Current Report No. 31/2013: Execution of a significant lease agreement
Date of the report: April 19th 2013
Abbreviated name of the Company: KRUK S.A.
Subject: Execution of a significant lease agreement
Legal basis: Art. 56.1.2 of the Public Offering Act – current and periodic information
Text of the report:
The Management Board of KRUK S.A. (the “Company”) reports that on April 19th 2013 a lease agreement was executed between the Company and DEVCO Sp. z o. o. (the “Lessor”) (the “Agreement”), providing for the lease of 7,335 sq. metres of floor space, comprising offices and storage areas forming part of an office building to be located in Wrocław, at ul. Wołowska 8, within the Wrocław Business Park 2 complex (the “Leased Space”), along with parking spaces (jointly the “Property Covered by the Agreement”).
The Agreement was executed for a definite term of 10 years starting from the day on which the Leased Space is handed over, with a proviso that the Leased Space must be handed over by December 31st 2014.
Under the Agreement, the Company has undertaken to pay rent in the amount and by the deadlines specified therein, as well as service charges and utility bills. The aggregate amount of payments to be made under the Agreement over the 10-year lease term has been estimated at approx. PLN 56m (exclusive of VAT), including rent, service charges, utility bills and other costs.
The rent and service charges will be payable at monthly intervals, whereas costs resulting from the actual consumption of electricity and water will be calculated from the readings of the relevant meters, based on invoices made out by the Lessor.
The space leased under the Agreement will be used by the Company for the purpose of its business activity.
At present, the Company’s business in Wrocław is based at two locations; however, there is no possibility of leasing any additional office space at either of them.
In the Company’s opinion, the Agreement will enable it to carry out its business activities from a single location, which will improve the management efficiency, doing away with difficulties connected with the fact that its offices are now based at different locations in Wrocław.
In accordance with the Agreement, from the date on which the Leased Space is handed over to the Company, the Lessor will provide it with a development option, i.e. a possibility of leasing additional office and storage space.
The Agreement satisfies the materiality criterion, as its estimated value exceeds 10% of the Group’s revenue for the previous four financial quarters.
The Agreement provides for contractual penalties:
- for the Lessor – if it sells the office building or perpetual usufruct right to the parcel of land on which the building is to be erected to any third party in the period preceding the handover of the Leased Space, in the amount of PLN 4m,
- for the Lessor – if it fails to carry out correction work to repair any serious defects preventing the use of the leased space within the contractually defined deadline, in an amount equal to 1/30 of the monthly rent for each day of delay in repairing the defects beyond the prescribed deadline,
- for the Lessor – in the event of delay in releasing the leased space, in an amount equal to 1/30 of the monthly rent payable to the existing lessor for each day of delay,
- for the Lessor – if the Lessor fails to provide substitute space in the event of a failure in the Leased Space which is to be repaired at the Lessor’s expense and which is due to reasons attributable to the Lessor, preventing the Company from using more than 10% of the Leased Space, in an amount equal to 1/30 of the rent for the portion of the Leased Space which the Company has been unable to use because of the failure for each day on which such use of the Leased Space is prevented.
The parties will not be entitled to pursue any other claims in excess of the contractual penalties. Furthermore, there are no provisions whereby they would have the right to seek compensation under the laws of general application.
Other terms and conditions of the Agreement do not differ from those typically used in agreements of such type.
The Company also reports that, following the execution of the Agreement, the total value of agreements concluded between the KRUK Group companies and the Lessor in the last 12 months amounts to PLN 58.3m.
Legal basis:
Par. 5.1.3 of the Regulation of the Minister of Finance of February 19th 2009 on current and periodic information to be published by issuers of securities […].
For the Company:
Piotr Krupa – President of the Management Board
Rafał Janiak – Member of the Management Board