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LAS VEGAS-A 296-unit Downtown condominium development here is moving forward with a loan of up to $10-million from the real estate investment arm of publicly held Euroweb International Corp. The Los Angeles-based owner of an IT outsourcing company based in Hungary says Euroweb RE Corp. is supplying the funds to AO Bonanza Las Vegas Inc.
Bonanza Condominiums is slated for the northeast corner of West Bonanza Road and North Main Street, across Interstate 515 from the Main Street Station Casino-Hotel. In addition to the condo units, the project will include 34,700 sf of retail over three levels of below-grade parking.
Euroweb International stated in an SEC filing that AO Bonanza has the necessary entitlements for the project and expects to begin sales--and possibly construction--sometime this year. The architect is Dennis E. Rusk of Las Vegas. The construction manager is yet to be decided; the interim manager is Bob Buente of Pasadena, CA-based Trafford Associates LLC.
Euroweb RE's new chief executive Yossi Attia says that, whether by prepayment of at maturity, AOB is required to pay Euroweb RE 12% interest per annum or 33% of all gross profits derived from the property. In addition, Euroweb RE has the right to acquire the property for a purchase price of $15 million--$10 million cash and $5 million in shares of Euroweb International--through January 1, 2015, according to the filing.
Euroweb RE released $2.6 million to AO Bonanza in June. Additional funds may be requested by AO Bonanza after July 15, according to the filing. Each loan provided to AOB is due on demand or upon maturity on January 14, 2008. All loans will be secured by a deed of trust, assignment of rents and security agreement with respect to the property, along with an American Land Title Association title policy to be issued by a title company.
If Euroweb RE requests that the funds be paid on demand prior to maturity, then AOB shall be entitled to reduce the amount requested to be prepaid by 10%. The 10% discount will be paid to AOB in the form of shares of common stock of Euroweb International, which will be computed by dividing the dollar amount of the 10% discount by the market price of Euroweb International's shares of common stock.
Euroweb International's stock price Wednesday afternoon stood at $2.48, off $0.12 from its previous close. Shares hit a 52-week low of $2.36 on June 15, the day it announced the hiring of Attia as a director and CEO of Euroweb RE. The company's 52-week high of $4.73 occurred on July 25, 2005.
According to a June 15 SEC filing, Attia inked a five-year employment agreement that began July 1 and provides him an annual compensation of $240,000 and an annual bonus of not less than $120,000 per year, as well as an annual car allowance for the same period. In addition, Attia is entitled to a "special bonus" equal to 10% of the EBITDA of Euroweb RE that will be paid in shares of common stock of the company.
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