|Solidere announces promotional program to attract buyers and boost its shares (Daily Star)
|Offer should allow the company to pay off its $295 million debt in 2 years
Solidere announced a new promotional program to encourage the sale of its real estate holdings in downtown Beirut that would simultaneously attract real estate developers and investors and boost the value of the company's shares. "It is our firm conviction that the current market price of our company's shares does not reflect their true value," said Nasser Shamaa, Solidere board chairman, during a press conference announcing the new sales plan at Solidere headquarters in Beirut on Thursday.
"Our aims also encompass generating a substantial cash flow, significantly reducing our debt and moving the real state market out of stagnation."
Shamaa outlined the proposed program, to be implemented in its entirety and applicable for only empty real estate plots, as follows:
The buyer/investor will automatically benefit from a reduction not exceeding 15 percent of the property's value. An initial cash payment, equivalent to 10 percent of the real estate value after reduction, must be paid upon signing the contract.
At least 30 percent of the remaining value can be covered by Solidere shares (A and B), to be calculated on the basis of the Beirut Stock Exchange Solidere shares price average of the past 10 days preceding the sale's conclusion.
Furthermore, Solidere will add an extra 10 percent bonus on this amount, provided that the figure thus obtained does not vary by plus or minus 15 percent from the closing share value of the day preceding the inking of the deal.
The buyer/investor also has the option of increasing this percentage up to a maximum of 40 percent, the difference of which would be deducted from the initial cash payment. The remaining 60 percent would be divided into three equal yearly payments with interest fixed at LIBOR (The London interbank offered rate) plus 2."The shares thus returned to the company would not be reoffered back on the market but instead would be used to decrease the company's capital," explained Shamaa. "All other conditions pertaining to the contract and development of the real estate would be those currently in effect."
"This program cannot be broken up and all the conditions have to be accepted as a whole," he added. "Should this not be convenient to the potential investors, they can still carry out their purchases the old way."
The chairman expected that the move would allow the company to drastically reduce its $295 million existing debt and totally erase it in a two year period. The company's receivables already amount to over $200 million, not counting its cash and other properties.
In response to a question, Shamaa estimated that 80 percent of the investors were Lebanese and the other 20 percent were from the Arab world."By eradicating our debt we would finally be able to channel our income from rents back into the shareholders' pockets," concluded Shamaa. "We have high expectations that the program will receive wide acceptance and achieve a huge success."
Solidere recorded a profit of $16.43 million at the end of 2003, a drop of 60 percent compared to 2002.
Solidere A and B shares rose by more than 45 percent in value in March but the prices of these stocks, now traded at more than $7, are considered to be below their true market value.
Ara Alain Azoumian
The Daily Star