» Papers and Securities Issued
» Subscription Bonus
» Depositary Receipts Level 1 Program
» Corporate Timeline
» Stock Option Plan
Capital Stock
Papers and Securities Issued
On January 23, 2007, the Company was granted registration as a listed company by the Brazilian Securities Commission (CVM).
On January 11, 2007, we entered into an agreement with BOVESPA for the trading of our securities in the Novo Mercado segment of BOVESPA under the PDGR3 symbol. This agreement became effective on January 26, 2007, which was the date of publication of the announcement of the commencement of our initial offering of common shares.
The securities issued by the Company are: (i) registered book-entry common shares with no face value constituting its equity capital, (ii) simple non-stock-convertible debentures, (iii) 2nd Issue stock-convertible debentures issued by the Company, with real and floating guarantees.
The main trading market for the shares issued by the Company is the São Paulo Stock Exchange (BOVESPA), where they are traded under the PDGR3 Code.
Subscription Bonus
Due to the Take-Over of MP Holding 3 Ltda and CHL LXX Incorporações Ltda., Subscription Bonuses were issued in four series, with each series consisting of ten Class 1 and four Class 2 Subscription Bonuses, respectively. These bonuses endow their holders with the right to subscribe to registered common shares with no face value issued by the Company, in compliance with the terms and conditions set forth in the following tables:
Class 1 Subscription Bonuses
|
Nº Shares to be Issued
|
Duration of the Option Exercise Period
|
A
Series
|
To be defined on the basis of the net profits of the Company and Goldfarb for the 2008 financial year, with a 35% discount on the multiple for the net profits of the Company, less the number of shares already handed over for the Take-Over
|
Start |
End |
Date of the Annual General Meeting of the Company approving the Financial Statements for the financial year ending on December 31, 2008.
|
90 (ninety) days as from the opening date for the exercising the bonus on this series. |
B
Series
|
To be defined on the basis of the net profits of the Company and Goldfarb for the 2009 financial year, with a 35% discount on the multiple for the net profits of the Company
|
Start |
End |
| Date of the Annual General Meeting of the Company approving the Financial Statements for the financial year ending on December 31, 2009. |
90 (ninety) days as from the opening date for the exercising the bonus on this series. |
C
Series
|
To be defined on the basis of the net profits of the Company and Goldfarb for the 2010 financial year, with a 35% discount on the multiple for the net profits of the Company
|
Start |
End |
| Date of the Annual General Meeting of the Company approving the Financial Statements for the financial year ending on December 31, 2010. |
90 (ninety) days as from the opening date for the exercising the bonus on this series. |
D
Series
|
To be defined on the basis of the net profits of the Company and Goldfarb for the 2011 financial year, with a 35% discount on the multiple for the net profits of the Company
|
Start |
End |
| Date of the Annual General Meeting of the Company approving the Financial Statements for the financial year ending on December 31, 2011. |
90 (ninety) days as from the opening date for the exercising the bonus on this series. |
Class 2 Subscription Bonuses
|
Nº Shares to be Issued
|
Duration of the Option Exercise Period
|
A
Series
|
To be defined on the basis of the net profits of the Company and the CHL for the 2008 financial year, with a 35% discount on the multiple for the net profits of the Company, less the number of shares already handed over for the Take-Over
|
Start |
End |
Date of the Annual General Meeting of the Company approving the Financial Statements for the financial year ending on December 31, 2008.
|
90 (ninety) days as from the opening date for the exercising the bonus on this series. |
B
Series
|
To be defined on the basis of the net profits of the Company and the CHL for the 2009 financial year, with a 35% discount on the multiple for the net profits of the Company |
Start |
End |
Date of the Annual General Meeting of the Company approving the Financial Statements for the financial year ending on December 31, 2009. |
90 (ninety) days as from the opening date for the exercising the bonus on this series. |
C
Series
|
To be defined on the basis of the net profits of the Company and the CHL for the 2010 financial year, with a 35% discount on the multiple for the net profits of the Company |
Start |
End |
Date of the Annual General Meeting of the Company approving the Financial Statements for the financial year ending on December 31, 2010. |
90 (ninety) days as from the opening date for the exercising the bonus on this series.
|
D
Series
|
|
Start |
End |
Date of the Annual General Meeting of the Company approving the Financial Statements for the financial year ending on December 31, 2011. |
90 (ninety) days as from the opening date for the exercising the bonus on this series. |
1st Debentures Issue
On July 24, 2007, the Company concluded its Registration Statement for the Initial Public Offering of Debentures, with the issuance of 25,000,000 nominative registered debentures that are nonconvertible into shares, unsecured, in a single series, at the nominal value of R$ 10,000.00 (ten thousand Reais) each, fully subscribed by the Bradesco BBI investment fund. The operation will mature in 7 (seven) years and the securities will bear interest at the CDI rate plus 0.9% per annum. Amortization will be in 4 (four) annual installments payable from the 48th (forty-eighth) month after the date of issuance, beginning July 1, 2011.
2nd Debentures Issue - Convertible Debentures
Under the 2nd Issue of Convertible Debentures with real and floating guarantees, 27,600 (twenty seven thousand, six hundred) debentures were issued in denomination of R$ 10,000.00 (ten thousand Reais), with a date of issue on 15 April 2009, with the following conditions:
i. the company will issue for private placement debentures in an amount up to R$276,000,000.00 (two hundred and seventy-six million Brazilian real);
ii. the debentures will be convertible into shares issued by the Company by dividing the nominal unit value per debenture by the price of R$17.00;
iii. the debentures will mature in 42 months as of their issue date;
iv. remuneration will be equivalent to the variation in the CDI (interbank overnight deposit) rate plus 2.00% per annum, with payments made semiannually;
v. two years after the issue date of the Debentures, the Company will have the right to request the conversion of up to 50% of the Debentures in circulation if the average price per share of the Company’s common stock in the previous 60 trading sessions is equal to or greater than 140% of the Conversion Price;
vi. the debentures will be secured by a pledge constituted on 100% of the common stock issued by CHL Desenvolvimento Imobiliário S.A. and by a general privilege on the Company’s assets, in accordance with Article 58, Paragraph 1 of Federal Law 6,404/76.
Depositary Receipts Level 1 Program
In October, 2008, PDG Realty S.A. Empreendimentos e Participações (the “Company”) filed for the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – “CVM”), the request for the registration of its Sponsored Depositary Receipts Level 1 Program for trading on the U.S. over-the-counter market of securities backed by common shares issued by the Company.
For this purpose, Citibank DTVM S.A. will act as custodian of the Company’s common shares in Brazil, which will back the respective depositary shares, and Citibank, N.A. will act as depositary in the U.S., responsible for the issuance of the respective depositary shares, in the ratio of 1 (one) depositary share per 2 (two) common shares.
The Company believes that the institution of the Depositary Receipts Level 1 Program will satisfy the demand of investors with legal or regulatory limitations to invest in our common shares, in addition to increase the Company’s visibility.
Corporate Timeline
The Company was established on November 17, 1998 in the City of São Paulo, State of São Paulo, with equity capital of R$ 100.00, under the name of Varsóvia Participações S.A.
In December 2003, the equity capital of the Company was increased by R$ 50,001.00, with this increase subscribed and paid in by ABF Participações Ltda, whose corporate stake was fully divested to the FIP PDG I fund. In December 2004, the equity capital was increased from R$ 50,101.00 to R$ 8,773,101.00, with this increase being fully subscribed and paid in by the FIP PDG I fund.
In 2005, the equity capital was altered five times: (i) on April 26, an increase of R$ 586,380.00, increasing it to R$ 9,359,481.00, which was fully subscribed and paid in cash; (ii) on June 1, a reduction of R$ 8,424,601.00, reduced to R$ 934,880.00, with this amount being transferred in full to the FIP PDG I fund through shares held previously by the Company in the Giardino Desenvolvimento Imobiliário S.A company; (iii) on June 25, a capital increase of R$ 3,360,000.00, rising to R$ 4,294,880.00; (iv) on December 1, reduction of R$ 3,091,463.00, dropping to R$ 1,203,417.00, with this amount being transferred to the FIP PDG I fund through transferring the shares held by the Queiroz Galvão Cyrela Veneza Empreendimento Imobiliário S.A. company; and (v) on December 21, an increase of R$ 11,000,000.00, totaling an equity capital of R$ 12,203,417.00. All the capital increases conducted in the course of this year were fully subscribed by the FIP PDG I fund.
In 2006, the equity capital was subject to the following alterations: (i) on March 20, an increase of R$ 6,000,000, totaling R$ 18,203,417.00; (ii) on June 29, an increase of R$ 15,796,583.00, rising to R$ 34,000,000.00; (iii) on August 30, an increase of R$ 177,372,535.00, rising to R$ 211,372,535.00; (iv) on September 30, 2006, an increase of R$ 8,455,909.00, through capitalizing the premium reserve of the Company, with the capital rising from R$ 211,372,535.00 to R$ 219.828.444.00; (v) on October 20, 2006, the shares were grouped as described below; and (vi) on December 14, 2006, an increase of R$ 19,500,000.00, rising to R$ 239,328,444.00. All these increases were fully subscribed by the FIP PDG I fund.
On January 24, 2007, the equity capital of the Company was increased by the Board, based on the authorized capital, by 30,000,000 shares at an issue price of R$ 14.00, representing an increase of R$ 420,000,000.00.
On February 23, 2007, the equity capital of the Company was once again increased by the Board, also based on the authorized capital, by 875,933 shares, at an issue price of R$ 14.00 per share, representing an increase of R$ 12,263,062.00, due to the exercise of the supplementary batch option addressed in the primary public distribution of common shares by the Company, in response to the additional demands noted during this distribution, taking into account the effective exercise of this option by the Banco UBS Pactual S.A. on February 23, 2007.
On June 29, 2007, at an Extraordinary General Meeting, the equity capital of the Company was increased by R$ 4,559,370.00, due to the take-over of CHL XV Incorporações Ltda. and by R$ 12,275,611.12, due to the take-over of Key West Participações S.A., with the issue of 2,022,272 common shares and 5,040,000 common shares of the Company, respectively.
On September 28, 2007 the Company held an Extraordinary General Meeting that approved: (i) the take-over of MP Holding Ltda., owning 1.67% of Goldfarb, with the resulting increase in the equity capital of the Company by R$ 3,338,409.00 through the issue of 681,818 new common shares; (ii) the transfer of the corporate head offices to Rio de Janeiro; (iii) the expansion of the registered corporate purpose encompassing activities already undertaken indirectly by the Company, namely: (a) rendering collection services for receivables, (b) acquisition of properties for income purposes, (c) acquisition of properties for real estate development, and (d) real estate development, within the registered corporate purpose of the Company; (iv) alteration to the annual and global budget allocations for the remuneration of the Board Members, the Directors and Officers, to be paid through to the next Annual General Meeting of the Company, for a total amount of up to R$ 8,500,000.00.
On December 21, 2007 the Company held an Extraordinary General Meeting that approved: (i) the take-over of MP Holding 2 S/A, owning 2.5% of Goldfarb, with the resulting increase in the equity capital of the Company by R$ 5,690,361.00 through the issue of 1,136,364 new common shares; (ii) the take-over of CHL XXXIV Incorporações Ltda., owning 12.31% of CHL, with the resulting increase in the equity capital of the Company by R$ 20,231,881.30 through the issue of 3,200,000 new common shares; (iii) approval of the alteration to the Stock Option Plan for acquiring shares issued by the Company.
In February 2008 the Board of the Company approved the issue of 268,345 new shares due to the exercise of stock purchase options granted under the Plan. The issued shares were fully subscribed by the Plan beneficiaries at a price of R$ 13.42, in compliance with monetary restatement set forth in the Plan. Additionally, on May 12, 2008, 2,268 new shares were issued due to the exercise of purchase options at a price of R$ 13.72 per share.
On October 21, 2008, the Board approved the establishment of the First Share re-purchase program in order to maximize the generation of value for the shareholders. This Program is scheduled to last up to 365 days, and is limited to 8,142,064 common shares, corresponding to 10% of the shares in circulation. At the moment there are 598,600 shares held in the Treasury at an average price of R$ 9.1248.
In March 2009, at the Extraordinary General Meeting of the Company, 829,644 common shares were issued and forty Class 1 subscription bonuses as the result of the take-over of MP Holding 3 Ltda, with a resulting capital increase of R$ 13,026,690.56.
In April 2009, at the Extraordinary General Meeting of the Company, 779,062 common shares were issued, as well as four Class 2 subscription bonuses as the result of the take-over of CHL LXX Incorporações Ltda, with the resulting capital increase of R$ 11,199,251.66.
In May 2009, the holders of the Class 1 and Class 2 subscription bonuses, both A Series, exercised these bonuses and received 600,720 and 259,688 common shares respectively. This issue was approved at a Board Meeting held on May 4, 2009 and resulted in a capital increases of R$ 4,342,230.19 and R$ 3,733,083.89, respectively.
On May 19, 2009 the Company’s board of directors approved the issuance of 2,676,069 new shares because of the exercise of stock options under the Plan. The shares issued were fully subscribed by the Plan’s beneficiaries at a price of R$14.14 each, set according to the inflation adjustment index specified in the Plan. These new shares resulted in a capital increase of R$37,839,615.66.
On June 22, 2009, holders of convertible debentures of the second issue requested conversion of their debentures into shares, which resulted in the issuance of 3,058,642 new common shares. This issue was approved by the board of directors, resulting in a capital increase of R$51,996,914.00.
On June 30, 2009, holders of convertible debentures of the second issue requested conversion of their debentures into shares, which resulted in the issuance of 505,426 new common shares. This issue was approved by the board of directors, resulting in a capital increase of R$8,592,242.00.
On July 28, 2009, holders of convertible debentures of the second issue requested conversion of their debentures into shares, which resulted in the issuance of 766,757 new common shares. This issue was approved by the board of directors, resulting in a capital increase of R$13,034,869.00.
On August 12, 2009, the board of directors approved the cancellation of 598,600 common nominative book-entry shares issued by the Company and held in treasury, without changing the capital stock. These shares had been carried at a value of R$5.5 billion and the respective amount was recorded in the retained earnings reserve account.
At an extraordinary general meeting held on September 9, 2009, a stock split was approved covering all the Company’s common shares, in a ratio of two-to-one, with maintenance of the same advantages enjoyed by the pre-existing shares. Each depositary share of the Company represents two common shares.The board of directors has also approved four more share issues because of conversion of debentures, resulting in the issuance of 23,799,914 new common shares.
On August 21, 2009, the 2nd Issue convertible debenture holders requested that these debentures be converted into shares, resulting in the issue of 316,792 new common shares. This issue was approved by a Board Meeting at the price of R$ 17.00 per share, based on the criterion established in the Deed of Issue for the debentures, resulting in a capital increase of R$ 5.3 million, with the value of the increase being 0.3% (zero point three per cent) higher than the equity capital prior to this increase. The equity capital of the Company thus rose to a total of R$ 1,45 billion, divided into 155,197,348 common shares
At an Extraordinary General Meeting of the Company held on September 9, 2009, a stock split was approved for all the common shares issued by the Company, whereby each common share issued by the Company was split into two common shares, with the same rights and advantages as the pre-existing common shares. Each Depositary Share issued by the Company represents two common shares.
On October 1, 2009, the equity capital of the Company was increased again by the Board during the public offering of shares issued by the Company by 56,000,000 shares, also on the basis of its authorized capital, at an issue price of R$ 14.00 per share, as determined by the book building procedure, representing an increase of R$ 784.0 million, with the value of the increase being 54% higher than the equity capital prior to this increase. .
On October 14, 2009, the 2nd Issue convertible debenture holders requested that these debentures be converted into shares, resulting in the issue of 2,199,547 new common shares. This issue was approved by a Board Meeting at the price of R$ 8.50 per share, based on the criterion established in the Deed of Issue for the debentures, resulting in a capital increase of R$ 18.6 million, with the value of the increase being 0.8% higher than the equity capital prior to this increase. The equity capital of the Company thus rose to a total of R$ 2.24 billion, divided into 368,594,243 common shares.
On November 23, 2009, the 2nd Issue convertible debenture holders requested that these debentures be converted into shares, resulting in the issue of 13,791,237 new common shares. This issue was approved by a Board Meeting at the price of R$ 8.50 per share, based on the criterion established in the Deed of Issue for the debentures, resulting in a capital increase of R$ 117.2 million, with the value of the increase being 5.2% (five point two per cent) higher than the equity capital prior to this increase. The equity capital of the Company thus rose to a total of R$ 2.36 billion, divided into 382,385,480 common shares.
On November 30, 2009, the 2nd Issue convertible debenture holders requested that these debentures be converted into shares, resulting in the issue of 7,492,338 new common shares, at an issue price of R$ 8.50 per share, as established in the Deed of Issue for the debentures. This issue was approved by a Board Meeting, resulting in a capital increase of R$ 63.6 million, with the value of the increase being 2.6% (two point six per cent) higher than the equity capital prior to this increase.
On February 1, 2010, the Company Board approved the issue of 796,740 new shares through the exercise of stock purchase options granted under the aegis of the Plan. The issued shares were subscribed to in full by the beneficiaries of the Plan, at a price of R$ 7.08 for the 1st Program shares and R$ 11.62 for the 2nd Program, with monetary restatement as set forth in the Plan. This issue resulted in a capital increase of R$ 5.8 million, with the value of the increase being 1,01% higher than the equity capital prior to this increase.
On February 25, 2010, the Company Board approved the issue of 231,638 new shares through the exercise of stock purchase options granted under the aegis of the Plan. The issued shares were subscribed to in full by the beneficiaries of the Plan, at a price of R$ 7.08 for the 1st Program shares and R$ 11.62 for the 2nd Program shares, with monetary restatement as set forth in the Plan. This issue resulted in a capital increase of R$ 1.6 million, with the value of the increase being 1.0% higher than the equity capital prior to this increase.
On March 26, 2010, the Company Board approved the issue of 700,000 new shares through the exercise of stock purchase options granted under the aegis of the Plan. The issued shares were subscribed to in full by the beneficiaries of the Plan, at a price of R$ 7.16 for the 1st Program shares, with monetary restatement as set forth in the Plan. This issue resulted in a capital increase of R$ 5.0 million, with the value of the increase being 1.0% higher than the equity capital prior to this increase.
On April 30, 2010, the Company Board approved the issue of 3,886,049 new shares through the conversion of Class 1 Series B Subscription Bonds, Order Nºs 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10, in addition to 4,204,896 new shares through the conversion of Class 2 Series B Subscription Bonds, Order Nº 1, at subscription prices of R$ 4.47 and R$ 3.55 respectively. These issues resulted in capital increases of R$ 17,368,920.75 and 14,932,335.55 respectively, with the respective values of these increases being 0.99% and 1.07% higher than the equity capital prior to this increase.
On March 26, 2010, the Company Board approved the issue of 700,000 new shares through the exercise of stock purchase options granted under the aegis of the Plan. The issued shares were subscribed to in full by the beneficiaries of the Plan, at a price of R$ 7.16 for the 1st Program shares, with monetary restatement as set forth in the Plan. This issue resulted in a capital increase of R$ 5.0 million, with the value of the increase being 1.0% higher than the equity capital prior to this increase.
On April 30, 2010, the holders of Class 1 and Class 2 Subscription Bonds, both Series B exercised these bonds and received 3,886,049 common shares at an issue price of R$ 4.47 per share, determined by the equity value and 4,204,896 common shares at an issue price of R$ 3.55 per share, determined by the equity value, respectively. This issue was approved by a Board Meeting held on April 30, 2010 and resulted in capital increases of R$ 17.3 million and R$ 14.9 million, respectively, with the value of the increase being 1.3% higher than the equity capital prior to this increase.
On May 13, 2010, the Company Board approved the issue of 94,870 new shares through the exercise of stock purchase options granted under the aegis of the Plan.. The issued shares were subscribed to in full by the beneficiaries of the Plan, at a price of R$ 7.08 for the 1st Program shares, with monetary restatement as set forth in the Plan and at a price of R$ 11.67 for the 2nd Program shares. This issue resulted in a capital increase of R$ 1.0 million, with the value of the increase being 0.4% higher than the equity capital prior to this increase.
On May 20, 2010, the Company Board approved the issue of 386.300 new shares through the exercise of stock purchase options granted under the aegis of the Plan. The issued shares were subscribed to in full by the beneficiaries of the Plan, at a price of R$ 7.08 for the 1st Program shares, with monetary restatement as set forth in the Plan and at a price of R$ 11.67 for the 2nd Program shares. This issue resulted in a capital increase of R$ 2.7 million, with the value of the increase being 0.11% higher than the equity capital prior to this increase. .
On May 25, 2010, the Company Board approved the issue of 636,559 new shares through the exercise of stock purchase options granted under the aegis of the Plan. The issued shares were subscribed to in full by the beneficiaries of the Plan, at a price of R$ 7.08 for the 1st Program shares, with monetary restatement as set forth in the Plan and at a price of R$ 11.67 for the 2nd Program shares. This issue resulted in a capital increase of R$ 4.5 million, with the value of the increase being 0.18% higher than the equity capital prior to this increase.
Other than the public offerings in January and October 2007, and the offering in October 2009, the subscriptions to the increases in the Company capital were conducted privately.
Stock Option Plan
At the shareholders’ meeting held on January 9, 2007, our shareholders approved the creation of a stock option plan, which allows us to grant our managers and employees options to purchase our common shares, pursuant to the terms of Brazilian Corporate Law. This plan is managed by a committee composed of three of our directors, with powers to set forth each year the rules for granting stock options. The shares underlying the stock option plan may not exceed 8.0% of our outstanding shares.
A committee of our directors approved the creation of a stock option plan for the purchase of 6,190,000 of our common shares. The shares have been fully allotted to the plan’s beneficiaries and the exercise price is R$ 12.60 per share. The exercise price will be adjusted by the IGPM index variation between the date we granted the option and the date it is exercised. The options may be exercised in four equal lots, the first of which is exercisable on May 2, 2008 and the last exercisable on May 2, 2011. The plan’s beneficiaries will only be able to trade the shares purchased pursuant to the plan after May 7, 2009.
Additionally, the Committee approved the introduction of a Second Program with total of 600,000 common shares issued by the Company, whose options were allocated in full to the Program Beneficiaries at a subscription price of R$ 22.30 per share, restated by the General Price Index – Market (IGPM) between the award date and the date of the effective exercise of the options. The options may be exercised in four equal batches, with the exercise period for the first batch opening in February 2009 and the last batch in February 2012. The beneficiaries of the Second Program may trade the shares to be subscribed only after April 8, 2010. By May 2008, no stock option had been exercised under the Second Program.
In case of the full exercise of the options already granted and not yet exercised under these First and Second Programs, 6,521,655 new shares will be issued, and the current shareholders of the Company will be subject to 4.47% dilution.
In February 2008, the Board of the Company approved the issue of 268,345 new shares due to the Stock Purchase Option Plan. The issued shares were fully subscribed by the Plan beneficiaries at a price of R$ 13.42, in compliance with the monetary restatement established in the Plan. Additionally, on May 12, 2008, 2,268 new shares were issued due to the exercise of purchase options at a price of R$ 13.72 per share.
A summary of the stock purchase activities for shares issued by the Company is presented below:
|
Nº Options
|
Description
|
Plan 1
|
Plan 2
|
Balance of common share purchase options not exercised at the start of the period – 2007 |
6,190,000 |
|
Balance of common share purchase options not exercised at the start of the period – 2008 |
|
600,000 |
Movement during the period:
|
|
|
Exercised |
(270,613) |
- |
Balance of common share purchase options not exercised for common shares at the end of the period – December 31, 2008 |
5,919,387 |
600,000 |
The fair weighted value for the stock purchase options is updated through the Black Scholes options pricing model, assuming payment of dividends at 1.31% and an expected volatility of approximately 36.73% p.a. for the First Program and 53.19% p.a. for the Second Program, with a mean weighted risk-free rate of 11.17%, with final maturity in 4.8 years.
The total value of outlays on options worth R$ 50.611 was calculated by the Black Scholes method, taking into consideration the exercise period, volatility based on the track record of the Company shares, the risk-free rate and the proposed dividends rate. According to CPC 10 - Share Based Payments, the premium for these options was calculated on their award date and is being posted as an expense, in counterpart to the Net Worth, during the grace period as the services are rendered. The amount entered in the earnings for the 2008 financial year was R$ 11,468.