NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO
THE UNITED STATES, AUSTRALIA, HONG KONG, JAPAN, CANADA, SINGAPORE, SOUTH AFRICA
OR NEW ZEALAND OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OF THIS PRESS
RELEASE WOULD BE UNLAWFUL.
· Fully underwritten rights issue of approximately SEK 125 million with pre
-emptive rights for existing shareholders
· Issue of new shares in Bong to Holdham with payment by set-off of claims
under convertible bonds and shareholder loans of approximately SEK 100 million
· Issue of new shares in Bong with payment by set-off of part of existing bank
loans of SEK 50 million
· Convertible bonds issue of approximately SEK 200 million directed to
institutional investors
· Agreement reached regarding long-term financing
· Extraordinary general meeting (EGM) to be held on 17 July 2013 for approval
of the issues
On 16 June 2013, the Board of Directors of Bong AB (publ) (”Bong” or the
”Company”) resolved, subject to approval by the EGM, on a fully underwritten
rights issue of approximately SEK 125 million, a set-off issue where Holdham
S.A. ("Holdham") sets off the existing convertible and shareholder loans of in
total approximately SEK 100 million for new shares in Bong, a set-off issue of
in total SEK 50 million where Bong's two largest lending banks set off part of
existing bank loans for new shares in Bong and a convertible bonds issue of up
to approximately SEK 200 million directed to institutional investors. The
proposed transactions will substantially strengthen Bong's financial position
and provide significantly improved prerequisites for a profitable business.
Background and motives
In the autumn of 2010, Bong acquired France-based Hamelin's envelope division.
The deal was financed by new bank loans, an issue of new shares to Hamelin's
holding company Holdham as well as by a shareholder loan and convertible loan
issued to Holdham. Since then, Bong has worked successfully with integration and
to achieve planned synergies in the form of lower purchasing costs, lowered
fixed costs and reduced working capital requirements. The net debt has thereby
been reduced by more than SEK 200 million, primarily through the release of
working capital and the sale of certain properties and equipment.
In addition to working on the Hamelin integration, Bong has taken comprehensive
and strong structural measures to adjust its overall capacity, improve its
competitiveness and restore profitability to a satisfactory level. Bong has also
continued to invest in the growing specialty packaging segment with its Propac
product range which includes e-commerce packaging solutions and retail gift
bags. The restructuring programs and investments in the growing specialty
packaging business over the last years have been costly and have made Bong's
financial position constrained.
In order to achieve a reasonable balance between operating profit and interest
-bearing liabilities, Bong's Board proposes to strengthen the capital base
through the measures presented in this press release. The issue proceeds will be
used for partial repayments of current bank loans, which will result in a
significantly stronger financial position for Bong. In addition, Bong has
reached an agreement regarding long-term financing with between three to five
years’ maturity. In total, these measures will provide a solid base for the work
of transforming the envelope business to a customer-oriented, highly efficient
and profitable business with strong cash flow. It will also give Bong the
possibility to continue to grow fast in the specialty packaging segment with the
Propac range.
A more detailed description of the various proposed measures is presented below.
Rights issue
· On 16 June 2013, the Board resolved, subject to approval by the EGM, on a
rights issue of approximately SEK 125 million before transaction costs.
· The Company’s existing shareholders shall have pre-emptive rights to
subscribe for new shares.
· The rights issue is fully underwritten, in part through subscription
undertakings from existing shareholders in Bong corresponding to approximately
26 per cent of the rights issue, and in part through underwriting commitments
from a consortium of Swedish and international investors corresponding to
approximately 74 per cent of the rights issue.
· Among Bong's larger shareholders, Melker Schörling AB and members of Bong's
management team have undertaken to subscribe for their entire pre-emptive parts
of the rights issue.
· The Board shall no later than on 15 July 2013 determine certain terms for
the issue, including the subscription price. The final terms will be published
in a press release.
Preliminary time table for the rights issue:
+-------------+----------------------------------------------------------------+
|12 July 2013 | |
| | · Interim report January-June 2013 made public |
+-------------+----------------------------------------------------------------+
|No later than| |
|15 July 2013 | · Announcement of the Board’s determination of the final terms|
| |of the issue |
+-------------+----------------------------------------------------------------+
|17 July 2013 | |
| | · EGM |
| | · Last day of trading in the Bong share including the right to|
| |receive subscription rights in the issue |
+-------------+----------------------------------------------------------------+
|18 July 2013 | |
| | · First day of trading in the Bong share excluding the right |
| |to receive subscription rights in the issue |
| | · Prospectus made public |
+-------------+----------------------------------------------------------------+
|22 July 2013 | |
| | · Record date for the right to participate in the issue |
+-------------+----------------------------------------------------------------+
|25 July –14 | |
|August 2013 | · Subscription period in the issue |
+-------------+----------------------------------------------------------------+
|25 July – 9 | |
|August 2013 | · Trading in subscription rights |
+-------------+----------------------------------------------------------------+
|20 August | |
|2013 | · Announcement of the outcome of the rights issue |
+-------------+----------------------------------------------------------------+
Set-off issue Holdham
· On 16 June 2013, the Board resolved, subject to approval by the EGM, on a
new share issue to Holdham, a company that the Company's Chairman, Stéphane
Hamelin, is the principal owner of. Payment for the new shares shall be made by
set-off of claims on the Company of in total approximately SEK 100 million. The
claims relate to Holdham's convertible loan of EUR 4.0 million and shareholder
loan of EUR 7.5 million, which were issued in connection with Bong's acquisition
of Hamelin's envelope division in 2010.
· The Board shall no later than on 15 July 2013 determine certain terms for
the issue, including the subscription price (i.e., the amount to be paid for
every new share by way of set-off). The subscription price shall thereby be
determined at the expected theoretical price per share ex-rights (TERP) for
participation in the rights issue. The subscription price is thus intended to be
determined without discount. The final terms will be published in a press
release.
· Holdham has applied and been granted the Swedish Securities Council’s
exemption from the mandatory bid requirement that could arise in connection with
Holdham’s subscription of shares in both the set-off issue and the rights issue.
Following such subscription, Holdham may reach a holding of shares and votes in
the Company of up to approximately 40 per cent, compared to the current
approximately 25 per cent.
Set-off issue lending banks
· On 16 June 2013, the Board resolved, subject to approval by the EGM, on a
new share issue to Bong’s two largest lending banks. Payment for the new shares
shall be made by set-off of claims on the Company amounting to in total SEK 50
million.
· The Board shall no later than on 15 July 2013 determine certain terms for
the issue, including the subscription price, which will be determined in the
same way as in the set-off issue to Holdham. The final terms will be published
in a press release.
Convertible bonds issue
· On 16 June 2013, the Board resolved, subject to approval by the EGM, to
raise a convertible loan of up to SEK 200 million by issuing convertible bonds.
· The right to subscribe for the convertible bonds shall, with deviation from
the shareholders' pre-emptive rights, only fall upon a limited number of Swedish
and international institutional and qualified investors.
· The loan runs over a period of five years with an expected maturity in June
2018, to the extent that it has not already been converted or repaid.
· The Board shall no later than on 15 July 2013 determine certain terms for
the issue, including loan amount, interest rate and conversion price. The final
terms will be published in a press release.
Agreement on new loans with existing banks
· Bong has reached an agreement on long-term financing. The agreement refers
to two facilities; the first amounts to SEK 350 million and runs over a period
of three years with certain instalments and the second amounts to SEK 140
million and runs over a period of five years without instalments.
Unaudited pro forma report – estimated effects of the financial measures
The various measures described above are expected to increase equity by a total
of SEK 309 million, of which SEK 275 million is raised through the various share
issues. In addition, part of the convertible bonds, approximately SEK 34
million, corresponding to the option value of the convertible bonds, is expected
to be classified as equity. The Company's interest-bearing debt is expected to
decrease by a total of SEK 309 million, whereby a reasonable balance between
indebtedness and operating profit is achieved. The equity-to-assets ratio
increases pro forma from 14 per cent to 29 per cent.
An additional positive effect of the measures is that the borrowings become more
diversified, both with respect to lenders and maturity structure.
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1) The pro forma financial information is based on a hypothetical situation
based on Bong’s calculated effects of the measures on the Company's financial
position as of 31 March 2013. The pro forma presentation does not include any
transaction costs.
2) Refers to the expected value of the option component of the convertible bond
based on Bong's assessment of current market conditions and based on the offered
terms for the convertible bond.
Extraordinary general meeting, etc.
· The Board's resolutions pursuant to the above are submitted to the EGM for
approval on 17 July 2013. The EGM is also proposed to resolve upon, inter alia,
amendments of the articles of association and a reduction of the share capital.
Furthermore, the Board proposes that the EGM authorises the Board to resolve on
an additional issue in order to accommodate such shareholders of Bong that
subscribe for shares in the rights issue and, in addition thereto, applies for
subscription without subscription rights, without being allotted any such
shares. Notice of the EGM will be published in a separate press release today.
· The proposals to the EGM are mutually conditional upon one another and shall
be dealt with as one resolution at the EGM. A prerequisite for the issues to be
submitted for approval at the EGM, is that full bank loan documentation has been
signed prior to the EGM and that, under such documentation, except for
conditions relating to the completion of the issues, there are no other
conditions outstanding for the payment of the bank loans except for such
conditions whose fulfilment, in practice, are within Bong’s own control.
· Owners of shares representing 74 per cent of the votes in the Company have
undertaken to approve the Board's resolutions at the EGM.
· Complete terms and conditions for the rights issue and other information
about Bong will be provided in the prospectus, which is to be published before
the subscription period in the rights issue commences.
· Holdham as well as the two lending banks have undertaken not to sell any
shares in Bong, which they have obtained through the set-off issues, for at
least three months from the completion of the measures described in this press
release (lock-up).
Financial and legal advisers
ABG Sundal Collier AB is financial adviser and Advokatfirman Vinge is legal
advisor in connection with the proposed transactions.
Conference call on Tuesday, 18 June 2013, 10:00 am (CET)
In light of the proposed transactions, a conference call will be held on Tuesday
18 June at 10:00 am (CET) where Bong's President and CEO Anders Davidsson will
present the background and facts of the proposed transactions as well as
answering questions. The conference call will be recorded and made available at
Bong's website, www.bong.com, following the conference call.
To participate in the conference call, dial:
+46 (0)8 5052 0110
For further information, please contact Anders Davidsson, President and CEO of
Bong AB. Tel. (switchboard) +46 (0) 44 20 70 00, (direct) +46 (0) 44 20 70 80,
(mobile) +46 (0) 70 545 70 80.
About Bong
Bong is a leading provider of specialised packaging and envelope products in
Europe, offering solutions for distribution and packaging of information,
advertising materials and lightweight goods. Important growth areas in the Group
are the Propac packaging concept and Russia. The Group has annual sales of
approximately SEK 3 billion and about 2,100 employees in 15 countries. Bong has
strong market positions in the majority of key markets in Europe, and the Group
sees interesting possibilities for continued expansion and development. Bong is
a public limited company whose stock is quoted on the NASDAQ OMX Stockholm
(Small Cap).
Bong AB (publ) discloses the information in this press release pursuant to the
Securities Markets Act. The information was provided for public release on 17
June 2013 at 08:00 am CET.
Important information
This press release does not constitute an offer of any securities of Bong.
Neither the rights issue with pre-emptive rights for existing shareholders nor
any other transaction described in this press release is directed to
shareholders or other investors domiciled in the United States, Australia, Hong
Kong, Japan, Canada, Singapore, South Africa or New Zealand, or in any other
country where participation in the rights issue or any other such transaction
would require additional prospectuses, registration or other measures other than
those pursuant to Swedish law or would conflict with regulations in such
country. No shares, interim shares, subscription rights, convertibles or other
securities issued by Bong have been or will be registered in accordance with the
United States Securities Act of 1933, or in accordance with any securities
legislation in any state of the United States or any province in Canada.
Accordingly, no new shares, interim shares, subscription rights, convertibles or
other securities issued by Bong may be transferred or offered for sale in the
United States or Canada, other than in such exceptional cases that do not
require registration. The rights issue with pre-emptive rights for existing
shareholders and the other transactions described in this press release are
directed only at (i) persons who are outside the United Kingdom; (ii) investment
professionals falling within Article 19(5) of the Financial Services and Markets
Act 2000 (Financial Promotion) Order 2005 (as amended); or (iii) persons to whom
it can otherwise lawfully be directed at.
Bong strengthens its financial position; launches fully underwritten rights issue, set-off issues and convertible bonds issue
| Source: Bong AB
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