The Riga City Kurzeme District Court has approved amendments to JSC "VEF Radiotehnika RRR" legal protection process action plan (April 18, 2016 version) on May 31, 2016.

   Changes in the legal protection process action plan:

   Company will going to sell with leaseback rights 6967/7842 undivided share of the land and its existing building in Riga, Kurzemes prospect 3D cadastre No. 0100 080 2328. Above real estate is planned to sell up to 18 month of action plan by EUR 1'300'000.00, which has signed a Purchase agreement with buyer SIA KNOPS. The planned sales price is right VCG Panel's property assessment. Part of this amount - EUR 690'485.15 will be used to fully satisfy claim of secured creditors, EUR 135'098.02 for partial satisfaction of unsecured creditors' claims and the remaining amount will be spent to the manufacturing process to restore the acoustic systems and cabinets for professional acoustic production.

   Common revenue from production sales is estimated at EUR 1'204'092.92 (before VAT) during action plan proceedings. Company plans to sell the bulk of production in export markets: EU, USA, China, India. Company plans to use factoring services in order to reduce its working capital need. Taking into account the volume of exports, it is expected that from month 20 till month 24, the company will have an overpayment of VAT. Accordingly, the plan provides for the proceeds of the excess VAT recovery within two months of the overpayment has arisen.

   The claims of secured creditors is planned to fully satisfy on month 18 of action plan when it is planned to sell building with land. Concerning to the claims of unsecured creditors it is scheduled to deferral the repayment up to month 18  of action plan when it is planned to sell building with land and the restoration of the production with a stable cash flow, it is provided unsecured creditors' claims repaying every month. Commitment postponement to process month 18 of action plan is needed to stabilize the cash flow of company, but during months 10 to 18 - to use the available funds for current assets increasing and preparations for restoration of the production.