ProChoice to set up Cyprus KEPEY, extend property investments

— Rights issue to raise EUR 5.7 mln, dividend policy for 2007

 

A.L ProChoice Group Public Ltd aims to start a financial services division (KEPEY) offering stockbrokerage with a focus on foreign markets while extending its property investments, mostly abroad.

A.L. Prochoice CEO Andreas Leonidou told the Financial Mirror in an exclusive interview that the application to offer stockbrokerage activities has been filed with the CySEC, and once the relevant permit is received, the company will apply to become a remote member of the Athens Stock Exchange with emphasis on the Greek and other major markets.

“We intend to concentrate on equity, commodities and derivatives trading,” Leonidou said, adding that the relevant permits are expected sometime in January or February.

The company will also proceed to complete its rights issue, aiming to raise EUR 5.7 mln, with the issue fully backed and supported by majority shareholders.

According to the terms of the prospectus, A.L. Prochoice has issued 111,674,804 rights, which for every three rights exercised, one share will be issued at an exercise price of CYP 0.09 / EUR 0.15. For every three new shares, two free bonus warrants will be allocated with an exercise price of EUR 0.20 with a maturity until November 2010.
The period of exercise will start on January 9 and will end on January 16, 2008.

 

— Property investments

 

Part of the proceeds of the EUR 5.7 mln to be raised from the rights issue will be used to set up the KEPEY office, part on new property investments outside Cyprus (already in Romania), as well as to diversify into the insurance sector and pay off debt.

Leonidou said that A.L. Prochoice is currently considering the prospect of selling its property investment in Romania, which has been valued in its books at a cost price of EUR 850,000.

“We are negotiating to sell for at least five times higher or about EUR 4 mln, which will allow us to move into new areas in Romania and other countries in the region.”

The decision to sell a parcel of land held in the name of group subsidiary CPI Holdings was also in the context of moving into under-developed areas in the Balkans and take advantage of property price appreciation prospects there.

Last week, CPI sold land in Larnaca for EUR 3.76 mln at a profit of EUR 513.000 as the investment was valued in the books at EUR 3.25 mln. The deal will be finalised within 30 days.

 

— Dividend policy

 

Leonidou said an important milestone in the history of A.L. Prochoice is the decision to adopt a steady dividend-paying policy, with the first dividend expected to be declared on the bumper profits of 2007 and to be continued in future years.

While Leonidou would not comment on the level of the dividend, he expressed his disappointment at the gross undervalued price of EUR 0.16 at which the A.L. Prochoice stock (PROP) is trading on the CSE, just a notch above the EUR 0.15 per share book value as at June 30, 2007, according to Financial Mirror calculations.

PROP, which reported net profit of EUR 7.44 mln for 2006, is on target to report much better profits for 2007. In the first six-month period, PROP reported EUR 5.6 mln net profit against EUR 2.7 mln in the same period a year ago.

Leonidou also revealed that bank debt which only two years ago had reached CYP 12 mln is set to decline to CYP 2.2 mln as part of the Larnaca land sale proceeds is used to pay off debt, while his aim is for AL Prochoice to be totally debt-free by the end of 2008.