Reconstruction Capital II Ltd Judgment in litigation against Romar (7031F)
08 November 2022 - 12:34PM
UK Regulatory
TIDMRC2
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
EUR 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 EUR 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 EUR
614,144 of revenues, a net profit of EUR 118,086, and EUR 515,103
of negative equity in 2021, (iv) the fourth had revenues of EUR
154,100, a net profit of EUR 31,683 and EUR 130,796 of shareholder
funds in 2021, and (v) the fifth last reported in 2019 no revenues,
no profit and negative equity of EUR 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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END
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