Estonia: Hans Luik to buy Pro Kapital's hotels in Tallinn, Riga
The listed Estonian real estate developer Pro Kapital Grupp AS has concluded the contract for the sale of the group's hotel PK Ilmarine in Tallinn and PK Riga in Riga to Hans Luik's company Sisne Invest and the operator activity to BBH Hotel Group OU, while the total cost of the transaction is 13 million euros.
"The goal of the transaction, including the disposal of the shares, is to exit the Tallinn and Riga hotel market which has not been a core business for the group. The Tallinn and Riga hotel markets are in a positive state, so for us it is the right moment for the exit. Our goal is to concentrate on the development of residential and commercial real estate and to use the monetary resources received from the transaction to speed up the development of our core business in the markets, which have positive trends," Paolo Michelozzi, CEO of Pro Kapital Grupp, said in a statement made to the stock exchange.
Buyers of the real estate related assets are Sisne Invest OU in Estonia and SIA Sisne Invest Riga in Latvia, Pro Kapital told the stock exchange. The transaction is dependent on the conditions to be fulfilled by the buyer and they have until September 30, 2017, to fulfill the conditions.
The estimated amount of the transaction is 13 million euros, of which 6.9 million euros is the amount allocated to PK Ilmarine, which has been paid during the fulfilment of the transaction and the base price of PK Riga is 6.1 million euros. The exact price of the Latvian transaction will be determined upon the closing of the transaction, as the price is dependent on the result of economic activity of the hotel as of the closing. Altogether 630,000 euros has been paid upon signing and the rest will be paid upon the closing of the Latvian transaction.
As a result of the transaction, the revenue of Pro Kapital Group will decrease by 3.1 million euros, while net profit will fall 900,000 euros, at the same time, based on the 2016 financial results the financial liabilities of the group will decrease by 6.1 million euros and cash assets will increase by 6.9 million euros.
As of closing the transactions, all contracts between issuer and disposed companies are terminated. The issuer shall conclude the fix term license agreement for the use of PK Hotels, PK Ilmarine hotel and PK Riga hotel trademarks with the buyers.
Due to the sale of PK Ilmarine hotel operator, head of the legal department of Pro Kapital Ervin Nurmela resigned from the management board of OU Hotel Management Services and persons related to the buyer were elected as new board members. Boards of companies related to the Latvian transaction will continue to serve as board members until the closing of the Latvian transaction.
As a result of the transaction, Pro Kapital will exit the Tallinn hotel market and after the closing of the Riga hotel transaction will exit also from the Riga hotel market.
Founded in 2014, BBH Hotel Group is the group's parent company, which operates the Laulasmaa Spa and Conference Hotel and Hotell Euroopa and Tallinn Seaport Hotel located in the Tallinn city center. According to the season, the group employs approximately 300 people.