The Board does not currently intend to make any material new investments with the proceeds realised from the Company’s
existing holdings. With respect to the remaining assets, which predominantly comprise Eurocastle’s investments in Italian
real estate funds, the Company plans to continue to hold and realise these assets in accordance with existing business plans.
It will support these investments to the extent required to optimise returns and distribute cash to shareholders when
available. The Company’s distribution policy, including the regular quarterly dividend, will not apply with effect from Q3
2019. The Board currently anticipates that the majority of the Company’s existing assets will be realised by the end of
FIG LLC, the Company’s Investment Manager, has also agreed to amend the calculation of its incentive fee to treat the
Company’s other remaining assets, which predominantly comprise investments in Italian real estate funds, as fully realised
at an agreed value in 2019 and to better reflect the price per Ordinary Share represented in the initial Exchange Ratio.
These amendments will reduce the fee payable by the Company to the Investment Manager in the fourth quarter of 2019 by
up to €2.4 million to €19.7 million and no further fees will be due in relation to the Company’s remaining investments. In
return, the Investment Manager will be entitled to earn back a portion of this discount if amounts are released from certain
reserves put in place by the Board to fund future costs and potential liabilities.
EJF Debt Opportunities Master Fund, L.P., Asset Value Investors, and EMS EC Investments LP, for themselves and their
affiliates, whose aggregate voting rights in the Company represented approximately 62% of the total voting rights in the
Company as at 15 November 2019 (the “Major Shareholders”), have provided the Company with letters containing
confirmations of their firm intentions to vote in favour of the resolutions at the General Meeting and tender all of their
Ordinary Shares as part of the Tender Offer.
The Investment Manager, on behalf of itself, its principals and managed funds, whose aggregate voting rights in the
Company represented approximately 14% of the total voting rights in the Company as at 15 November 2019, has provided
the Company with a letter containing confirmations of (i) each of the Investment Manager, its principals and managed
funds’ firm intention to vote in favour of the Tender Offer at the General Meeting and tender all of their Ordinary Shares as
part of the Tender Offer; and (ii) the Investment Manager’s commitment not to vote on the NPL Sale Resolution, and to
take all reasonable steps to ensure that members of its group and employees will not vote on the NPL Sale Resolution to be
proposed at the General Meeting.
In addition, the Major Shareholders and the Investment Manager, on behalf of itself, its principals and managed funds, have
agreed to restrictions on their ability to dispose of any doValue Shares acquired through the Tender Offer prior to January
31, 2020 and such restrictions will then expire in stages up to March 31, 2020. Please refer to the Circular for more details
of these restrictions. Certain other affiliates and employees of the Investment Manager may participate in the Tender Offer
on the same terms as all other shareholders.
Shareholders should refer to the sections of the Circular entitled “Action to be Taken in Relation to the Proposed NPL
Sale” and “Action to be Taken in Relation to the Tender Offer” for action to be taken in respect of the Proposed NPL Sale
and the Tender Offer.
NPL Sale Details
The NPL Sale is conditional on approval by Shareholders at the General Meeting
Since the establishment of the change in strategy in 2013, Eurocastle has invested €289 million in 24 Italian loan pools.
These investments have returned €237 million to date, helping to support the Company’s regular quarterly dividend, and
have a remaining value as at 30 September 2019 of €149 million. The Board has been evaluating options of how to
accelerate the return of this remaining value to shareholders. After carefully considering the possibility of running a
marketed process with third parties and the associated timing, cost and execution risk in light of the complexity and size of
the Company’s portfolio, the Board approached the Investment Manager to gauge the interest of any of its affiliated funds,
certain of which already held interests in the NPL Portfolio, to acquire these interests in a single accelerated transaction.
The Company has now reached agreement to sell the NPL Portfolio for a purchase price (after customary adjustments for
collections) of €140.2 million to funds managed by an affiliate of its Investment Manager (the “NPL Purchaser”). The
purchase price represents a 5% discount to the Q3 2019 NAV of the NPL Portfolio excluding certain residual interests
which the Company is required to retain due to legal obligations and which the NPL Purchaser has committed to acquire at
the same 5% discount when such obligations no longer apply. In addition, the NPL Purchaser will assume an obligation to
fund the €18.1 million deferred purchase price due to be paid by the Company in July 2020 in relation to the FINO NPL
investment. Therefore, the Company anticipates receiving cash proceeds of approximately €122.1 million upon completion
of the Proposed NPL Sale in December 2019.