03.09.2009 – 07:39

Atrium European Real Estate Limited

EANS-Adhoc: Atrium European Real Estate Limited
DEBT REPURCHASE, EQUITY ISSUANCE, CORPORATE GOVERNANCE MEASURES AND NEW DIVIDEND POLICY

  ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide
  distribution. The issuer is solely responsible for the content of this
  announcement.

03.09.2009

DEBT REPURCHASE, EQUITY ISSUANCE, CORPORATE GOVERNANCE MEASURES AND 
NEW                                   DIVIDEND POLICY    Jersey, 3 
September 2009: Atrium European Real Estate Limited ("Atrium" or    
the "Company") (Euronext / ATX: ATRS), a leading real estate company 
focused    on shopping centre investment, management and development 
in Central and    Eastern Europe, announces the proposals described 
in this announcement    (together, the "Proposals") to strengthen its
balance sheet, reduce its debt,    increase its equity and improve 
its corporate governance consistent with its    previously stated and
on-going strategy. The Proposals require the approval    of certain 
resolutions by shareholders at an extraordinary general meeting    
("EGM").

Atrium has agreed with Citi Property Investors ("CPI") and Gazit 
Globe    Limited ("Gazit" and, together with CPI, the "Investors"), 
to exchange in    aggregate 144,853,705 new ordinary shares of the 
Company and approximately    EUR9.3 million in cash for the 
following:

• all the Investors' and their affiliates' 10.75% subordinated convertible securities (the "Convertible Bonds");
• all the Investors' and their affiliates' warrants to subscribe for ordinary shares (the "Warrants");
• the removal and/or reduction of certain significant rights held by the Investors under the relationship agreement (the "Relationship Agreement") entered into at the time of the Investors' original investment and approved by shareholders on 16 July 2008 (for details see annex attached); and
• the special voting shares issued to the Investors in connection with the issue of Convertible Bonds (the "Special Voting Shares") (together, the "Exchange Transaction").

Following closing of the Exchange Transaction, Atrium proposes to:

• make a partial tender offer for the listed Notes issued under the Company's 2006 guaranteed medium term programme (the "2006 Notes") at 95% up to a maximum amount of EUR120 million in nominal value of the 2006 notes;
• pay a special dividend of EUR0.50 per ordinary share (the "Special Dividend"); and
• commence a dividend policy of EUR0.12 per ordinary share per year, payable in quarterly instalments.

The board has approved the Proposals on the unanimous recommendation 
of a    committee comprising the Company's independent directors, 
chaired by Dr Peter    Linneman and advised by Kempen & Co Corporate 
Finance B.V.  Directors    appointed by the Investors did not 
participate in the vote of the board    approving the Proposals.

The Company will shortly publish a circular including a notice to 
convene the    EGM to allow shareholders to vote on the required 
resolutions.

The Investors, who currently hold in aggregate 29.7% of the voting 
rights of    the Company, have committed to vote in favour of the 
resolutions. On closing    of the Exchange Transaction, the Investors
will in aggregate own 48.6% of the    Company's issued ordinary 
shares, carrying 48.6% of the voting rights in the    Company.

The board believes that the benefits to the Company and its 
shareholders of    the Proposals include the following:

• a total saving of EUR176 million from 1 October 2009 or EUR46 million per year, equivalent to EUR0.12 per ordinary share per year (assuming 372,052,992 ordinary shares in issue), in future interest payments on the Convertible Bonds until August 2013 when the Convertible Bonds would otherwise first become redeemable. This saving would increase to a total of EUR268 million if the Convertible Bonds were held to maturity in August 2015;
• a total saving of EUR29.3 million or EUR7.7 million per year from 1 October 2009 to maturity, equivalent to EUR0.02 per ordinary share per year (assuming 372,052,992 ordinary shares in issue), in future interest payments on the 2006 Notes until maturity in August 2013, assuming the partial tender is accepted in full;
• a reduction in the Company's average borrowing rate of interest from 7.62% to 5.65%, following the exchange of the Convertible Bonds, and to 5.49%, assuming the partial tender is accepted in full;
• an improvement in the Company's cash flow which will allow immediate and future cash returns through the payment of the Special Dividend and future dividends to all shareholders;
• a stronger and more efficient balance sheet with significantly decreased leverage;
• a reduction of leverage that will create room for Atrium to raise new financing on more attractive terms;
• a large increase in equity value, resulting in the stronger alignment of the Investors' interests, given their increased equity stake, with those of the Company's other shareholders; and
• an improved corporate governance structure, more autonomy for the board and a clear mechanism for the reduction of the number of seats the Investors have on the Company's board in relation to their shareholding, coupled with an agreement to cancel all terms of the Relationship Agreement, should the Investors' shareholding fall below 20,000,000 shares.

Shareholder approval is required for resolutions to make Atrium a no 
par    value company, to facilitate the issuance of the new ordinary 
shares and to    make certain changes to the Company's articles of 
association ("Articles"),    including in relation to the rights of 
the Investors to appoint directors and    to facilitate payment of 
the Special Dividend and implementation of the    proposed on-going 
dividend policy. Closing of the Exchange Transaction is    also 
subject to the obtaining of applicable anti-trust clearances.

The Company expects that, subject to obtaining the relevant 
shareholder    approvals and applicable anti-trust clearances, the 
Exchange Transaction will    close by year end.

Further details of all these actions are set out below.

Rachel Lavine, chief executive officer of the Company, commented 
today:  "We    have been actively looking at ways to strengthen our 
balance sheet through    the reduction of the Company's debt, enhance
the Company's cash flow and    improve Atrium's corporate governance 
structure.

"The 2008 10.75% convertible bonds and related arrangements are key 
issues    which need to be addressed, particularly given our reduced 
capital    expenditure requirements in the current financial 
environment.  I therefore    view the fact that we have been able to 
reach agreement with the Investors to    buy in this debt and rework 
the Relationship Agreement in favour of the    Company as very 
positive for Atrium, especially when combined with the other    
actions and transactions we are announcing today.  We expect the 
Proposals to    put us in a strong position to take advantage of 
acquisition opportunities by    utilising our cash and/or by raising 
debt which is both cheaper and less    restrictive.  We believe it is
a further clear demonstration of how we are    creating a solid 
platform for future growth."

Peter Linneman, chairman of the committee of independent directors 
which    recommended the Proposals, added:  "The Proposals we are 
announcing today    provide a number of significant benefits for the 
Company. Our interest burden    will be reduced significantly and our
corporate governance structure    improved.  Importantly, they will 
also mean that the interests of the    Investors are fully aligned 
with all other shareholders, as they will now be    major holders of 
the Company's equity rather than its debt."

"I expect there to be a number of significant benefits for the 
Company as a    result of the Proposals which include putting the 
Company in a position to    implement an on-going dividend policy and
pay the Special Dividend,    underlining our commitment to delivering
real value for shareholders.  I am    of the firm belief that the 
package we have announced today is another    significant step 
forward for the Company and we feel encouraged by the    significant 
equity increase the Investors will make."

Analyst call

There will be a call for analysts regarding the arrangements 
described in    this announcement on 3 September 2009 at 0830hrs UK /
0930 hrs CET.  Please    contact Laurence Jones of Financial Dynamics
at  Atrium@fd.com for the dial in    details.

For further information:

Financial Dynamics:                             +44 (0)20 7831 3113
   Richard Sunderland
   Laurence Jones
   Stephanie Highett
    Richard.sunderland@fd.com

BACKGROUND

In August 2007, the previous management of the Company began a 
strategic    review to identify and implement improvements to the 
Company's management,    corporate governance and reporting 
arrangements and processes, as well as a    review of the Company's 
capital and financing structure.  The investment and    restructuring
package proposed by the Investors, which was announced in March    
2008, subsequently approved by shareholders on 16 July 2008 and 
implemented    in August 2008, was seen as an opportunity for the 
Company to bring about    change in a significantly shorter 
time-frame than it could achieve on its own    and to satisfy the 
Company's funding requirements at that time.

Terms of the arrangements in 2008 included the Investors making an 
immediate    EUR500 million investment in the Company through the 
acquisition of    convertible bonds with a 10.75% coupon at a time 
when the 'credit crunch' had    significantly reduced the 
availability of commercial financing.  It was also    a condition of 
their investment that the Investors were provided with    significant
consent and information rights under the terms of the    Relationship
Agreement with the Company.

On completion of this transaction in August 2008, the Company's new  
internalised management, under the leadership of Rachel Lavine, 
conducted an    assessment of the Company's existing development 
pipeline and the returns it    would be likely to generate, if at 
all, in light of the global financial    crisis.  This resulted in a 
rationalisation of the Company's development    pipeline, and 
consequently a reduction in the Company's anticipated cash    
requirements for development purposes.

In January 2009, in place of the rights issue contemplated at the 
time of the    Investors' initial investment, the Company negotiated 
arrangements with the    Investors to place 10,300,000 shares in a 
partial exchange of EUR72,100,000    in nominal value of Convertible 
Bonds and a corresponding reduction in the    voting rights attached 
to the Special Voting Shares and the cancellation of    25,066,667 
Warrants of the 30,000,000 Warrants then held by the Investors.

In addition, since August 2008, the Company has purchased in 
aggregate EUR366    million nominal value of 2006 Notes and EUR60 
million nominal value of the    Convertible Bonds.

The Company's management has focussed on strengthening the Company's 
balance    sheet, enhancing cash flow as well as improving corporate 
governance and    believes it is necessary to address the significant
interest burden posed by    the Convertible Bonds and reduce the 
control rights held by the Investors    through the Relationship 
Agreement.  In addition, the Proposals will simplify    Atrium's 
voting structure and mean that one share equals one vote.  This puts 
Atrium in an improved position to achieve further growth, either 
organically    or by utilising its strong cash position, and, if 
required, by raising less    expensive and less restrictive debt, to 
take advantage of acquisition    opportunities.

DETAILS OF THE PROPOSALS

Exchange of Convertible Bonds, Warrants and Special Voting Shares

The Company has agreed with the Investors to exchange the outstanding
EUR427.9 million in principal amount of the Convertible Bonds and 
4,933,333    Warrants held by the Investors for an aggregate 
consideration of 144,853,705    new ordinary shares of the Company 
and approximately EUR9.3 million in    cash.  The Company will pay 
interest on the Convertible Bonds until the    earlier of the closing
of the Exchange Transaction and 30 September 2009.    As part of the 
exchange, the outstanding 8,043 Special Voting Shares held by    the 
Investors will be repurchased by the Company for a nominal 
consideration    and cancelled.

The buyback of the Convertible Bonds from the Investors will result 
in a    saving of EUR46 million per year equivalent to EUR0.12 per 
share per year    (assuming 372,052,992 shares in issue) for the 
Company in future interest    payments on the Convertible Bonds until
2013 when the Convertible Bonds first    become redeemable, or a 
saving of EUR268 million if they were to be held to    maturity in 
2015.

The new ordinary shares to be issued to the Investors will be subject
to a    six month lock up from the date of closing of the Exchange 
Transaction,    subject to customary exceptions including the pledge 
of the shares as    security.  The Company intends to apply for the 
new ordinary shares to be    listed on the Vienna Stock Exchange and 
NYSE Euronext Amsterdam.

Amendments to the Relationship Agreement and the Articles

The Investors have agreed to the removal or reduction of many of the 
consent    rights contained in the Relationship Agreement, in order 
to enhance the    board's autonomy. In addition, it is proposed that 
the existing rights of the    Investors under the Articles to appoint
certain directors be removed and    replaced with new rights to 
appoint certain directors to reflect the fact    that they will hold 
only ordinary shares.

A summary of the proposed amendments to the Relationship Agreement 
and the    changes to the Articles are included in the annex to this 
announcement.

Special Dividend

The Company proposes to pay the Special Dividend to the holders of 
its    ordinary shares of EUR0.50 per ordinary share.

The record date for the entitlement to the Special Dividend and the 
payment    date will be set and announced after closing of the 
Exchange Transaction.    The new ordinary shares to be issued to the 
Investors and all currently    issued shares will be entitled to the 
Special Dividend.

Dividend policy

Subject to closing of the Exchange Transaction, the Company intends, 
with    effect from the fourth quarter of 2009, and subject to legal 
and regulatory    requirements and restrictions and commercial 
viability, to distribute EUR0.12    per ordinary share per year 
payable in quarterly instalments to the holders    of its ordinary 
shares.

Partial tender offer for the 2006 Notes

The Company also intends to launch a partial tender offer of the 2006
Notes    at a price of EUR95 for every EUR100 in nominal amount, 
capped at EUR120    million in nominal amount.  Acceptance in full of
the tender offer would    save the Company EUR7.7 million per year, 
or EUR29.3 million in total, in    interest payments until maturity 
in August 2013.  Further details of the    tender offer, which is 
expected to be launched following closing of the    Exchange 
Transaction, will be announced in due course.

Conditions precedent

The Exchange Transaction is subject to fulfilment of a number of 
conditions.    These include the passing of certain resolutions by 
shareholders of the    Company at an EGM and anti-trust clearances. 
The remainder of the Proposals    are conditional upon the closing of
the Exchange Transaction.

Extraordinary General Meeting

The Company will shortly convene an EGM at which resolutions will be 
proposed    to:

• make Atrium a no par value company to facilitate the issue of new ordinary shares;
• amend the Articles to extend certain shareholder rights and to replace the existing rights of the Investors to appoint certain directors with new rights dependent on their holding of ordinary shares;
• amend the Articles to facilitate the payment of dividends by the Company out of its capital reserves, including the Special Dividend, payment of which is conditional onclosing of the Exchange Transaction; and
• approve a resolution to authorise the Company to purchase up to 50 million ordinary shares of the Company, to replace the existing authority to acquire up to 50 million of the Company's Austrian Depository Certificates, now that the ordinary shares are listed on the Vienna Stock Exchange and Euronext Amsterdam.

The circular, which will include the notice convening the EGM and 
provide    further details of the matters to be considered, will be 
made available on    the Company's website (www.aere.com) at the time
of its publication.

Interests of the Investors in the Company

Following the Exchange Transaction, the Investors and their 
affiliates will    own in aggregate 48.6% of the shares of the 
Company carrying 48.6% of the    Company's outstanding voting rights.
The remaining outstanding Special    Voting Shares held by the 
Investors will be acquired and cancelled by the    Company on closing
of the Exchange Transaction pursuant to the existing    shareholder 
repurchase authority.

The Investors have confirmed to the Company that, for a period of 
twenty    months after closing of the Transaction for so long as 
EUR100 million or more    in principal amounts of the Company's 2006 
Notes remain outstanding, the    Investors and their affiliates will 
not acquire securities of the Company    that would result in their 
aggregate ownership of the Company triggering a    change of control 
for purposes of the 2006 Notes.

Important notice This announcement includes statements that are, or 
may be deemed to be, ''forward-looking statements''.  These 
forward-looking statements can be identified by the use of 
forward-looking terminology, including the terms ''believes'', 
''estimates'', ''anticipates'', ''expects'', ''intends'', ''may'', 
''will'' or ''should'' or, in each case, their negative or other 
variations or comparable terminology.  These forward-looking 
statements include matters that are not historical facts.  They 
appear in a number of places throughout this announcement and include
statements regarding the intentions, beliefs or current expectations 
of the Company and its group, including in relation to the closing of
the transactions described in this announcement and their potential 
effect, payment of the Special Dividend and the proposed dividend 
policy of the Company.  By their nature, forward-looking statements 
involve risks and uncertainties because they relate to events and 
depend on circumstances that may or may not occur in the future.  
Forward-looking statements are not guarantees of future performance. 
The business, financial condition, results of operations and 
prospects of the Company and its group may change.  Except as 
required by law or applicable regulation, the Company does not 
undertake any obligation to update any forward-looking statements, 
even though the situation of the Company or its group may change in 
the future.  All of the information presented in this announcement, 
and particularly the forward- looking statements, is qualified by 
these cautionary statements.  This press release appears as a matter 
of record only and does not constitute an offer to sell or a 
solicitation of an offer to purchase any security.

Atrium is established as a closed-end investment company domiciled in
Jersey. Atrium is registered with the Dutch Authority for the 
Financial Markets as a collective investment scheme which may offer 
participations in The Netherlands pursuant to article 2:66 of the 
Financial Supervision Act (Wet op het financieel toezicht). All 
investments are subject to risk. Past performance is no guarantee of 
future returns. The value of investments may fluctuate. Results 
achieved in the past are no guarantee of future results.

ANNEX:      SUMMARY OF PROPOSED CHANGES TO THE RELATIONSHIP AGREEMENT
AND ARTICLES    RELATIONSHIP AGREEMENT CHANGES CONSENT RIGHT REMOVED:
. If total indebtedness of the Company and its group is at any time 
to exceed    60 per cent. of the value of the Company and its group's
real estate    portfolio (including both investment properties and 
developments in progress)    as shown in the books of account of 
members of the Company and its group and    calculated on a 
consolidated basis;  . Any change in either the memorandum or 
articles of association of any member    of the Company or its group 
which affects the rights and obligations of the    Investors;  . Any 
liquidation, winding up, moratorium, dissolution, consolidation or   
amalgamation in any jurisdiction of the Company or any member of its 
group,    any appointment of a receiver, administrator, 
administrative receiver,    trustee or similar officer to, and any 
corporate restructuring of, the    Company or any of member its 
group;  . Any material commitment or incurring of liability by the 
Company or its group    outside of the ordinary course of business of
the Company and its group;  . Any commitment or incurring of 
liability or obligation by the Company in    excess of EUR200 million
and any increase in an existing commitment or    liability or 
obligation of any Company by more than EUR200 million;  . The payment
of any dividend or distribution or purchase or redemption or buy-    
back or repayment of any capital instrument of the Company or its 
group;  . Any change to the structure of the board of directors of 
the Company (which    does not include changes to the identity of the
persons appointed as    directors of the Company), save for the 
annual election or re-election of    independent directors by the 
shareholders;  . Any change to the share capital of the Company;  . 
The selection of a venue for the re-listing of the ordinary shares or
certificates;  . The appointment of any auditor to the Company other 
than KPMG, Deloitte,    Ernst & Young or PricewaterhouseCoopers.

CONSENT RIGHT ALTERED TO A SPECIAL RESOLUTION OF SHAREHOLDERS AS A 
WHOLE AND TO BE INCLUDED IN THE ARTICLES  . Any material change in 
the business of the Company or its group, which is to    own, manage 
and develop retail real estate assets in Central and Eastern    
Europe;  . Issuance of new equity or capital by the Company or a 
member of its group,    including ordinary shares (whether fully or 
partly paid), certificates,    rights, options or warrants to 
purchase ordinary shares or certificates and    other convertible or 
quasi-equity securities, and any issuance of shares,    certificates,
rights, options or warrants to purchase shares or certificates    and
any other convertible or quasi-equity securities issued by the 
Company;

CONSENT RIGHT RETAINED BUT INCREASED TO 20% OF THE COMPANY'S GROSS 
ASSET    VALUE

. The sale or financing in a single or series of transactions directly or
      indirectly of more than 10 per cent. of the net assets of the Company at
      that time calculated on a consolidated basis;
    . The acquisition of any assets (including any investment in or acquisition
      of, shares or securities issued by a person, any making of capital
      contribution to any person, any investment in or acquisition of, any
      business or whole or part of the assets of business of any person or any
      assets constituting a division or operating unit of the business of any
      person) in a single or series of transactions directly or indirectly which
      in any of the forgoing cases has an aggregate value equal to or greater
      than 10 per cent. of the net assets of the Company and its group at that
      time calculated on a consolidated basis;
    . The entry into any agreement or arrangement or commitment to enter into or
      to obtain an option to enter into by the Company of any material joint
      venture, material partnership, material consortium or other similar
      arrangement where materiality shall be measured by reference to an amount
      equal to 10 per cent. of the net asset value of the Company immediately
      prior to the relevant action occurring.

CONSENT RIGHT RETAINED
    . The entry into any agreement or arrangement or commitment to enter into or
      to obtain an option to enter into by the Company or any member of its
      group, any material transaction with either of the Investors or any of
      their respective affiliates, where materiality shall be measured by
      reference to an amount equal to 10 per cent. of the net asset value of the
      Company immediately prior to the relevant action occurring;
    . Any change in the tax jurisdiction of the Company that would have a
      material adverse impact on shareholders;
    . The appointment or replacement of the Chief Executive Officer of the
      Company and clarified so that appointment includes the appointment of an
      interim CEO.

The Relationship Agreement will terminate if the Investors hold in 
aggregate    less than 20,000,000 ordinary shares.

Subject to the passing of a special resolution of the shareholders, 
the    existing rights of the Investors under the Articles to appoint
certain    directors and officers will be terminated and new rights 
will be given to the    Investors to reflect the fact that they will 
hold only ordinary shares, so    that they may appoint:

• four directors, the chairman and a majority of the nomination committee for so long as they hold in aggregate at least 80,000,000 ordinary shares;
• three directors with at least 60,000,000 ordinary shares;
• two directors with at least 40,000,000 ordinary shares;
• one director with at least 20,000,000 ordinary shares; and in addition
• the Investors may determine the chairman of the board of directors and a majority of the nomination committee for so long as they hold an aggregate of at least 55,000,000 ordinary shares.

Notes to Editors:
About Atrium European Real Estate Limited

Atrium is a leading real estate company focused on shopping centre 
investment, management and development in Central and Eastern Europe.
As at 30 June 2009 the Group owned 152 standing investments, with a 
market value of EUR1.49 billion, diversified across eight countries 
with a total gross lettable area of 1.1 million sqm. Geographically, 
the Group's focus is principally concentrated in Poland, the Czech 
Republic and Russia with a presence in Hungary, Romania, Slovakia, 
Latvia and Turkey. In addition, the Company has a development 
portfolio including several development projects with a market value 
of EUR712 million as at 30 June 209.

Gross rental income from investment properties for the year ended 31 
December 2008 was EUR134 million and EUR75 million for the first half
of 2009.  Net rental income for the year to 31 December 2008 amounted
to £95 million and EUR59 million for the six months to 30 June 2009. 
As at 30 June 2009, the Company had a cash position of EUR855 million
against borrowings of EUR1.08 billion.

Following a strategic investment of EUR500 million by a Citi Property
Investors and Gazit Globe Ltd joint venture, agreed in August 2008, 
Rachel Lavine was appointed Chief Executive Officer of Atrium. Rachel
Lavine has significant experience of both real estate and the CEE 
region and was previously President and CEO of Plaza Centres.  The 
Board is chaired by Chaim Katzman, founder of Gazit Globe, which has 
extensive global experience of real estate management and is one of 
the largest owners of shopping centres in the world.

The Company is based in Jersey and dual listed on the Vienna and 
Euronext Amsterdam Stock Exchanges under the ticker ATRS.

end of announcement                               euro adhoc

Further inquiry note:

Financial Dynamics, London
Richard Sunderland / Laurence Jones
Phone: +44 (0)20 7831 3113
mailto:richard.sunderland@fd.com

Branche: Real Estate
ISIN: AT0000660659
WKN: 066065
Index: Standard Market Continous
Börsen: Wien / official market