EANS-Adhoc: Successful Partial Divestment of Precious Woods Central America - Precious Woods Holding Ltd. remains a significant minority shareholder following the divestment of its Central American S

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ad-hoc disclosure transmitted by euro adhoc with the aim of a Europe-wide
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Company Information/Sustainable management and use of tropical
forests and plantations

14.10.2011

Zug/Zurich, 14 October 2011 - Precious Woods Holding Ltd. has
completed the sales process for Precious Woods Central America in a
successful and timely manner. The divestment of 75% of the shares in
Precious Woods Central America will enable Precious Woods Holding
Ltd., as a minority shareholder, to remain involved in the teak
business in Central America and to repay its bank and some other
debts. The remaining liquidity will put Precious Woods in a position
to push ahead with the development of the Group as a whole.

Swiss solution for Precious Woods Central America In a bidding
process, two larger Swiss shareholders of Precious Woods Holding Ltd.
(PWH) have each purchased 37.5% (75% in total) of the newly
established subholding Precious Woods Central America (PWCA), in
which all Central American assets are integrated. With a stake of
25%, PWH remains a significant minority shareholder. This solution is
in line with the wishes of the majority of shareholders, who voted
accordingly in the consultative ballot at this year´s Annual General
Meeting. The existing local management team will retain operational
responsibility, and PWH is represented by its chairman Ernst A.
Brugger in the three-member PWCA Board of Directors.

Reduction of debt and capital costs With the divestment of its stake
in PWCA, PWH will be in a position to fulfil the debt repayment
arranged with the banks in a standstill agreement. Here it is worth
recalling the situation that led to the sales process for PWCA:
assets in Central America were pledged to the banks, which for their
part did not wish to extend the standstill agreement any later than
the end of October 2011. This posed a specific risk that the banks
would seek to wind up PWCA on expiry of the standstill. At the same
time, from the perspective of the Board of Directors, the liquidity
of PWH was insufficient to complete the accelerated turnaround
process, and debt and the associated financing costs also needed to
be reduced from an accounting perspective. Following the completion
of the partial divestment, Precious Woods will be able to repay
timely all the holding´s bank debts as well as a convertible bond due
in 2012. This debt reduction to the tune of over USD 40 million is a
significant opportunity for PWH to liberate itself from a high debt
burden. At the same time, the solution will enable capital costs to
be reduced substantially and liquidity to be improved. It is
essential that the solution adopted for PWH and its shareholders does
also make excellent sense from a business perspective. Moreover, the
two Swiss shareholders are granting two loans summing up to USD 5
million. The additional funds allow Precious Woods Amazon to acquire
a concession area of 39000 ha adjacent to existing estates with a
view to securing its medium-term harvest schedule, as well as to
secure the legalisation of property rights on further considerable
land.

Business opportunity The negotiated company value of USD 62 million
is around USD 15 million below the book value. This is attributable
to the noticeable weakening of the global economy and uncertainty,
which are also affecting land and forest values in Central America.
However, the negotiated company value is slightly higher than
alternative offers from third parties that did not take into account
a minority shareholding by PWH. The achieved result represents a
business opportunity to expand the operational activities of Precious
Woods Central America. The three shareholders undertake to cooperate
closely over the long term, and this intention has been laid down in
a shareholders´ agreement. The Board of Directors has therefore
unanimously adopted this solution with the business prospects that it
offers.

end of ad-hoc-announcement ==========================================
====================================== Precious Woods is one of the
world’s leading companies in the sustainable management and use of
tropical forests and plantations. The company’s core activities
include reforestation and sustainable management of tropical forests,
timber processing and the trading of FSC-certified timber products.
The generation of emission rights and electricity from wood waste
represent further integral elements of the company’s business. Shares
of Precious Woods Holding Ltd. have been listed on the SIX Swiss
Exchange since March 2002. Additional information about Precious
Woods can be found at www.preciouswoods.com

Further inquiry note:
Precious Woods Holding AG
Brunhilde Mauthe
Head of Group Communications & Marketing Services
Tel. +41 44 245 81 20
Fax +41 44 245 81 12
media@preciouswoods.com

end of announcement euro adhoc
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issuer: Precious Woods Holding Ltd.
Baarerstrasse 135
CH-6301 Zug
phone: +41 44 245 80 10
FAX: +41 44 245 80 12
mail: office@preciouswoods.com
WWW: http://www.preciouswoods.com
sector: Forestry & Timber
ISIN: CH0013283368
indexes: SPI
stockmarkets: Main Standard: SIX Swiss Exchange
language: English