arbitration against Romania with respect to the "Casa Radio" project:

On July 15, 2024 Plaza received a notice, on behalf of the Ministry of Finance of Romania, to start an arbitration procedure under the rules of the London Court of International Arbitration (hereafter: "Request") against the Company, Elbit Imaging Ltd and a third-party private investor (the Company, Elbit Imaging Ltd and the third-party private investor will be collectively referred to below as: "the Respondents"). As part of the request, the Ministry of Finance of Romania demands compensation from the Respondents amounting to approximately EUR 96 million (before VAT and interest). 

Commenting on the results, executive director Ron Hadassi said:

"The Company is continuing to take all necessary steps with Casa Radio Project. The Company has submitted with the International Centre for Settlement of Investment Disputes ("ICSID") a Request for Arbitration (the "Request") against Romania for compensation of losses incurred due to failure of the Romanian authorities to cooperate, negotiate and adjust the PPP agreement."

For further details, please contact:

Plaza

Ron Hadassi, Executive Director                                              972-526-076-236          

Notes to Editors

Plaza Centers N.V. (www.plazacenters.com) is listed on the Main Board of the London Stock Exchange, as of 19 October 2007, on the Warsaw Stock Exchange (LSE: "PLAZ", WSE: "PLZ/PLAZACNTR") and, on the Tel Aviv Stock Exchange.

Forward-looking statements

This press release may contain forward-looking statements with respect to Plaza Centers N.V. future (financial) performance and position. Such statements are based on current expectations, estimates and projections of Plaza Centers N.V. and information currently available to the company. Plaza Centers N.V. cautions readers that such statements involve certain risks and uncertainties that are difficult to predict and therefore it should be understood that many factors can cause actual performance and position to differ materially from these statements.

MANAGEMENT STATEMENT

During first half of 2024 the Company also continued cost reductions in administrative expenses and costs of operations. In connection with Casa Radio Project, as stated above, the Company issued a Notice of Dispute and Acceptance of Offer and Consent to Arbitrate to Romania with respect to the Project and we hope this will help us to unblock the current status of the Project. In addition, on December 4, 2023 the Company and AFI Europe N.V. ("AFI Europe") agreed to extend the Long Stop Date, which is the date on which the parties will execute a share purchase agreement, subject to the satisfaction of conditions precedent (the "SPA"), until December 31, 2024.

Due to the board and management estimation that the Company is unable to serve its entire debt according to the current redemption date (January 1, 2025) in its current liquidity position, the Company intends to request from the bondholders of both series (Series A and Series B) postponement of the repayment of the remaining balance of the bonds.

Results

During the first half of the year, Plaza recorded a €8.9 million loss attributable to the shareholders of the Company (30 June 2023: €0.6 million). Total result of operations excluding finance income and finance cost was a loss of €0.9 million in 2024 compared to reported loss of €0.9 million in the first half of 2023. The losses were mainly due to administrative expenses and arbitration costs.

Liquidity & Financing

Plaza ended the period with a consolidated cash position of circa €4.6 million, compared to €5.7 million at the end of 2023.

As of June 30, 2024, the Group's outstanding obligation to bondholders (including accrued interests) are app. €142.3 million.

As disclosed in Note 6(d) below the Company was not able to meet its final redemption obligation to its (Series A and Series B) bondholders, due on July 1, 2024, and the bondholders approved to postpone the final redemption date to January 1, 2025.

Due to the board and management estimation that the Company is unable to serve its entire debt according to the current bond's repayment schedule in its current liquidity position, the Company intends to request the bondholders of both series to postpone the repayment of the remaining balance of the bonds. However, there is an uncertainty if the bondholders will approve the request. In the case that the bondholders would declare their remaining claims to become immediately due and payable, the Company would not be in a position to settle those claims and would need to enter into an additional debt restructuring or might cease to be a going concern.

Strategy and Outlook

The Company's priorities are focused on efforts to sign definitive sale agreement of Casa Radio project. The Company also intends to seek for bondholders' approval for postponement of the repayment of the bonds. In addition, the Company intends to continue the cost-cutting of its operational cost.

OPERATIONAL REVIEW

The Company's current assets are summarised in the table below (as of balance sheet date):

FINANCIAL REVIEW

Results

In 2024, the administrative expenses amounted to €0.9 million, which was comparable to the first half of 2023. Administrative expenses for both periods include expenses for legal services in respect to initiated by the Company of an arbitration process in Romania as states above in connection with Casa Radio Project.

Net finance result changed  from €0.3 million gain in the first 6 months of 2023 to €8.9 million loss in the first 6 months of 2024.  The main components of net finance incomes were foreign currency gain on bonds (including inflation) and interests' expenses accrued on the debentures which includes also penalty interest calculated on the deferred principal.

As a result, the loss for the period amounted to circa €8.9 million in the first 6 months of 2024, representing a basic and diluted loss per share for the period of €1.30 (H1 2022: €0.09 loss).

Balance sheet and cash flow

The balance sheet as of 30 June 2024 showed total assets of €4.7 million compared to total assets of €5.8 million at the end of 2023, mainly as a result of administrative expenses and costs of operations.

The consolidated cash position (cash on standalone basis as well as fully owned subsidiaries) as of 30 June 2023\4 decreased to €4.6 million (31 December 2023: €5.7 million).

As of 30 June 2024, the Company has a balance sheet liability of €97.2 million from issuing bonds on the Tel Aviv Stock Exchange. Additionally, the Company recorded provision for interests on bonds as of June 30, 2024, in an amount of €45.1 million (31 December 2023: €38.8 million).

Disclosure in accordance with Regulation 10(B)14 of the Israeli Securities Regulations (periodic and immediate reports), 5730-1970

1.    General Background

According to the abovementioned regulation, upon existence of warning signs as defined in the regulation, the Company is obliged to attach its report's projected cash flow for a period of two years, commencing with the date of approval of the reports ("Projected Cash Flow").

The material uncertainty related to going concern was included in Note 1(b). In light of the material uncertainty that the SPA between the Company and AFI Europe N.V. will eventually be executed and/or that the transaction will be consummated as presented above or at all (refer to Note 5), the board and management estimates that the Company is unable to serve its entire debt according to the due date the bondholders approved to postpone the final redemption date. Accordingly, it is expected that the Company will not be able to meet its entire contractual obligations in the following 12 months.

With such warning signs, the Company is providing projected cash flow for the period of 24 months following for the coming two years.

2.    Projected cash flow

The Company has implemented the restructuring plan that was approved by the Dutch court on July 9, 2014 (the "Restructuring Plan"). Under the Restructuring Plan, principal payments under the bonds issued by the Company and originally due in the years 2013 to 2015 were deferred for a period of four and a half years, and principal payments originally due in 2016 and 2017 were deferred for a period of one year. During first three months of 2017, the Company paid to its bondholders a total amount of NIS 191.7 million (EUR 49.2 million) as an early redemption. Upon such payments, the Company complied with the Early Prepayment Term (early redemption at the total sum of at least NIS 382 million) and thus obtained a deferral of one year for the remaining contractual obligations of the bonds.

In January 2018, a settlement agreement was signed by and among the Company and the two Israeli Series of Bonds.

On November 22, 2018 the Company announced based on its current forecasts, that the Company expected to pay the accrued interest on Series A and Series B Bonds on December 31, 2018, in accordance with the repayment schedule determined in the Company's Restructuring Plan and Settlement Agreement with Series A and Series B Bondholders from 11 January 2018 (the "Settlement Agreement"). The Company noted that it will not meet its principal repayment due on December 31, 2018 as provided for in the Settlement Agreement. On February 18, 2019 the Company paid principal of circa EUR 250,000 and Penalty interest on arrears of EUR 150,000 following the bondholder's approval to defer principal repayment to July 1, 2019.

In addition, during June 2019 the bondholders approved the deferral of the full payment of principal due on July 1, 2019 and of 58% ("deferred interest amount") of the sum of interest (consisting of the total interest accrued for the outstanding balance of the principal, including interest for part of the principal payment which was deferred as of February 18, 2019, plus interest arrears for part of the principal which was fixed on February 18, 2019 and was not paid by the Company and all in accordance with the provisions of the trust deed; "the full amount of interest"), the effective date of which is June 19, 2019, and the payment date was fixed as of July 1, 2019. The company paid on the said date a total amount of circa EUR 1.17 million, which is only 42% of the full amount of interest.

On July 11, 2019, the Company announced that its Romanian subsidiary had signed a binding agreement to sell land in Romania (refer to Note  5(3)(f) of the consolidated financial statements as of December 31, 2020), and that the Company would use part of the proceeds now received by it EUR 0.75 million (hereinafter: "the amount payable"), in order to make a partial interest payment to the bondholders (Series A) and (Series B) issued by the Company. The payment required changes in the repayment schedule and amendments of the trust deeds which was approved unanimously by the Bondholders. The amount payable was paid on August 14, 2019 and reflects 30% of accrued interest as of that date.

On November 17, 2019, the bondholders of Series A and Series B approved a deferral of all the scheduled Principal payment and app. 87% of deferral of the scheduled Interest payment, both, as of December 31, 2019 to July 1, 2020.

On May 4, 2020, the bondholders of Series A and Series B approved: (i) to postpone the final redemption date to January 1, 2021 of all the scheduled Principal; (ii) that on July 1, 2020 the Company will pay to its bondholders a partial interest payment in the total amount of EUR 250,000 and to deferral all other unpaid scheduled Interest payment.

Following receiving the Settlement Amount related to the final price adjustment of the sale of Belgrade Plaza and in light of the potential negative impact of the Covid-19 on the possibility to receive future proceeds from the Company's plots in India, the Company decided to increase the amount to be paid to the bondholders on July 1, 2020, from EUR 250,000 to EUR 500,000. The amount reflected 6.74% of accrued interest as of that date.

On November 12, 2020, the bondholders of Series A and Series B approved: (i) to postpone the final redemption date to July 1, 2021 of all the scheduled Principal; that on January 1, 2021 the Company will pay to its bondholders a partial interest payment in the total amount of EUR 200,000 and to deferral all other unpaid interest. The amount reflected 1.84% of accrued interest as of that date.

On April 12, 2021, the bondholders of Series A and Series B approved: (i) to postpone the final redemption date to January 1, 2022; (ii) that on July 1, 2021 the Company will pay to its bondholders a partial interest payment in the total amount of EUR 125,000 and to deferral all other unpaid interest. The amount reflected 0.84% of accrued interest as of that date.

On November 25, 2021, the bondholders of Series A and Series B approved: (i) to postpone the final redemption date to July 1, 2022; (ii) that on January 1, 2022 the Company will pay to its bondholders a partial interest payment in the total amount of EUR 125,000 and to deferral all other unpaid interest. The amount reflected 0.92% of accrued interest as of that date.

On June 16, 2022, the bondholders of Series A and Series B approved to postpone the final redemption date to January 1, 2023.

On November 8, 2022, the bondholders of Series A and Series B approved: (i) to postpone the final redemption date to July 1, 2023; (ii) that on January 1, 2023 the Company will pay to its bondholders a partial interest payment in the total amount of EUR 2,000,000 and to deferral all other unpaid interest. The amount reflected 6.08% of accrued interest as of that date.

Further, in 2023 the bondholders of Series A and Series B approved: (i) to postpone the final redemption date to January 1, 2024; (ii) that on July 1, 2023 the Company will pay to its bondholders a partial interest payment in the total amount of EUR 750,000 and to deferral all other unpaid interest. The amount reflected 6.08% of accrued interest as of that date.

On November 11, 2023, the bondholders of Series A and Series B approved: (i) to postpone the final redemption date to July 1, 2024; (ii) that on January 1, 2024 the Company will pay to its bondholders a partial interest payment in the total amount of EUR 200,000 and to defer all other unpaid interest. The amount reflected 0.51% of accrued interest as of that date.

Further, in 2024 the bondholders of Series A and Series B approved: (i) to postpone the final redemption date to January 1, 2025.

The materialisation, occurrence consummation and execution of the events and transactions and of the assumptions on which the projected cash flow is based, including with respect to the proceeds and timing thereof, although probable, are not certain and are subject to factors beyond the Company's control as well as to the consents and approvals of third parties and certain risks factors. Therefore, delays in the realisation of the Company's assets and investments or realisation at a lower price than expected by the Company, as well as any other deviation from the Company's assumptions (such as additional expenses due to suspension of trading, delay in submitting the statutory reports etc.), could have an adverse effect on the Company's cash flow and the Company's ability to service its indebtedness in a timely manner.

1.     The above cash flow is subject to the approval of the bondholders of both series to postpone  the repayment of the remaining balance of the bonds which is due on January 1, 2025.

2.     Total cash on standalone basis as well as fully owned subsidiaries.

3.     The Company did not include any proceeds from pre-sale agreement signed with AFI, due to the uncertainty as to the fulfilment of the conditions set out in the preliminary agreement as mentioned in Note 5 of the interim condensed consolidated financial statements as of June 30, 2024, thus there can be no certainty an the SPA will eventually be executed and/or that the Transaction will be completed.

4.     Payments of interests are subject to the approval of the bondholders of both series.

5.     The cost includes a provision for arbitrations / legal costs based on projection of arbitration process.

6.     Total general and administrative expenses includes both costs of the Company and of all the subsidiaries.

Ron Hadassi

Executive Director

22 August 2024

PLAZA CENTERS N.V.

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF JUNE 30, 2024

NOT AUDITED AND NOT REVIEWED

IN '000 EUR

CONTENTS

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