DEMIRE reaches agreement with a group of bondholders regarding the restructuring of the 2019/2024 bond; majority shareholder makes corresponding commitments

Disclosure of an inside information acc. to Article 17 MAR of the Regulation (EU) No 596/2014

DEMIRE reaches agreement with a group of bondholders regarding the restructuring of the 2019/2024 bond; majority shareholder makes corresponding commitments

Langen, 5 June 2024. Today, DEMIRE Deutsche Mittelstand Real Estate AG (ISIN: DE000A0XFSF0) ("Company") entered into an agreement ("Lock-up Agreement") with a group of bondholders ("Ad hoc Group") of its unsecured corporate bond (ISIN: DE000A2YPAK1) with a maturity date of 15 October 2024 and a nominal amount currently outstanding of EUR 499 million ("Bond"), which has the particular purpose of enabling the extension and restructuring of the Bond on adjusted terms ("Transaction"). The members of the Ad hoc Group together currently directly or indirectly hold Bonds representing the majority of the outstanding aggregate principal amount of the Bond.

It is currently aimed to complete the Transaction as soon as possible by way of a vote without a meeting (Abstimmung ohne Versammlung) pursuant to Sec. 18 of the German act on bonds from aggregate issuances (Schuldverschreibungsgesetz, SchVG).

The Transaction shall comprise, inter alia, (i) a partial redemption of the Bonds at par in an aggregate principal amount of EUR 49,900,000.00 (“Early Redemption”) and, (ii) comprehensive amendments to the conditions of the Bonds, inter alia, an extension of the maturity term until 31 December 2027, a 5.00 % cash interest (and additional 1.00 % PIK interest starting on 1 January 2027) and an updated set of covenants aligned with the business plan allowing the Company to maintain adequate operational flexibility.

It is intended, that as part of the Transaction and shortly after the Early Redemption Date, the Company will launch a tender offer (“Tender Offer”) to all holders of the Bonds to repurchase Bonds at a maximum price of 76.25 % of the principal amount of the Bond outstanding following the Early Redemption for a total maximum purchase price of approx. EUR 159,6 million. Assuming the maximum tender price of 76,25 % the total maximum repurchase amount (principal amount following Early Redemption) would be approx. EUR 209 million (“Maximum Total Repurchase Amount”). The Tender Offer shall be backstopped by backstop commitments provided by certain holders of Bonds (“Backstop”). The members of the Ad hoc Group have already committed a Backstop for a large part of the Maximum Total Repurchase Amount. Participation in the Backstop is open to all bondholders. The Company will pay all bondholders who participate in the Backstop a fee of 5.00 % on the allocated Backstop commitments.

In order to facilitate the Tender Offer and the Backstop, the Company’s majority shareholder, a subsidiary of certain funds managed by affiliates of Apollo Global Management Inc. (the “Shareholder”), has, subject to fulfillment of certain conditions or their waiver by the Shareholder, agreed to grant a shareholder loan (or similar instrument) to the Company in an aggregate amount of up to EUR 100,000,000.00, but in any event not be less than EUR 68,345,000.00. The shareholder funding will be provided at arms´ length terms in line with statutory requirements and will include a qualified subordination clause. The Company will, on a pro rata basis, make available the remainder of the funds required to finance the Tender Offer in the amount of up to approx. EUR 59.6 million.

In addition, the Shareholder has undertaken vis-à-vis the Company to take measures that allow the Company to free up financial resources of the Company, which the Company has allocated to the development of certain property companies being part of the Company’s real estate portfolio called “Limes” (including Essen, Kassel, Aschheim and Cologne) (“Limes Entities”), in order to finance the Early Redemption, the Company portion of the Tender Offer and certain fees connected with the Tender Offer (in an aggregate amount of up to approx. EUR 120 million). This may include a transfer of the Limes Entities to an entity controlled by the Shareholder.

The Company will now approach further bondholders for an accession to the Lock-Up Agreement and the support of the contemplated Transaction.