Geveko implements guaranteed rights issue of SEK 160m
(Thomson Reuters ONE) -
Gothenburg, Sweden, 25 February 2010
· The Board of Directors of Geveko has decided to implement a rights
issue of approximately SEK 160m, with preferential rights for Geveko's
shareholders.
· The rights issue is 100 percent covered by subscription commitments
and underwriting commitments from major shareholders and external underwriters,
of which 46.0 percent is attributable to existing shareholders and 54.0 percent
to external underwriters.
· The main purpose of the rights issue is to strengthen Geveko's
long-term financial position and financial flexibility, which will provide a
more solid basis to develop operations in accordance with the Company's
strategy.
· The final terms of the rights issue, including the subscription price,
will be determined by the Board on 29 March 2010 and published on the same date
through a press release.
· The rights issue is subject to approval by an Extraordinary General
Meeting to be held on 31 March 2010, and subject to obtaining such approval, the
subscription period is expected to be from 12 April up to and including 28 April
2010.
"The rights issue will provide Geveko with greater flexibility in the current
economic climate. The capital injection will further strengthen Geveko's
financial position, give the Company a stronger basis to utilise business
opportunities, and further reinforce the Company's market position," says Hans
Ljungkvist, managing director and Group CEO of Geveko.
Background and reasons
Geveko's current strategy was adopted in conjunction with its transition from an
investment company to an operating industrial Group. The overall strategic goal
is to reinforce and strengthen Geveko's market-leading position within road
marking in Europe, and to be a proactive participant in the necessary
restructuring of the industry. Initially, focus has been on strengthening
Geveko's position on the important Nordic domestic market, and on attaining
leading positions on the growing markets in Eastern Europe. Today, Geveko has
market-leading contracting operations from the Nordic region in the north to the
Black Sea in the south. Going forward, Geveko's primary strategic focus will be
on continuing integration of new operations, as well as increased co-ordination
and utilisation of the economies of scale and synergy effects that are expected
to arise from the new business- and market-oriented organisational structure
implemented in 2009. In the long term, the Group's strategy is to grow on other
markets in Europe.
In 2009, demand for Geveko's products and contracting services in Western Europe
remained stable. Growth and good earnings were achieved in Germany, the
Netherlands, Belgium, France and Denmark, driven by focus on infrastructure and
increased road maintenance, etc. Performance in Eastern Europe was divided, and
characterised by sharp increases and decreases of both volumes and results.
There was large uncertainty relating to operations in Russia and Poland, while
volume increases and a strong earnings improvement were achieved in Romania and
Ukraine.
Weaker earnings in 2009 were primarily attributable to lower material sales on
the Russian market, caused by reduced budget appropriations from the government,
as well as a significant decline on the Polish market for road markings. For
2009, operating earnings from the Polish operations were minus SEK 61m,
including writedowns and restructuring costs. A new management team for the
Polish operations is in place, and the prerequisites for attaining previouse
positions are regarded as good.
In order to be able to encounter future market conditions, and with the aim of
cutting costs, Geveko has designed and begun to implement an earnings
improvement programme. In 2010, the total cost saving is expected at
approximately SEK 60m, and rising to an annual amount of around SEK 80m as from
2011. In addition, Geveko plans to carry out structural changes as part of its
new organisational structure, which are expected to be decided upon in the
second half of 2010. The Company's long-term target is an operating margin of 8
percent.
The proposed rights issue will create the financial strength and strategic
flexibility required to carry out the Company's strategic plan, as well as
utilise new business opportunities. A strong financial position will enable
Geveko to further reinforce and strengthen its position as Europe's leading
company within road markings. The capital injection will also enable Geveko to
take a proactive role in the necessary restructuring of the industry and
capitalise on further growth opportunities in Europe.
The proceeds from the rights issue of approximately SEK 160m before issue costs
will strengthen the Company's financial position by reducing its net debt,
creating financial flexibility for the future. The rights issue will strengthen
the balance sheet so that the net debt ratio[1], all other factors being equal,
pro forma 31 December 2009, would have amounted to 3.1x. This, together with the
Company's earnings improvement programme and the new organisational structure,
is expected to ensure that Geveko's position remains strong. Against this
background and the planned development of operations in accordance with the
Company's strategy, the Board of Directors of Geveko has proposed, subject to
approval by the Extra General Meeting, to implement a rights issue with
preferential rights for the Company's shareholders.
Terms of the rights issue
Each owner of A-shares and B-shares shall have preferential rights to subscribe
for new shares of the same type in proportion to the number of shares the holder
previously held (primary preferential rights). Shares which are not subscribed
for with primary preferential rights shall be offered to all shareholders for
subscription (subsidiary preferential rights). If shares thus offered are not
sufficient for subscription with subsidiary preferential rights, the shares
shall be allocated between the subscribers in proportion to the number of shares
they previously held and where this is not possible, by drawing of lots. When
selling subscription rights, both the primary and the subsidiary preferential
rights are transferred to the new holder of the subscription right.
In the event that not all shares are subscribed for with primary or subsidiary
preferential rights, other parties who have registered interest will have the
opportunity to subscribe for shares without preferential rights. Lastly,
allocation will be allotted underwriters in proportion to their respective
underwriting undertaking.
The record date at Euroclear Sweden AB (previously VPC) for entitlement to
participate in the rights issue with preferential rights is 7 April 2010. The
subscription period will be from 12 April up to and including 28 April 2010, or
until a later date if so decided by the Board.
A number of major shareholders in Geveko, Gunnar and Märtha Bergendahl's
Foundation, the Bergendala Foundation and Johan Rapp (with family and company),
collectively representing approximately 17.1 percent of the total number of
shares and 48.3 percent of the total number of votes, have committed to
subscribe for shares to their pro rata shares of the rights issue, as well as
have committed to subscribe for additional shares corresponding to approximately
20.0 percent of the total number of shares in the rights issue. In addition,
Gunnar and Märtha Bergendahl's Foundation and the Bergendala Foundation have
committed to acquire and utilise all A-share subscription rights that the
shareholders do not wish to utilise in the issue and instead want to sell. They
have further committed to subscribe to subsequent unutilised A-share
subscription rights, collectively this undertaking represent approximately 5.4
percent of the total number of shares in the rights issue.
In addition to the aforementioned shareholders, an institutional shareholder,
Länsförsäkringar Fonder, representing approximately 3.5 percent of the total
number of shares and 1.4 percent of the total number of votes, has announced
that it takes a positive view of the issue, and has expressed its intention to
subscribe for its respective pro rata number of shares of the issue (i.e. "soft
commitments").
Moreover, an additional number of external parties, Prior & Nilsson Fond, Färna
Invest AB, Investment AB Öresund and LMK Ventures AB, have committed to
subscribe for additional shares equivalent to an underwriting of approximately
54.0 percent of the total number of shares in the rights issue.
Consequently, in total, the aforementioned shareholders and external parties
have committed to subscribe for, or underwrite to subscribe for, shares
equivalent to 100 percent of the issue.
Together, existing shareholders representing more than 50.0 percent of the total
votes of the Company have a positive view regarding the issue and have
expressed that they intend to vote in favour of the rights issue at the
Extraordinary General Meeting.
The rights issue is subject to approval by the Extraordinary General Meeting to
be held on 31 March 2010 at 10.00 a.m. CET at Hotel Riverton in Gothenburg. As a
consequence of the rights issue, the Company's Board of Directors has decided to
put forward an additional proposal at the Extraordinary General Meeting,
including amendments to the articles of association and adjustment of the share
capital. Notice of the Extraordinary General Meeting will be published through a
separate press release and will be published on 1 March 2010 in Svenska
Dagbladet and the Official Swedish Gazette (Post- och Inrikes Tidningar, PoIT),
as well as being available at www.geveko.se
Pro forma financial effects of the rights issue
| | |
Balance sheet | | |
-------------------------+----------------+-------------------+-----------------
| | New issue and|
| Actual| repayment of| Adjusted
SEK million |31 December 2009| overdraft|31 December 2009
| | facility[2]|
| | |
-------------------------+----------------+-------------------+-----------------
Fixed assets | 577| | 577
-------------------------+----------------+-------------------+-----------------
Current assets excl. | 466| | 466
liquid funds | | |
-------------------------+----------------+-------------------+-----------------
Liquid funds | 46| | 46
-------------------------+----------------+-------------------+-----------------
Total assets | 1,089| | 1,089
-------------------------+----------------+-------------------+-----------------
Shareholder's equity | 326| +160| 486
-------------------------+----------------+-------------------+-----------------
Long-term | | |
interest-bearing | 129| | 129
liabilities including | | |
pension commitments | | |
-------------------------+----------------+-------------------+-----------------
Short-term | | |
interest-bearing | 364| -160| 204
liabilities | | |
-------------------------+----------------+-------------------+-----------------
Other long-term | 26| | 26
liabilities | | |
-------------------------+----------------+-------------------+-----------------
Other current | 244| | 244
liabilities | | |
-------------------------+----------------+-------------------+-----------------
Total equity and | 1,089| | 1,089
liabilities | | |
-------------------------+----------------+-------------------+-----------------
Interest-bearing net | 412| -160| 252
debt[3] | | |
-------------------------+----------------+-------------------+-----------------
Net debt ratio[4], times| 5.1| | 3.1
| | |
-------------------------+----------------+-------------------+-----------------
Equity ratio[5] | 30.0%| | 44.6%
| | |
Indicative timetable for the rights issue
29 March 2010 Announcement of final terms, including subscription
price
31 March 2010 Extraordinary General Meeting decides on the rights
issue resolved by the Board of Directors
1 April 2010 First day of trading in the shares, excluding right
to participate in the rights issue
7 April 2010 Record date for the rights issue, i.e. shareholders
that are registered in the company's share register
as of this date will receive subscription rights for
the participation in the rights issue
7 April 2010 Estimated date for publication of the prospectus
12 April - 23 April 2010 Trading in subscription rights
12 April - 28 April 2010 Subscription period
Financial and legal advisers
Handelsbanken Capital Markets is acting as financial adviser to Geveko and Lead
Manager for the rights issue. Vinge is legal adviser to Geveko.
For further information, please contact:
Hans Ljungkvist, Managing Director and Group CEO
Tel. +46 (0) 31 17 29 45
Mobile: +46 (0) 705 37 11 10
E-mail: hans.ljungkvist(at)geveko.se
AB Geveko (publ)
SE-403 13 Gothenburg, Sweden
Corporate identity no. 556024-6844
Tel. +46 (0) 31 172 945
www.geveko.se
The information above includes that which AB Geveko (publ) is required to
publish under the Swedish Securities Market Act. The information was submitted
for publication on 25 February 2010 at 14.00 CET.
IMPORTANT INFORMATION
This press release does not contain and does not constitute an offer to
subscribe for shares in AB Geveko ("Geveko"). A prospectus regarding the new
share issue that is presented in this press release will be drawn up and
submitted to the Swedish Financial Supervisory Authority (Sw.
Finansinspektionen). When the Swedish Financial Supervisory Authority has
approved and registered the prospectus, it will be disclosed and published on,
inter alia, Geveko's website.
Distribution of this press release may, in certain jurisdictions, be subject to
legal restrictions. This press release does not contain and does not constitute
an offer to acquire, sell, subscribe for or in any other way trade in shares,
subscription rights or other securities in Geveko in any jurisdiction.
Information in this press release must not be disclosed, published or
distributed, either directly or indirectly and either as a whole or in part, in
or to the United States of America, Canada, Australia, Japan or Hong Kong, or
any other country where such measure is wholly or partly subject to legal
restrictions, or where such measure would wholly or partly result in
requirements for further prospectuses, other offer documentation, registration
or other measures in addition to those required by Swedish law. The subscription
rights, the shares that have been subscribed for and paid for (Sw. BTA) and the
new shares have not been registered and will not be registered pursuant to the
US Securities Act of 1933, as amended, and must not be offered or sold in the
United States of America without such registration or an appropriate exemption
from such registration.
In conjunction with the new share issue, Handelsbanken Capital Markets ("Lead
Manager") is acting exclusively on behalf of Geveko and no other party. The Lead
Manager will not regard any other person (regardless of whether the person in
question is a recipient of this press release) as its client in relation to the
new share issue and will not be responsible to any party other than Geveko for
providing the protection afforded to its clients or for advisory services in
conjunction with the new share issue and/or any other matter referred to herein.
No commitment or guarantee, explicit or implied, is provided by the Lead Manager
as regards accuracy, completeness or verification of information in this press
release, and the content of this press release neither constitutes nor should be
relied upon as an undertaking or a commitment by the Lead Manager in this
respect, either historically or as regards the future. Accordingly, the Lead
Manager hereby disclaims to the greatest possible extent under applicable laws
all liability, regardless of whether such liability is based on the law of
torts, contract law or other grounds, that the Lead Manager could otherwise hold
regarding the information provided in this press release or otherwise.
This press release contains "forward-looking statements", which are statements
relating to future, not past, events. In this context, forward-looking
statements often relate to Geveko's expectations regarding future events and
financial results. By definition, forward-looking statements refer to
circumstances that, to a greater or lesser extent, are uncertain, and may be
affected by many factors, including circumstances on the financial markets and
fluctuations in interest rates, exchange rates or the value of financial assets.
Such factors may result in that Geveko's actual results in the future will
deviate materially from what is expressed in the forward-looking statements.
Geveko does not undertake to update its statements relating to future events.
--------------------------------------------------------------------------------
[1] Net debt ratio is defined as interest-bearing net debt/EBITDA plus interest
income
[2] Before transaction costs for the preferential rights issue
[3] Interest-bearing net debt is defined as interest-bearing debts minus
interest-bearing assets including liquid funds and listed equities
[4] Net debt ratio is defined as interest-bearing net debt/EBITDA plus interest
income
[5] Equity ratio defined as reported equity as a percentage of total assets
[HUG#1389264]
Press release (PDF): http://hugin.info/1075/R/1389264/347455.pdf
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