Presentation – Forward exercise of 30% options in CHL
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Presentation – Forward exercise of 30% options in CHL Presentation – Forward exercise of 30% options in CHL Presentation Transcript

  • PDG Realty increases its stake in CHL to 100%
  • Agenda Deal rationale Deal structure Orginal MOU conversion formula 2008 pro forma results  Appendix * 2
  • Early option exercise - Deal Rationale  Total consolidation of CHL as an operational branch for PDG Realty;  PDG Realty´s back office platform integrated under only one single structure seeking operational efficiency;  Reduction in the “Minority Interest” line of our Income Statement;  The terms from the MOU (as of 27/Nov/07) will be preserved. The future payments will continue to be calculated by the original formula (presented later in this document);  CHL´s management team continues in a long term commitment and subject to exclusivity and non-compete clauses;  Accretive valuation. 3 View slide
  • Early option exercise - Deal Structure  Early exercise of the call option to acquire up to 30% of the common shares of CHL LXX Incorporações Ltda. through the issuance of PDG Realty shares and Subscription Warrants;  Deal structure: Both sides had 4 options (PDG Realty calls and PDG Realty early exercised its 4 calls. CHL’s founding Founding partners puts). Each option had an specific partner will receive 779,062 PDG shares and 4 exercise date (2009 up to 2012) related to 6% of CHL subscription bonuses class 2. in 2009 and 8% the next years, totaling the remaining 30%. Additionally, CHL founding partners will receive the rights More details in the MOU dated as of 27/Nov/07. of: • veto right until the date of the annual general meeting that approves the accounts of the 2011 fiscal year; • the election of two members of CHL’s Board of Directors, out of a total of 6; • election of the Chief Executive Officer of CHL. 4 View slide
  • Early option exercise – Original MOU conversion formula  Originally the option could be exercised annually by any of the partners in 4 tranches (the first of which in 2009, and the last in 2012). Formula from original Memorandum of Understanding, to be implemented in current transaction: PDGR3 nº = (CHL DI NP/ PDG NP) * 65% * PDG Shares * % of CHL DI Shares Where: PDGR3 no.: means the number of PDG’s shares to be issued as a result of the merger; PDG NP: means the PDG's net profit as shown in the corporate balance sheet of December 31 of the year immediately prior to the exercise of the respective Option’s tranche; CHL DI NP: means CHL’s net profit as shown in the corporate balance sheet dated December 31 of the year immediately prior to the exercise of the respective Option’s tranche; PDG Shares: means the number of shares representing PDG’s capital stock on December 31 of the year immediately prior to the exercise of the respective Option; % of CHL DI Shares: means the percentage of CHL’s shares being sold in the tranche in question (6%).  Therefore, the early exercise of the Option shall not result in any change in the Option exercise payment terms, as (i) the payment shall continue to be made with PDG Realty’s shares; (ii) the number of shares to be transferred shall continue to be determined by the formula above; and (iii) the term for the subscription of PDG Realty’s shares by the partners shall remain unchanged, that is, it shall only take place in the following 3 fiscal years. 5
  • Early option exercise – 2008 Results pro forma  Just as an exercise, below we present the consolidated pro forma results (considering 100% stake in CHL and Golfarb) for operational figures and adjusted net income in 2008: Operational results: 2008 70% CHL 100% CHL Launched pro rata PSV 2,611.5 2,946.2 Contracted sales pro rata 1,811.9 2,074.3 Adjusted Net Income: 2008 70% CHL 100% CHL Adjusted Net Income 250.6 267.9 Adjusted Net Margin 20.7% 22.1% 6
  • Appendix 1  Issued shares rational: Earnings CHL 2008 (R$) 33,285,881 Earnings PDG Realty 2008 (R$) 182,463,487 (a) CHL / PDG Realty 18.24% (b) Multiple discount 35.00% (a) * [ 1 - (b) ] = (c) 11.86% (d) Total PDG Realty shares 146,003,148 (c) * (d) = (e) 17,312,495 (f) 2008 shares to be bought 6.00% Shares to be issued before adjustment (e) * (f) = 1,038,750 Threshold (1) 25% Shares issued 2008 779,062  Subscription bonuses rational (each Series represents 10 bonuses): NO. OF SHARES TO BE ISSUED EXERCISE PERIOD Series A To be determined according to the Company's and CHL's net profit in Beginning End 2008, with a 35% discount in relation to the Company's net profit On the date of the Company's annual general meeting that Ninety (90) days as of the date when the warrants of multiple, minus the number of shares already delivered as a result of shall approve the financial statements referring to the fiscal this series may be exercised. the Merger. year ended on December 31, 2008. Series B To be determined according to the Company's and CHL's net profit in Beginning End 2009, with a 35% discount in relation to the Company's net profit On the date of the Company's annual general meeting that Ninety (90) days as of the date when the warrants of multiple. shall approve the financial statements referring to the fiscal this series may be exercised. year ended on December 31, 2009. Series C To be determined according to the Company's and CHL's net profit in Beginning End 2010, with a 35% discount in relation to the Company's net profit On the date of the Company's annual general meeting that Ninety (90) days as of the date when the warrants of multiple. shall approve the financial statements referring to the fiscal this series may be exercised. year ended on December 31, 2010. Series D To be determined according to the Company's and CHL's net profit in Beginning End 2011, with a 35% discount in relation to the Company's net profit On the date of the Company's annual general meeting that Ninety (90) days as of the date when the warrants of multiple. shall approve the financial statements referring to the fiscal this series may be exercised. year ended on December 31, 2011. 7
  • Contacts:  For any additional information, please contact : • Michel Wurman - CFO and Investor Relations Officer • João Mallet, CFA – Financial and Investor Relations Manager • Gustavo Janer – Financial and Investor Relations Analyst • IR Team: ri@pdgrealty.com.br • Phone: + 5521 3504-3800 • www.pdgrealty.com.br 8