The Board of Directors decision for capital increase

On 20 April 2018, on meeting of the Board of Directors


of Bulgarian Real Estate Fund  REIT, the following decisions have been taken to increase the capital of the company

on Item One of the agenda

THE BOARD OF DIRECTORS DECIDED UNANIMOUSLY:

Pursuant to Article 196, Paragraph 1 and Article 194, Paragraph 1 of the Commerce Act, Article 112 and the following articles of the Public Offering of Securities Act and according to the authority of the Company’s Articles of Incorporation to increase capital, , the Board of Directors INCREASES THE CAPITAL of BULGARIAN REAL ESTATE FUND REIT from BGN 20 150 000, divided into 20 150 000 common registered dematerialized shares, each giving the holder and with a par value of BGN 1.00, to BGN 40 300 000 by issuing 20 150 000 new dematerialized shares, each giving the holder the right to one vote and with a par value of BGN 1.00 and an issue value of BGN 1.90 per share, as follows:

The capital increase is going to be carried out in the form of public offering of the newly issued shares, after publishing a PROSPECTUS, endorsed by the Financial Supervision Commission and prepared in compliance with the legislative requirements.

1. Amount of the capital to be raised, permissible limits, number, par value and issue value, types of shares and rights associated with them. 

The capital of BULGARIAN REAL ESTATE FUND REIT shall be increased from BGN 20 150 000 to BGN 40 300 000 by issuing 20 150 000 common dematerialized voting shares with a par value of BGN 1.00 each. The Company’s capital shall only be increased if at least 10 075 000 shares with a par value of BGN 1.00 and an issue value of BGN 1.90 each are subscribed and paid for, in which case the Company’s capital shall be increased by the value of the subscribed shares only. It is not possible to go beyond the upper limit for the capital to be raised.

Each newly issued share has a par value of BGN 1.00 and an issue value of BGN 1.90. All shares, issued by BULGARIA REAL ESTATE FUND REIT, as well as the newly issued ones, belong to the same class – common, dematerialized, registered voting shares, giving the holder the right to one vote in the General Meeting of Shareholders, a right to a dividend and a liquidation quota, proportionate to the par value of the share. Increasing the capital in the form of rights precludes the possibility to damage the shareholders’ interests.

2. Rights issue. Proportion between the rights being issued and the new shares.  Minimum and maximum number of shares that can be subscribed in exchange for the rights issued. 

Pursuant to Article 112b, Paragraph 2 of the Public Offering of Securities Act and since the increase decision is being adopted by the management body, only those individuals who have acquired shares no later than 7 days after the date of publication of the public offering announcement pursuant to Article 92а, Paragraph 1 of the Public Offering of Securities Act are entitled to take part in the capital increase. Within three business days from the expiry of 7 (seven) days from the promulgation and publication of the public offering announcement, Central Depository AD shall open rights accounts in the names of these individuals on the basis of data kept in the shareholders’ register. One right shall be issued in exchange for every share existing at the end of the stipulated period. 1 (one) right allows the holder to subscribe 1 (one) new share. After the rights are issued, every individual can acquire rights during the period allowed for transferring/trading in them and during the public auction; every exercised right allows the holder to subscribe one new share at an issue value of BGN 1.90 each. Every individual may acquire the number of shares that is equal to the number of rights he/she has acquired and/or possesses. The rights shall be transferred within the transfer period, defined below in these minutes.

3. Start and end date, conditions and procedure for transferring the rights.  Start and end date, conditions and procedure for subscribing newly emitted shares by the rights holder.

Start date for transferring the rights and subscribing shares pursuant to Article  112b, Paragraph  4 and 5 of the Public Offering of Securities Act – the third business day, following the expiry of 7 (seven) days from the time of publication of the public offering announcement pursuant to Article 92a of the Public Offering of Securities Act in a major daily newspaper (Capital Daily) and on the websites of BULGARIAN REAL ESTATE FUND REIT and the authorized investment brokers First Financial Brokerage House EOOD and Sofia International Securities AD.

3.2. End date for transferring the rights pursuant to Article 112b, Paragraph 4 of the Public Offering of Securities Act – the first business day, following the expiry of 14 days from the start date pursuant to Item 3.1.

3.3. Transfer of rights in the form of purchase and sale thereof (trading in rights) pursuant to Article 112b, Paragraph 6 and the following articles of the Public Offering of Securities Act is carried out on the main market of Bulgarian Stock Exchange – Sofia AD (BSE) by submitting a sale order to the relevant investment broker, with whom accounts for rights of the respective clients are opened, respectively by submitting an order to an investment broker that is a member of the regulated market. The acquisition of rights by other methods is regulated by the provisions of the Regulations of Central Depository AD. The start date for trading in rights is the same as the one in Item 3.1. According to the Regulations of BSE – Sofia AD the end date for trading in rights on the stock exchange is 2 business days before the end date pursuant to Item 3.2. Those shareholders who do not wish to take part in the capital increase, as well as all other rights holders, are entitled to sell their rights pursuant to the afore-mentioned procedure by the end of the stock exchange trading session on the last day on which trading in rights is allowed, respectively to dispose of them by other methods by the last day of the rights transfer period, but not later than stipulated in the Regulations of Central Depository AD. On the 5th business day after the end date of the rights transfer period pursuant to Item 3.2. BULGARIAN REAL ESTATE FUND REIT, acting through its investment broker First Financial Brokerage House EOOD, shall offer for sale in the form of an auction the rights, for which no newly issued shares have been subscribed by the end date of the rights transfer period. BULGARIAN REAL ESTATE FUND REIT shall distribute the amount, obtained from the sale of unexercised rights, decreased by the sale costs, proportionately among their holders. The amounts, obtained from the sale of the rights, shall be transferred to a special account, opened by Central Depository AD, and may not be used until the capital increase has been entered into the Trade Register. The amounts, obtained from the sale of rights, both during the period for transfer thereof and during the auction, shall be distributed with the assistance of the Central Depository pursuant to the conditions and procedures in its Regulations. At the beginning of each business day during the subscription period the Central Depository shall publish information about the rights that were exercised until the end of the previous business day. Individuals who have acquired rights during the auction sale can subscribe the respective number of shares not later than the expiry of the subscription period pursuant to Item 3.4.

3.4. End date for subscription of the shares pursuant to Article 112b, Paragraph 5 of the Public Offering of Securities Act – the first business day, following the expiry of 15 business days from the day on which the rights transfer period pursuant to Item 3.2. expires. Subscription is not allowed before the specified start date and after the specified end date.

3.5. The newly issued shares shall be subscribed on the following conditions and pursuant to the following procedure:

3.5.1. Individuals who acquired rights into their personal accounts shall declare the transfer of the rights into their subaccounts, held with an investment broker. Individuals holding shares with rights, as well as all rights holders who acquired these during the rights transfer period, are entitled to subscribe the respective number of shares in exchange for the rights before the rights transfer period pursuant to Item 3.2 expires, failing which their unexercised rights shall be sold officially at an auction. Individuals who acquired rights during the auction sale can subscribe the respective number of shares not later than the expiry of the subscription period pursuant to Item 3.4. The Company provides an opportunity for remote share subscription through the Central Depository and its members. Share subscription shall be done by submitting written applications. All individuals who hold shares with rights, as well as all other holders of rights, acquired within the acquisition period and/or during the auction, shall submit the subscription applications to the authorized investment brokers First Financial Brokerage House EOOD with seat and registered office, as follows: City of Sofia, 2, Enos Street, floor 4, phone number: +359 2 460 64 11, e-mail: Anna.Georgieva@ffbh.bg, and Sofia International Securities AD with seat and registered office, as follows:, et. 4 City of Sofia, 140, Rakovski Street, floor 4, phone number: +359 2 937 98 67, fax: +359 2 937 98 77, e-mail: abrashev@sis.bg, which provides capital increase services, and/or to the investment brokers who are members of the Central Depository, with whom the client accounts for the rights held by them are registered, pursuant to the procedures, stipulated in the Regulations of the Central Depository. Share subscription applications shall be submitted to the afore-mentioned investment broker every business day from 9 am to 5 pm in compliance with the legislative requirements.

3.5.2. Share subscription shall only be considered valid, if done by a shareholder who holds shares with rights and/or another holder of rights up to the permitted number of shares pursuant to Item 2 and if the whole issue value of the shares being subscribed was paid in by the end date of the share subscription period, on the conditions, specified below. In case of partial payment of the issue value, the respective number of shares whose issue value is paid in full shall be considered to have been subscribed. The issue value of the subscribed shares shall be paid into a special fund-raising account, opened in the name of BULGARIAN REAL ESTATE FUND REIT. The funds must be registered in the fund-raising account by the person who is subscribing the shares not later than the end date of the share subscription period.

3.6. The special account of BULGARIAN REAL ESTATE FUND REIT, into which the payment for the new shares must be made, shall be stated in the public offering announcement, provided for in Article 92а, Paragraph 1 of the Public Offering of Securities Act. 

3.7. Pursuant to Article 89, Paragraph 2 of the Public Offering of Securities Act the funds raised in the special account may not be used before the subscription period is over and the capital increase has been entered into the Trade Register of the Registry Agency.

4. Applicable procedure, if all offered shares are subscribed before the end of the share subscription period; if all offered shares are not subscribed by the end of the share subscription period; if the number of shares subscribed by the end of the share subscription period exceeds that of the offered shares.

If all shares in this issue are subscribed before the end of the share subscription period, BULGARIAN REAL ESTATE FUND REIT shall notify the Financial Supervision Commission (FSC) within 3 business days pursuant to Article 112b, Paragraph 12 of the Public Offering of Securities Act and adopt the necessary measures for entering the capital increase into the Trade Register and registering the issue in Central Depository AD, the FSC and BSE – Sofia AD. If all shares are not subscribed by the end of the share subscription period, but at least 10 075 000 shares are subscribed and paid for, the capital shall be increased up to the number of the shares subscribed and paid for, and the new issue in this amount shall be registered in Central Depository AD, the FSC and BSE – Sofia AD. The capital increase in the form of rights precludes the possibility to subscribe more shares than the number, specified in Item 1 herein.  

5. Procedure and time frame for refunding the contributions made and paying the interest due in case of unsuccessful conclusion of the subscription.

If the subscription concludes unsuccessfully, BULGARIAN REAL ESTATE FUND REIT shall notify the FSC pursuant to the provisions of Article 84, Paragraph 3 of the Public Offering of Securities Act. BULGARIAN REAL ESTATE FUND REIT is obliged to notify the Bank of the result of the subscription on the day of the announcement pursuant to Article 84, Paragraph 3 of the Public Offering of Securities Act, publish an invitation to the share subscribers on the websites of BULGARIAN REAL ESTATE FUND REIT and of the investment brokers First Financial Brokerage House EOOD and Sofia International Securities AD, announcing the conditions and procedure for refunding the raised amount, as well as submit the invitation for announcement in the Trade Register and publish it in a major daily newspaper (Capital Daily). The paid-in amounts together with the interest, accrued thereon, shall be refunded to the investors within 30 days of the notification pursuant to Article 84, Paragraph 3 of the Public Offering of Securities Act by a transfer to a bank account, specified by them, or in cash at the Bank’s address. If the capital increase is not entered into the Trade Register, BULGARIAN REAL ESTATE FUND REIT shall immediately notify the FSC, the BSE and the Central Depository and publish an announcement in the specified daily papers within a 3-day period from the time of entry into force of the refusal and refund the received amounts within a 30-day period from the notification pursuant to the same procedure.

6. Obtaining the certification documents for the shares issued and the contributions made.

After the capital increase is entered into the Trade Register, the Company shall register the share issue into Central Depository AD. Central Depository AD shall open new accounts of the investors or credit existing ones with the new shares, subscribed and paid for by them. The shares of holders of subaccounts with investment brokers in Central Depository AD shall be distributed among the respective subaccounts. Holders of accounts in Register A of the Central Depository shall receive the new shares from the capital increase, carried out by BULGARIAN REAL ESTATE FUND REIT, into accounts in Register A.  If requested, the investors may receive certification documents – depository receipts – for the new shares, acquired by them. Depository receipts shall be issued by Central Depository AD through the relevant investment broker at the investor’s request and in compliance with the Regulations of Central Depository AD and the broker’s internal regulations.

The document certifying the contributions made is the payment document (a payment order or a deposit slip) and shall be obtained from the servicing bank, through which the investor orders the payment or pays in the amount due for the shares being subscribed.

7. Purpose for which the funds, raised from the increase, are going to be used: Investment into the development of an office building with an expected above-ground floorage of 35 000 sq.m. and a below-ground floorage of 16 000 sq.m. The construction is planned to be carried out with a license to build, issued to the benefit of the Fund, in Zone 2 of the Development Plan of the Science and Technology Park in the City of Sofia (Sofia Tech Park).

 

On Item Two of the agenda

THE BOARD OF DIRECTORS DECIDED UNANIMOUSLY:

It elects and authorizes investment brokers First Financial Brokerage House EOOD with seat and registered office, as follows: City of Sofia, 2, Enos Street, and Sofia International Securities AD with seat and registered office, as follows: City of Sofia, 140, Rakovski Street, floor 4, to service the increase of the capital of BULGARIAN REAL ESTATE FUND REIT pursuant to the procedure and on the conditions, defined in the decision in Item One herein. It authorizes a representative of the Company to conclude a contract for preparation and servicing of the capital increase with the elected investment brokers.

- Decision of the Board of Directors

 

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