REG - Reconstruction CapII - Judgment in litigation against Romar

Reconstruction Capital IIAnnouncement

08/11/2022 11:45

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RNS Number : 7031F  Reconstruction Capital II Ltd  08 November 2022

8 November 2022

 

Reconstruction Capital II Limited

 

Judgment in litigation against Romar

 

Reconstruction Capital II Limited (the "Company") announces that, pursuant to
previously disclosed litigation initiated by the Company, the District Court
of Nicosia has awarded to the Company € 4m in damages plus statutory
interest thereon and legal costs against Romar Holding Limited ("RHL"), Else
Holding Limited ("EHL") and Mr Erghin Hagicalil (together the "Defendants").

Over 2007-2008, the Company injected € 4m into RHL, a Cyprus-registered
special-purpose vehicle which owns four Romanian companies operating in the
medical services field (of which one is in insolvency), thereby acquiring 40%
of its share capital. The remaining 60% is owned by Mr Erghin Hagicalil, a
Romanian citizen, through EHL, another Cyprus-registered entity.  In 2012,
the Company wrote down its investment in RHL to zero.

The judgment was made jointly and severally against the Defendants, and it is
the maximum compensation that the Company could have expected out of the
litigation, representing the full original cost of its investment. Upon
obtaining the awarded compensation the Company will be required to transfer
its shares in RHL back to EHL.

 

Although the judgment has been appealed by the Defendants, such appeal does
not suspend its enforcement by the Company in Cyprus. On the other hand, based
on  European Council Regulation (EC) No. 44/2001 on Jurisdiction and the
Recognition and Enforcement of Judgments in Civil and Commercial Matters, any
enforcement against the Defendants' assets in Romania may be suspended until
the completion of the appeals process in Cyprus.

Based on publicly available information, of the five operating companies
initially owned by RHL in Romania, (i) the first has gone bankrupt, (ii) the
second is insolvent, (iii) the third had € 614,144 of revenues, a net profit
of € 118,086, and € 515,103 of negative equity in 2021, (iv) the fourth
had revenues of € 154,100, a net profit of € 31,683 and € 130,796 of
shareholder funds in 2021, and (v) the fifth last reported in 2019 no
revenues, no profit and negative equity of € 122,830*.

Considering the financial standing of RHL and its operating subsidiaries,
there is no certainty as to the amount, if any, that can be collected under
the judgment.

 

*All euro-denominated amounts mentioned in this paragraph have been obtained
by converting the RON-denominated amounts using the average RON/EUR exchange
rate for the P&L elements and the period end RON/EUR exchange rate for the
balance sheet elements.

 

For further information, please contact:

 

Reconstruction Capital II Limited

Cornelia Oancea / Luca Nicolae

Tel: +40 21 3167680

 

Grant Thornton UK LLP (Nominated Adviser)

Philip Secrett / George Grainger

Tel: +44 (0) 20 7383 5100

 

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