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1 July 2009

R.G.I. International

New terms agreed in respect of certain development projects

R.G.I. International Limited ('RGI' or the 'Company'), the AIM-listed developer of high-end properties in Moscow and the surrounding area, announces that it has renegotiated a number of agreements in respect of certain development projects.

A summary description of the original agreements and the new terms is provided below.

In this announcement, the 'Group' means RGI and its subsidiaries or one or more of such subsidiaries, as appropriate.

The Chelsea transaction

In March 2007, the Group acquired the development rights to the Chelsea Project. Under the terms of that transaction, Atropa Investments Limited ('Atropa') agreed to a number of ongoing obligations in respect of the Chelsea Project, including procuring an amendment to certain resolutions of the Government of the City of Moscow. These obligations have not been fulfilled. In addition, the Group undertook to transfer, for no additional consideration, 3,000 square metres of premises in the completed development to Atropa. As at 31 December 2008, this obligation was recorded in the Group's balance sheet as a liability of approximately US$25.9 million.

Following negotiations with Atropa, it has been agreed that the Group will waive Atropa's ongoing obligations as described above and that the Group will be released from its obligation to transfer 3,000 square metres of premises within the Chelsea Project to Atropa on completion. 

The Chelsea project is a proposed multi-building development comprising primarily residential areas in addition to some retail space. The total value of assets under development at the Chelsea Project as at 31 December 2008 was US$131.6 million, based on an independent valuation conducted by LLC Debenham Zadelhoff Limited (the 'DTZ Valuation').

The Sucreti transaction

In July 2007, RGI announced an investment in four new developments in Moscow and the surrounding area. The investment was made through the acquisition of a 73% shareholding in Sucreti Holdings Limited ('Sucreti') for US$2.0 million. Sucreti holds the development rights for the Dream, Maya, Media City and Kingston Projects. The remaining interest in Sucreti (being 27%) was retained by Lirion Participation Corp ('Lirion'). In addition, the Group undertook to provide a loan to Sucreti of up to US$190.0 million in order to meet existing debts of Sucreti and its subsidiaries and for working capital purposes. 

Under the terms of the above transaction, Lirion was granted the right to a preferential dividend of US$55.0 million by Sucreti. Lirion also committed to a number of ongoing obligations in respect of the four projects, including extending the terms of the project investment contracts and formalising certain project lease rights. Certain of Lirion's obligations in respect of the Dream, Maya and Media City Projects have not been fulfilled by Lirion and as a consequence RGI's management recently entered into negotiations with Lirion regarding the terms of the original transaction. 

Following negotiations with Lirion, the Group has agreed to waive certain of Lirion's obligations in respect of the Dream, Maya and Media City Projects. In return, Lirion has agreed to transfer 9% of the issued share capital of Sucreti to the Group. Consequently, the Group will have a shareholding of 82% in Sucreti. Lirion's right to a preferential dividend from Sucreti will be reduced from US$55.0 million to US$29.5 million in order to reflect its smaller overall shareholding in Sucreti. Furthermore, prior to the negotiation of the new terms of the Sucreti transaction, Sucreti owed (through its subsidiaries) debts of approximately US$31.0 million to affiliates of Lirion. Under the new terms, these debts will be waived. 

The Dream, Maya, Media City and Kingston Projects are all at the pre-construction stage. The total value of assets under development by Sucreti as at 31 December 2008 was US$340.6 million, based on the DTZ Valuation. 

The effect of the renegotiated terms on the Group

RGI is currently undertaking a full assessment of the impact of the matters described above. The full effect of the new arrangements on the Group will be published with the Company's interim financial results for the six month period ending 30 June 2009. In addition to the reduction of the Group's obligations and increased share in Sucreti as described above, such impact will be affected by the independent valuation which will be performed on the relevant assets. 

The transactions described above are related party transactions pursuant to AIM Rule 13. The directors of the Company, having consulted with RGI's nominated adviser, Shore Capital and Corporate Limited, consider that the terms of the transactions described above are fair and reasonable insofar as its shareholders are concerned.

Enquiries:

R.G.I. International Limited            

Emanuel Kuzinetz                           +972 54 691 6699 

Citigate Dewe Rogerson            +44 (0)20 7282 1089

Sandra Novakov

Shore Capital                               +44 (0)20 7408 4090

Dru Danford

Pascal Keane

Note:

The DTZ Valuation provided valuation information in respect of the various RGI development projects as of 31 December 2008 only. There can be no assurance that valuations performed at more recent dates would not produce different values. The current economic crisis has created a significant degree of uncertainty in real estate markets and real estate prices and values have fallen significantly. The market value of the Company's development projects may have declined materially since 31 December 2008.

The valuation of real estate and real estate-related assets is inherently subjective. As a result, all real estate valuations are subject to uncertainty. Real estate valuations, including those contained in the DTZ Valuation, are made on the basis of assumptions which may not prove to reflect the accurate fair market value of the Company's real estate portfolio. The appraised market values should not be taken as an indication of the prices at which the Group may be able to effect sales of its real estate properties in the future.

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