RB 35/2007 Achievement of the conditions precedent and Amendment to Agreement and Plan of Merger
02-07-2007

With reference to the Agreement and Plan of Merger (“Merger Agreement”) dated 20 May 2007 (RB 20/2007 dated 21st May 2007) and RB 33/2007 dated 2nd July 2007, the Management Board of AmRest Holdings N.V. (AmRest) informs that major conditions precedent to the final conclusion of the Merger Agreement such as successful completion of Due Diligence of US Strategies, Inc. as well as acquiring shareholders’ approval for the transaction, have been satisfied.
 
As a result, on the 2nd July 2007, US Strategies, Inc. (“USSI”) was merged with AmRest Acquisition Subsidiary, Inc. (“AA Subsidiary”). The surviving corporation is AA Subsidiary. Before the merger USSI had 91% shareholding in OOO Pizza Nord. The remaining 9%, held by minority shareholders, was acquired by American Restaurants Sp. z o.o., the 100% subsidiary of AmRest.
 
Simultaneously, on the 2nd of July 2007, the Amendment to Agreement and Plan of Merger (“The Amendment”) was signed between AmRest, AA Subsidiary, USSI and Michael Tseytin (“Controlling Shareholder”).
 
Under the Amendment the Preliminary Merger Consideration was decreased to USD 47.0 million, made up of two portions:
(i) cash - in the amount of USD 25.4 million (Cash Portion), and
(ii) 427,666 AmRest shares – equivalent of USD 21.6 million (Stock Portion).
In addition to the above, the equivalent of USD 12.0 million will be settled in 242,940 AmRest shares (Additional Stock Portion). The Additional Stock Portion reflects mainly the fact that merged company will assume USD 10.5 million of long term debt instead of originally estimated USD 21.5 million.
 
Pursuant to the Merger Agreement and the Amendment all of USSI Shares were converted into and exchanged for the right to receive (i) ninety-one percent (91%) of the Preliminary Merger Consideration, and (ii) one hundred percent (100%) of the Additional Stock Portion.
 
The remaining 9% of the Preliminary Merger Consideration will be paid for the minority (9%) shareholding in OOO Pizza Nord. The minority shareholding in OOO Pizza Nord was acquired by American Restaurants Sp. z o.o., 100% subsidiary of AmRest, based on separate purchase and sell agreements with 3 key senior managers of Pizza Nord concluded on 2nd July 2007.
 
Total of 670,606 shares were borrowed from International Restaurant Investments, LLC for the purpose of finalizing the Merger Agreement. The shares will be delivered to the Controlling Shareholder’s and three key managers’ accounts held with UniCredit CAIB Polska S.A. At the same, pursuant to the Share Pledge Agreements concluded on the 2nd of July 2007, all the shares will be pledged for a period of up to 5 years.
 
Pursuant to the Amendment, if the Adjustment Period EBITDA is more than 21% of Adjustment Period Gross Sale, the number of shares representing Additional Stock Portion shall be automatically and immediately released to Controlling Shareholder. The remaining Pledged Shares shall be released as follows:
(i)        from and after the date falling five (5) days after the Adjustment Period Settlement Date (30 June 2008), one-fifth (1/5) of the remaining pledged shares;
(ii)       from and after July 1, 2009, one-fourth (1/4) of the remaining pledged shares;
(iii)      from and after July 1, 2010, one-third (1/3) of the remaining pledged shares;
(iv)             from and after July 1, 2011, one-half (1/2) of the remaining pledged shares;
(v)               from and after the end of July 1, 2012, all of the remaining pledged shares.
 
Additionally, by virtue of the Amendment, Controlling Shareholder will guarantee the continuity of the current Pizza Nord restaurant lease agreements in the period of 5 years following the end of Adjustment Period (1st July 2008). If any Pizza Nord restaurant shall be closed by the lessor in the above mentioned period, the Controlling Shareholder shall pay AmRest the relevant liability calculated as 91% of Adjustment Period Value attributable by respective restaurant (in proportion to period of forced closure and 5 years). 
 
 
 
Legal act:
Ustawa o ofercie z dnia 29 lipca 2005 art. 56. ust. 1 punkt 2.

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