CCA Companies Incorporated Signs Letter of Intent With JSC Rosneftagasroy for the Completion of Its Sakhalin Hotel/Casino Project.
- Company also to Acquire Russian Hotel Management Entity -
CCA Companies Incorporated (Nasdaq:RIPE) announced today that it has entered into a Letter of Intent with JSC Rosneftagastroy ("RNGS") whereby RNGS would directly guarantee repayment of any future financing for constructing and equipping the Company's Sakhalin hotel and casino project.
RNGS would also be the major subcontractor under a turn-key construction and equipping contract for the project. CCA would work in conjunction with RNGS to obtain financing acceptable to both parties.
The Letter of Intent also provides for the development of a hotel and casino management business in the Russian Federation and the Commonwealth of Independent States.
In exchange for the guarantee, RNGS would receive a 51 percent stake in Sakhalin City Centre Limited ("SCC"), a Russian holding company which owns the development rights to the Sakhalin project. In order to issue the 51 percent stake, CCA would reduce its holding in SCC from 65 to 32 percent and the local city and state government would have to reduce their position from 35 to 17 percent. At the closing of the financing, a three-year put/call option would be granted in which either CCA or RNGS may elect to exchange RNGS's 51 percent interest in SCC for shares equal to 51 percent of the common stock in CCA, thereby increasing CCA's indirect equity in the Sakhalin hotel and casino project to 83 percent.
In addition, CCA would acquire at the close of the financing all of the capital stock in Rossihotels Management, a joint venture between RNGS and Valmet International Ltd. for the development of a hotel and management business in the Russian Federation and the Commonwealth of Independent States. Upon completion of the acquisition, CCA would merge Rossihotels Management into its Dorsett Hotels and Resorts division. In exchange, CCA would issue three million shares of CCA Common Stock, all of which would count towards fulfillment of RNGS's 51 percent stake in CCA should either party choose to exercise the put/call option.
Consummation of the above transaction is subject to further negotiations with RNGS and third parties, satisfactory due diligence investigation by RNGS and CCA, and execution of a definitive agreement to be approved by CCA's Board of Directors and shareholders.
A leading international construction company, CCA believes that RNGS is an ideal partner in the development of the first major casino project on Russia's Sakhalin Island. With over US$30 billion now being invested by the world's major oil companies as a result of massive oil discoveries in the Sakhalin area, and given the island's close proximity to Japan, Russia, China, and Korea, CCA believes this project provides a unique and potentially lucrative opportunity for all parties involved.
RNGS, headed by Dr. Ivan I. Mazur, is a Russian leader in oil, gas, industrial and civil construction. A joint-stock company since 1992, RNGS manages a number of units involved in various fields, including engineering, transport, customs clearance, wood processing, research, construction and finance, and directly employs over 120,000 individuals. RNGS has major shares of stock in over 20 subsidiary companies and has a considerable share in another 16. In addition, on behalf of the Government in Russia, the Company carries out trust management of 37 oil and gas construction enterprises.
Certain statements contained in this press release may be deemed forward looking statements. Such statements, and other matters addressed in this press release involve a number of risks and uncertainties. Among the factors that could cause actual plans to differ materially from these statements and other matters are risks associated with its Preservit distributor, with entering a new line of business, compliance with regulatory matters, ability to obtain financing on favorable terms, risks inherent in international operations, restrictions and controls on foreign investments, and other risk factors detailed, from time to time, in the Company's reports with the U S. Securities and Exchange Commission.
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|Date:||Sep 25, 1998|
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