STOCKHOLM, Sweden, June 1, 2005 (PRIMEZONE) -- New Wave Group:
The acquisition: Yesterday evening New Wave Group entered into a share transfer agreement with Royal Scandinavia A/S in relation to an acquisition of 51% of the shares in Orrefors Kosta Boda Holding AB with subsidiaries. Furthermore Royal Scandinavia A/S has given New Wave Group an option, which can be exercised during the period from 1 June 2005 inclusive until 31 December 2007, inclusive. New Wave Group has also given Royal Scandinavia an option which gives Royal Scandinavia a right to, during January 2008, demand that New Wave Group acquire the remaining 49% of the shares in Orrefors Kosta Boda Holding AB.
The valuation of all shares in Orrefors Kosta Boda Holding AB, on a free from debt basis, is approximately 360 MSEK.
The purchase sum for the initial acquisition shall be equivalent to on the shares assignable part of the Orrefors Kosta Boda group of companies' shareholders equity on 31 May 2005, calculated and adjusted in accordance with certain agreed models of calculation. According to preliminary calculations the purchase sum for 51% of the shares Orrefors Kosta Boda Holding AB will be approximately 30 MSEK. New Wave Group will today, i.e. 1 June 2005, get access to the shares.
If the option to buy the remaining 49% of the shares in Orrefors Kosta Boda Holding AB is exercised by New Wave Group the purchase sum will be equivalent to 49% of the Orrefors Kosta Boda group of companies' shareholders equity as per 31 May 2005, with certain agreed adjustments, plus an extra 5% per year from 1 June 2005 until the date the shares are accessed (which will be ten days after the option is exercised).
If instead the option to sell the remaining 49% of the shares in Orrefors Kosta Boda Holding AB is exercised by Royal Scandinavia A/S, the size of the purchase sum will instead be calculated on the Orrefors Kosta Boda group of companies' result during 2006 and 2007. If the Orrefors Kosta Boda group of companies' result during 2006 and 2007 in average is less than 10% of the Orrefors Kosta Boda group of companies' shareholders equity as per 31 May 2005, after certain agreed adjustments have been made, the purchase sum will amount to 1 MSEK. If the result after tax during 2006 and 2007 in average is higher than an amount corresponding to 10% of the Orrefors Kosta Boda group of companies' shareholders equity, after certain agreed adjustments, the purchase sum will be an amount equivalent to 24.5% of the Orrefors Kosta Boda group of companies' shareholders equity as per 31 May 2005, with certain agreed adjustments.
Royal Scandinavia A/S has guaranteed that the Orrefors Kosta Boda group of companies will not present a negative result during the period 1 June 2005 -- 31 December 2005, which means that New Wave Group will be reimbursed for an eventual loss during the said period of time. The aquisition will be consolidated result wise into the New Wave Group of companies from 1 June 2005, inclusive.
Financing: Up until any party exercise's its option in accordance with the above (i.e. during the period of time in which the Orrefors Kosta Boda group of companies is owned jointly) the Orrefors Kosta Boda group of companies will be financed through (1) shareholders equity, loans from Royal Scandinavia and New Wave Group (75 MSEK each) and (3) bank loans.
Effect on the result: New Wave Group believes that the acquisition during the existing year will have a small negative effect on the result. Thereafter the goal is that the Orrefors Kosta Boda group of companies together with the new businesses that New Wave Group plan to establish in connection with the acquisition, see below, shall give a small positive effect on the result for 2006 and that this positive effect on the result shall grow for each year thereafter. The goal is to no later than 2010 reach a business margin of at least 10%.
Management: The board of directors of Orrefors Kosta Boda Holding will consist of six directors, elected at shareholders' meeting, of which New Wave Group elect four and Royal Scandinavia A/S two. One of New Wave Group's representatives will be the chairman of the board and will be in possession of the casting vote.
New businesses: Several new businesses related to the Orrefors Kosta Boda group of companies and its trademarks will be established by New Wave Group in companies independent from the Orrefors Kosta Boda group of companies. New Wave Group will introduce a wide assortment of metal products for kitchen and presents under the trademark ORREFORS SMIDE. Examples of such products are pots, pans and candlesticks. Moreover, New Wave Group will launch a wide assortment of textiles, such as table-cloths, runners and towels under the trademark BODA LINNEWAFVERI. Preliminary these two businesses will be established in the old Sandvik's glassworks.
"Glasriket" in Smaland, Sweden, today has approx. one million visitors each year. Depending on the development New Wave Group will establish 3-8 outlets for sales of products sold under other trademarks owned by the New Wave group of companies. For most of these planned outlets it already exist premises which today are not used.
Distribution/Synergies: New Wave Group believes that the acquisition will give the Orrefors Kosta Boda group of companies a relative large increase in sales within the promotional market. Orrefors Kosta Boda group of companies has already today a sales volume of 60 MSEK on the Swedish promotional market, but outside Sweden the promotional market has almost not been worked at all. Considering this, New Wave Group count on a large future growth in the sales of the Orrefors Kosta Boda group of companies' products.
On certain markets New wave Group believe that the Orrefors Kosta Boda group of companies should be able to share sales staff with Sagaform which will result in a better penetration of the market, and this at lower costs.
The Orrefors Kosta Boda group of companies' annual sales in USA is approx. 21 MUSD. This gives New Wave Group a way in on the American market which will be utilised to, together with or through the Orrefors Kosta Boda group of companies, launch Sagaform in USA on both the retail market and the promotional market, within the next 6 -- 24 months.
New Wave Group also hope to, within 1 -- 2 years, be able to achieve considerable cost savings within the Orrefors Kosta Boda group of companies in relation to inter alia buying, logistics and marketing.
Cost savings: Notwithstanding the aforementioned investments and offensive strategy New Wave Group believes that it will probably be necessary with further improvements of efficiency and rationalizations in the Orrefors Kosta Boda group of companies, especially within sales/marketing and administration, to be able to reach an acceptable profit level. New Wave Group hopes that the already made reductions of employees within production, with inter alia the closing of the glassworks of Sandvik, shall be sufficient. It shall however be noted that the Orrefors Kosta Boda group of companies during recent years have had large problems with profitability with losses before tax of approx. 100 MSEK during the last four years, and that further reductions of employees can not be ruled out, if a prompt improvement can not be achieved.
Further enquiries: Enquiries in relation to the acquisition will be answered by New Wave Group's management at a press conference today at 3.00 PM in Orrefors (the large conference room within the exhibition building on the works area, and also at a presentation in Stockholm tomorrow 2 June 2005 at 9.00 AM in Salenhuset (Olympia), Norrlandsgatan 15, Stockholm.
Orrefors 1 June 2005
New Wave Group AB (publ) Goran Harstedt dCEO
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