Flamingo Unveils Pink Outlook

• Shareholders approve capitalization plan

Over 75% of the voting power of the shareholders in electronics and home appliances retailer Flamingo International (BSE:FLA) was cast for saving the company by capitalizing it through corporate bonds convertible into stock. Following this decision, the shareholders will have to inject approximately 7 million EUR into the ailing company. The motion filed by the investment fund QVT to dissolve the company, without providing any explanation, was denied.

"We have a multilateral plan that we are currently implementing. Besides the shareholders and the banks, our suppliers and landowners play an essential role. They need to support the recovery plan proposed by the management and accepted by the shareholders today (i.e. yesterday)," said Flamingo International CEO Stefan Treiber. The company also announced that they were having advanced talks with the partner banks to extend the existing credit lines for operating capital.

The capitalization will be performed in two steps. In the first step, existing shareholders will be able to buy bonds proportionally to the existing holding. Bonds left unsubscribed after the first step will be offered to new investors through a private placement. Shareholders will be asked to subscribe bonds worth at least 50,000 EUR in RON equivalent.

"The shareholders have taken today a first step towards invigorating the company. We look forward to seeing our partner banks, suppliers and owners of the commercial spaces we use to contribute to the management"s plan to accelerate Flamingo"s development," said Dragos Cinca, a leading shareholder in the company.

Based on the shareholders" approval, Flamingo will issue 290 million bonds with a face value of 0.1 RON. The annual return for the non-convertible bonds is 10%. Maturity has been set at 5 years. The Flamingo shares were suspended from trading on the BSE yesterday, the latest price pointing to a market capitalization of 22 million RON.

According to the latest management report, Dragos Daniel Cinca is the largest shareholder with 25.2%, followed by the investment fund QVT Fund LP with 23% and Nova Trade - Bucharest with 14.94%. The remaining 44% is free float on the Bucharest Stock Exchange.