Sunday, June 14, 2009

Tough Business, Tough Times... but a Tough Guy...

Locally we have all heard of "Homburg" through their investment in the Confederation Mall, Dyne Holdings, Dundee Arms, etc... to name a few and now we are watching as they move forward in Charlottetown with a new 8 story office building presently under construction and also a new 80 unit major boutique hotel in the Downtown... it may seem a little strange to some that in this type of climate a developer would commence such a significant project in our market when the economy seems to be in a bit of a crises and particularly when money and stock values are so volatile... Homburg's stock has been all over the place from a high of $40.70 to a low of $3.99 this year and closed Friday at $9.01 with an announcement of no dividend for 2009... now this might alarm some people but the development business is a tough business and if you don't believe me just ask your local banker and he'll tell you that "developers" are at the bottom of the banker's interest these days... but it's been my experience watching Richard Homburg that in "tough times" is when he shines and in fact I've seen him here before.... and just when the naysayers are at their best he'll pull a rabbit out of the hat... and that's what I like about him... he's not afraid to take a little risk but at the same time he bears down and always finds a way to make it happen... a number of years ago he had a medical condition that put him out of commission flat on his back for almost a year and a lot of people speculated that this might end his reign supreme... not this guy, as most hadn't understood that Richard had developed a solid Board and a strong management team that confidently managed the Company in his absence... and he “pushed back” on all the medical experts and beat himself back into excellent health.... he's a tough flamboyant guy with a big heart, a big development appetite and a plan to go forward... and we’re lucky to have him here...

Shares issued: Class A - 16,666,320 Class B - 3,148,739
Halifax, Nova Scotia, June 12, 2009 –
Richard Homburg, Chairman and Chief Executive Officer of Homburg Invest Inc. today announced on behalf of the Company, a new strategic direction to focus the Company’s activities exclusively on income producing properties. Homburg Invest has appointed a special committee to consider a plan to spin off the Company’s development and other non-income producing properties to its shareholders. As part of the new strategic direction, the special committee will also consider a plan to reorganize Homburg’s equity structure by creating a single class of common shares, each with a single vote and equal dividend rights. The terms of the share reorganization proposal, including the share exchange ratio, which will be subject to shareholder approval, will beannounced in the coming months.
Homburg also announced that no dividend will be payable in 2009. In future years, as
previously announced, the Company will declare an annual dividend based on the Company’s
performance and market conditions. Dividends will be declared in June and paid in July.
Planned initiatives
Under its new strategy, Homburg Invest will hold income-producing properties. The Company
will be a growing real estate investment company with strong cash flows that will, subject of
course to market conditions, pay healthy annual dividends to its shareholders. Homburg Invest
will target a 50% to 60% ratio of debt to total equity. To achieve this, as previously
announced, the Company will make greater use of strategic alliances and partnerships. The
Company will continue to be listed on both the Toronto Stock Exchange (TSX) and on NYSE
The new spun out entity will hold assets projected for future development. This entity will
strive to have no long-term debt. Development projects will begin again once financial markets
have stabilized. It is anticipated that the assessment process will be completed by autumn
Homburg will continue to issue Homburg Capital Security instruments to raise additional
capital as part of its debt management strategy. The Homburg Capital Security A is a 9.5%,
99-year bond that is to be listed on NYSE Amsterdam. The issue of HCSAs permits the
Company to reduce its debt-to-equity ratio, as 80% of all outstanding HCSAs are considered
equity for accounting purposes. Homburg Invest is considering offering holders of Homburg
bonds the opportunity to exchange their holdings for HCSA.
“Our financial position is solid,” said Richard Homburg. “We are profitable and funds from
operations remain healthy. These initiatives will enable Homburg to build our cash position,
further strengthen our balance sheet and create greater certainty and stability for our
shareholders in these difficult economic times. Under this new strategic direction, we will be in
an excellent position to build value for shareholders and to take advantage of the best
opportunities that present themselves in the months and years ahead,” Richard Homburg
“The creation of a single class of voting shares will benefit all our shareholders. Indeed, we are
taking this initiative because we believe strongly that we own high quality assets, the value of
which is not reflected in our shares. We believe in the ability of markets to discover that
Homburg Invest will provide more details on the various elements of its strategic initiatives as
they become available.

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