Pursuant to the provisions of Regulation 20, the Board of Directors announces:
1. Number of shares held directly or indirectly by the members of the Board of Directors
On July 8, 2005, the members of the Board of Directors held (directly or indirectly) Company’s shares pursuant to article 60(4) of the CSE Law as follows:
Name / Number of shares / Percentage1 / Andreas Andreou / 45.844.919 / 67,80%
2 / Vasiliki Andreou / 489.076 / 0,72%
3 / Christos Vakis / 260.001 / 0,38%
4 / Olympios Toumazou / 434.377 / 0,64%
5 / Andreas Constantinides / 205.549 / 0,30%
2. Acts in which the Board of Directors has proceeded to or intends to proceed to with regard to the Public Offer
On May 19, 2005, the Offeror informed the Board of Directors in writing on its intention to submit a Public Offer.
On June 27, 2005, the Offeror informed the Board of Directors that the Public Offer Document has been approved by the CSE Council. The Offeror submitted a copy of the Public Offer Document to the Board of Directors.
2.1 Staff briefing
As regards to the staff’s briefing on the Public Offer, the Board of Directors proceeded to the following acts:
On May 20, 2005, the Board of Directors informed the Company’s staff on the Offeror’s intention to submit a Public Offer and clarified that a successful completion of the agreement is not expected to change the main activities and operating procedures of the Company but operations will be improved in order to accelerate the procedures of problems management / decision taking and improve the product that the Company offers to the consumer. The Offeror does not intend to change the existing policy on employment issues. The staff has been also informed on the Offeror’s intention to appoint a Managing Director and Finance Director.
2.2 Appointment of independent experts
The Board of Directors appointed LAIKI INVESTMENTS EPEY PUBLIC COMPANY LIMITED as independent experts, pursuant to Regulation 20, par. 5 (the “Expert”). The Expert meets the requirements of the above Regulation and has experience on relevant issues. The Expert’s duty includes the preparation of a detailed report, pursuant to Regulation 20, par. 5.
The Company’s Management has cooperated closely with the Expert, providing all the necessary information.
3.3 Agreements between the Board members and the Offeror on the acceptance of the Public Offer
The members of the Board of Directors received a copy and examined the agreement between CFR and Andreas and Vasiliki Andreou. The Board of Directors emphasized the commitment of Andreas and Vasiliki Andreou, who hold 68.52% of the issued capital, to accept the Public Offer.
The agreement between CFR, Andreas Andreou and Vasiliki Andreou has been reached by Mr. Andreas Andreou and Mrs. Vasiliki Andreou as shareholders. The Company does not act in concert with the Offer on the Public Offer and the Company is not committed by the agreement.
4. Intention of Board members
All members of the Board of Directors state that they intend to accept the Public Offer.
5. Opinion of the Board of Directors on the Public Offer
In order to form an opinion, the Board of Directors took into account the interests of the Company, the shareholders and the staff. The Board of Directors also took into account the Expert’s report on the Public Offer and the evaluation of the consideration (cash), as well as the aims and the intentions of the Offeror for the Company.
Specifically, it took into account:
5.1 The detailed report of the independent Expert
LAIKI INVESTMENTS EPEY PUBLIC COMPANY LIMITED as an independent expert pursuant to Regulation 20 par. 5, proceeded to the preparation of a report, expressing its view on:
1. Whether the proposed consideration is fair and reasonable and
2. The calculation basis used for the proposed consideration by the Offeror, as seen in the Public Offer Document.
The Expert believes that the consideration of 32 cents cash for each share is fair and reasonable and the calculation basis used for the setting of the consideration is reasonable and acceptable.
The Board of Directors believes that it is not necessary to proceed to a special account on the report.
The Board of Directors has emphasized on the following conclusions:
“As seen in paragraph 6, the proposed consideration will lead to a significant economic benefit, taking into account: a) the stock market securities and the multipliers of valuation of comparative companies in Cyprus before the announcement of the intention for a Public Offer, b) the average stock market price of CHR at the period before the announcement and c) the net book value of CHR as at 31.12.2004”.
“Taking into account the above and the assumptions that we have adopted for the evaluation, set in paragraph 6, we believe that the proposed consideration is fair and reasonable. We also believe that the calculation basis used for the consideration of the Public Offer is reasonable and acceptable”.
“The Public Offer Document compares the net book value of CCC share based on the audited results for 2004 as it is, with no additional adjustment (21.72 cents per share) with the proposed consideration (32 cents). This entails an “economic benefit” per share of 47.4% (the ratio of the consideration to the net book value amounts to 1.47)”.
5.2 Targets and intentions of the Offeror
The Board of Directors has evaluated the Offeror’s intentions as presented on the Public Offer Document. The participation of CARREFOUR in the share capital will boost the Company, turning it into a power in the sector of retail trade in the Cyprus market. The Board of Directors believes CARREFOUR’s stake in the share capital will serve the Company’s interests.
The Board of Directors emphasizes the intentions of the Parties on Agreement with regard to the Company’s management and the appointment of Board members. If the rate of acceptance exceeds 90%, the Offeror and the Parties on Agreement will proceed to all necessary acts so that CHR applies for its delistment from the CSE. The shareholders that will not accept the public offer will have the opportunity to either sell their shares or exercise any other rights pursuant to the Companies’ Law, Chapter 113.
5.3 The impacts on the Company’s staff
The Board of Directors believes that the acquisition of 100% of the issued share capital by the Offeror is not expected to affect significantly the existing employment policy. The Board of Directors also expects that the Offeror will respect the agreements signed between the Company and its employees.
5.4 Proposed consideration
The proposed consideration of 32 cents cash for each share is fair and reasonable, pursuant to the Expert’s report.
5.5 Other factors
The Board of Directors has also taken into account the following:
- Mr. Andreas Andreou and Mrs. Vasiliki Andreou, who have committed to accept the offer, hold 68.52% of the Company’s issued share capital.
- The minimum rate of acceptance for the success of the Public offer is 75% and according to CLR Securities & Financial Services Limited, which acts as director of the Public Offer, this rate has been achieved at the preparation of the Document.
- The shareholders are offered the sum of 32 cash as an exchange, which is 91.13% higher than the average trading price of the three months prior to the announcement of the intention for the Public Offer.
- The shareholders are offered the sum of 32 cash as an exchange, which is 10 cents higher than the net book value of the share.
6. Conclusions
The Board of Directors believes that the proposed consideration of 32 cents cash for each share is fair and reasonable.
Copies of the Document will be available at the Company’s Office, 11 Spyrou Kyprianou, Limassol during the period of acceptance, which expires on July 29, 2005.