14.10.2011 – 06:58

Precious Woods Holding Ltd.

EANS-Adhoc: Successful Partial Divestment of Precious Woods Central America - Precious Woods Holding Ltd. remains a significant minority shareholder following the divestment of its Central American Segment

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  ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide
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  announcement.
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Company Information/Sustainable management and use of tropical forests and
plantations

14.10.2011

Zug/Zurich, 14 October 2011 - Precious Woods Holding Ltd. has completed the
sales process for Precious Woods Central America in a successful and timely
manner. The divestment of 75% of the shares in Precious Woods Central America
will enable Precious Woods Holding Ltd., as a minority shareholder, to remain
involved in the teak business in Central America and to repay its bank and some
other debts. The remaining liquidity will put Precious Woods in a position to
push ahead with the development of the Group as a whole. 

Swiss solution for Precious Woods Central America
In a bidding process, two larger Swiss shareholders of Precious Woods Holding
Ltd. (PWH) have each purchased 37.5% (75% in total) of the newly established
subholding Precious Woods Central America (PWCA), in which all Central American
assets are integrated. With a stake of 25%, PWH remains a significant minority
shareholder. This solution is in line with the wishes of the majority of
shareholders, who voted accordingly in the consultative ballot at this year´s
Annual General Meeting. The existing local management team will retain
operational responsibility, and PWH is represented by its chairman Ernst A.
Brugger in the three-member PWCA Board of Directors.

Reduction of debt and capital costs
With the divestment of its stake in PWCA, PWH will be in a position to fulfil
the debt repayment arranged with the banks in a standstill agreement. Here it is
worth recalling the situation that led to the sales process for PWCA: assets in
Central America were pledged to the banks, which for their part did not wish to
extend the standstill agreement any later than the end of October 2011. This
posed a specific risk that the banks would seek to wind up PWCA on expiry of the
standstill. At the same time, from the perspective of the Board of Directors,
the liquidity of PWH was insufficient to complete the accelerated turnaround
process, and debt and the associated financing costs also needed to be reduced
from an accounting perspective. 
Following the completion of the partial divestment, Precious Woods will be able
to repay timely all the holding´s bank debts as well as a convertible bond due
in 2012. This debt reduction to the tune of over USD 40 million is a significant
opportunity for PWH to liberate itself from a high debt burden. At the same
time, the solution will enable capital costs to be reduced substantially and
liquidity to be improved. It is essential that the solution adopted for PWH and
its shareholders does also make excellent sense from a business perspective.
Moreover, the two Swiss shareholders are granting two loans summing up to USD 5
million. The additional funds allow Precious Woods Amazon to acquire a
concession area of 39000 ha adjacent to existing estates with a view to securing
its medium-term harvest schedule, as well as to secure the legalisation of
property rights on further considerable land. 

Business opportunity 
The negotiated company value of USD 62 million is around USD 15 million below
the book value. This is attributable to the noticeable weakening of the global
economy and uncertainty, which are also affecting land and forest values in
Central America. However, the negotiated company value is slightly higher than
alternative offers from third parties that did not take into account a minority
shareholding by PWH. The achieved result represents a business opportunity to
expand the operational activities of Precious Woods Central America. The three
shareholders undertake to cooperate closely over the long term, and this
intention has been laid down in a shareholders´ agreement. The Board of
Directors has therefore unanimously adopted this solution with the business
prospects that it offers.

end of ad-hoc-announcement
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Precious Woods is one of the world’s leading companies in the sustainable
management and use of tropical forests and plantations. The company’s core
activities include reforestation and sustainable management of tropical forests,
timber processing and the trading of FSC-certified timber products. The
generation of emission rights and electricity from wood waste represent further
integral elements of the company’s business. Shares of Precious Woods Holding
Ltd. have been listed on the SIX Swiss Exchange since March 2002. Additional
information about Precious Woods can be found at www.preciouswoods.com


Further inquiry note:
Precious Woods Holding AG
Brunhilde Mauthe
Head of Group Communications & Marketing Services
Tel. +41 44 245 81 20
Fax +41 44 245 81 12 
media@preciouswoods.com

end of announcement                               euro adhoc 
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issuer:      Precious Woods Holding Ltd.
             Baarerstrasse 135
             CH-6301 Zug
phone:        +41 44 245 80 10
FAX:          +41 44 245 80 12
mail:         office@preciouswoods.com
WWW:         http://www.preciouswoods.com
sector:      Forestry & Timber
ISIN:        CH0013283368
indexes:     SPI
stockmarkets: Main Standard: SIX Swiss Exchange 
language:   English