joint report

SUMMARY TRANSLATION OF THE GERMAN LANGUAGE REPORT. THIS TRANSLATION IS FOR IMFORMATIONAL PURPOSES ONLY.
JOINT REPORT
of the Management Board and Supervisory Board of
conwert Immobilien Invest AG ("conwert")
to agenda item 1 of the shareholders' meeting of
conwert on 25 October 2007
1.
conwert plans to conclude agreements on
a)
the acquisition of a 49% interest in RESAG Immobilienmakler GmbH from
RESAG REAL ESTATE SERVICES AG, Seiller-Tarbuk Liegenschaftsverwaltung
GmbH, and from Thomas Rohr;
b)
the acquisition of a 100% interest in RESAG Baumanagement GmbH from
Günter Kerbler, Mag Johann Kowar, Dr Helmut Hardt, K 5 Privatstiftung, Kowar KEG, and from Gabriele Kerbler;
c)
the acquisition of a 100% interest in RESAG Business Immobilienverwaltung
GmbH from RESAG REAL ESTATE SERVICES AG;
d)
the acquisition of a 100% interest in Brestan, Karner & Partner Immobilienverwaltung Gesellschaft mbH (in future: RESAG Home Immobilienverwaltung
GmbH) from RESAG REAL ESTATE SERVICES AG;
e)
the acquisition of a 100% interest in Insurance Financial Services GmbH
from RESAG REAL ESTATE SERVICES AG;
f)
the acquisition of a 100% interest in WPB Baumanagement GmbH from Wiener Privatbank Immobilieninvest AG;
g)
the acquisition of a 100% interest in ECO Management GmbH from Wiener
Privatbank Immobilieninvest AG, Günter Kerbler, Mag Johann Kowar,
Dr Helmut Hardt, K 5 Privatstiftung, Kowar KEG, Gabriele Kerbler, S 8 Privatstiftung, and from KR Friedrich Scheck;
h)
the acquisition of a 100% interest in conwert Management GmbH from Wiener Privatbank Immobilieninvest AG, Günter Kerbler, Mag Johann Kowar,
Dr Helmut Hardt, K 5 Privatstiftung, Kowar KEG, and from Gabriele Kerbler;
i)
the acquisition of a 100% interest in Alt & Kelber Immobiliengruppe GmbH
from Alt & Kelber Holding GmbH & Co KG;
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j)
the acquisition of a 22% interest in Alt & Kelber Immobilienverwaltung
GmbH from Walter Leitner.
To item 1.g) above it is noted, that ECO Management GmbH plans to reduce its registered capital from Euro 4,500,000 by Euro 4,450,000 to Euro 50,000 before Closing of the transaction with which conwert would acquire ECO Management GmbH.
The sellers shall be entitled to the reduction amount of Euro 4,450,000 in the ratio
of their interests in ECO Management GmbH.
2.
To facilitate the execution of the acquisitions mentioned under item 1, each of the
sellers has submitted to conwert an offer for the sale and transfer of the interests
held by such seller. The offers can be accepted by conwert by way of a acceptance
declaration in accordance with the applicable acceptance periods set forth in the offers.
3.
By acquiring the interests in conwert Management GmbH, Insurance Financial Service GmbH and Alt & Kelber Immobiliengruppe GmbH, conwert would also indirectly
acquire the interests held by conwert Management GmbH, Insurance Financial Service GmbH and Alt & Kelber Immobiliengruppe GmbH in the following subsidiaries:
a)
conwert Management GmbH holds a 70% interest in BOKRÉTA Management
Kft., Budapest, a 60% interest in Pdcz brno s.r.o, Brno, a 60% interest in
Pdsk Bratislava s.r.o., Bratislava, a 60% interest in conwert Thüringen Portfolio GmbH, Berlin, a 100% interest in conwert Deutschland Immobilien
GmbH, Berlin, a 40% interest in Bau-Verein zu Hamburg Hausverwaltungsgesellschaft mbH, Hamburg, and a 60% interest in CC Portfolio GmbH, Berlin.
b)
Insurance Financial Services GmbH holds a 100% interest in RESAG Insurance Broker GmbH, Vienna.
c)
Alt & Kelber Immobiliengruppe GmbH holds a 100% in ALT & KELBER Wohnungsprivatisierung GmbH, Heilbronn, Germany, a 78% interest in Alt &
Kelber Immobilienverwaltung GmbH, Heilbronn, Germany, a 100% interest
in ALT & KELBER Verwaltungs GmbH, Heilbronn, Germany, a 100% interest
in ALT & KELBER Immobilienmanagement GmbH, Heilbronn, Germany, a
100% interest in ALT & KELBER Eigenheim GmbH, Heilbronn, Germany, a
100% interest in ALT & KELBER Wohninvest GmbH, Heilbronn, Germany,
and is also the sole limited partner of ALT & KELBER Immobilienkontor
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GmbH & Co. KG, Gera, Germany, and Alt & Kelber Verwaltungs GmbH is a
limited partner of ALT & KELBER Immobilienconsulting GmbH & Co. KG, Heilbronn, Germany.
4.
The purchase prices1 for the interests to be acquired by conwert are:
a)
Euro 95,385,000 for the interest in conwert Management GmbH as well as
the interests held by conwert Management GmbH in subsidiaries;
b)
Euro 48,800,000 for the interest in ECO Management GmbH;
c)
Euro 35,487,000 for the interests in RESAG Immobilienmakler GmbH,
RESAG Baumanagement GmbH, RESAG Business Immobilienverwaltung
GmbH, Brestan, Karner & Partner Immobilienverwaltung Gesellschaft mbH
(in future: RESAG Home Immobilienverwaltung GmbH) and in Insurance Financial Services GmbH (including the interest held by Insurance Financial
Services GmbH in RESAG Insurance Broker GmbH);
d)
Euro 2,256,500 for the interest in WPB Baumanagement GmbH; and
e)
Euro 34,171,000 for the interest in Alt & Kelber Immobiliengruppe GmbH as
well as for the interests held by Alt & Kelber Immobiliengruppe GmbH in
subsidiaries.
5.
The target companies (together with each of their subsidiaries) are active in the following business areas:
a)
conwert Management GmbH is the management company of conwert. conwert Management GmbH and its subsidiaries are active in Austria, Germany
and the CEE region. conwert Management GmbH employs 105 employees.
b)
ECO Management GmbH is the management company of the stock exchange
listed ECO Business-Immobilien AG and is responsible for its commercial real
estate assets. The company employs 24 employees and is active in Austria,
Germany and the CEE region.
c)
RESAG Immobilienmakler GmbH, RESAG Baumanagement GmbH, RESAG
Business Immobilienverwaltung GmbH, Brestan, Karner & Partner Immo-
1
These purchase prices are preliminary purchase prices. The final purchase prices will be determined on the basis of audited financial statements of the target companies as of 31 December
2007. Compare also item 6 of this report.
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bilienverwaltung Gesellschaft mbH (in future: RESAG Home Immobilienverwaltung GmbH) and Insurance Financial Services GmbH as well as its subsidiary RESAG Insurance Broker GmbH are Austrian real estate service providers. They offer different real estate services such as property management, real estate brokerage services, insurance brokerage services and construction management services. Currently the companies employ 74 employees.
d)
The Alt & Kelber-Group (Alt & Kelber Immobiliengruppe GmbH and its subsidiaries) is a German real estate service provider group that is active in the
area of third party housing privatisation, but also offers property management services, real estate brokering services and real estate development
services. The Alt & Kelber-Group employs approximately 220 employees and
has over 100 offices in the whole of Germany at its disposal.
6.
The other material terms of the agreements between conwert and the sellers named in agenda item 1 of the invitation to conwert's shareholders' meeting on 25
October 2007 are largely identical or very similar and can be summarized as follows:
•
The sellers were provided with a standard for their offers by conwert. Based
on this standard conwert negotiated with each of the sellers and adapted the
standard according to the results of the negotiations.
•
The agreements, also the agreements regarding the acquisition of the Alt &
Kelber interests, will be subject to Austrian law. The legal venue is in each
case the commercial court of Vienna.
•
The sellers' offers for the conclusion of share purchase agreements are, with
exception of the offers by Wiener Privatbank Immobilieninvest AG that are
subject to the approval of the shareholders' meeting of Wiener Privatbank
Immobilieninvest AG, unconditional. The Closing of the transfer of the interests is subject to customary conditions precedent, such as approval by the
cartel authorities and that no material adverse changes shall have occurred.
•
conwert does not have the obligation to accept the offers before the shareholders' meeting, but has sufficient time to conclude its extensive due diligence of the target companies.
•
The purchase prices are subject to a customary purchase price adjustment.
The final purchase prices will be determined on the basis of audited financial
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statements as of 31 December 2007. The financial statements will be audited
by conwert's independent auditor.
•
The sellers are entitled to receive the profits earned by the target companies
in the financial year 2007. conwert is, however, economically entitled to the
profits for subsequent financial years.
•
In their offers the sellers have given an extensive catalogue of customary representations and warranties, in particular concerning company law matters, financial statements, accountancy and financial matters, taxes and fees, intellectual property rights, material contracts, insurance matters, employment law
matters, litigation, real estate and environmental law matters, administrative
law matters, the conduct of the business since the end of the last financial
year and regarding the truthfulness, completeness and correctness of the information disclosed in the due diligence and the non-misleading nature of such
information. The representations and warranties are valid for certain periods,
in which conwert's auditors will, in particular, audit the financial statements of
the target companies, and are secured by profits to which the sellers are economically entitled. In case of a breach of a representation or warranty conwert
can use this security to satisfy its claims.
conwert's representation and warranty claims are subject to customary liability
limitations. Liabilities resulting from the breach of representations or warranties are generally limited to half of the purchase price. The liability for representations and warranties regarding company law matters and taxes is, however, limited with the purchase price, in one case this liability is even unlimited.
•
For the period from the date of the offers (30 September 2007) until Closing
conwert has customary co-determination rights and the sellers are obligated
not to carry out any disadvantageous transactions.
•
In addition, the sellers are subject to non-compete and non-solicitation clauses
for a period of between one year (for the stock exchange listed Wiener Privatbank Immobilieninvest AG) and up to 5 years. A breach of these clauses triggers a contractual penalty.
7.
The aim of the acquisition of the above mentioned interests is the expansion of
conwert's operative business so that it includes real estate management and real
estate services. After having acquired RESAG Immobilienmakler GmbH, RESAG
Baumanagement GmbH, RESAG Business Immobilienverwaltung GmbH, Brestan,
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Karner & Partner Immobilienverwaltung Gesellschaft mbH (in future: RESAG Home
Immobilienverwaltung GmbH) and Insurance Financial Services GmbH (including its
subsidiary RESAG Insurance Broker GmbH) conwert will have all material real estate services at its disposal internally and will, therefore, become a fully integrated
provider of all real estate services that covers the whole real estate value chain. By
covering the whole real estate value chain conwert should be able to generate additional cash-flows. The strategic focus of conwert after the acquisition of the interests will remain in high-quality residential properties and will be extended by the
management expertise of ECO Management GmbH in business properties.
In addition, the acquisition of the Alt & Kelber-Group is an important step for conwert's expansion in Germany. Through this acquisition conwert would have extensive and established property management and Alt & Kelber-Group's 20 year
knowledge of the German real estate market at its internal disposal.
8.
JP Morgan acted as conwert's financial advisor in this transaction and submitted a
fairness opinion to the management board.
Due to the importance of the acquisitions stated in agenda item 1 of the invitation to
conwert's shareholders' meeting on 25 October 2007 for conwert's group-structure and
the future strategy of conwert as well as due to certain relationships between conwert's
boards and individual sellers respectively the boards of individual sellers the management board and the supervisory board of conwert have – after the management board
had submitted a request for approval by the supervisory board and after the supervisory
board had discussed such request benevolently – agreed to inform the shareholders'
meeting extensively on the planned transaction and to request the approval of the
shareholders' meeting to the conclusion of the agreements by conwert's boards.
The management board and the supervisory board of conwert recommend that conwert's
shareholders approve the conclusion of the agreements regarding the planned acquisition
of interests by conwert's boards in the shareholders' meeting on 25 October 2007.
Vienna, 3 October 2007
_____________________________
__________________________
Mag Franz Zwickl
Mag Johann Kowar
(Chairman of the Supervisory Board)
(Chairman of the Management Board)