The board of directors of HQ has decided on a rights issue of up to SEK 1,000 million. The rights issue is entirely secured by existing shareholders

The board of directors of HQ has decided on a rights issue of up to SEK
1,000 million. The rights issue is entirely secured by existing
shareholders


  · The board of HQ AB publ (”HQ” or the ”Company”) has decided on a new
rights issue with preferential rights for existing shareholders of a
maximum of SEK 1,000 million and a minimum of SEK 900 million (the ”
Rights Issue”). 
  · The Rights Issue is being conducted in order to make possible a
buyback of HQ Fonder Sverige AB (”HQ Fonder”) and to assure financial
stability. 
  · The Rights Issue is entirely secured through separate subscription
obligations and guarantee undertakings by existing shareholders.
Shareholders representing 41 percent of issued shares in HQ have
undertaken in advance to subscribe to their respective pro rata portion
of the Rights Issue. In addition the same shareholders have undertaken
to together guarantee an additional SEK 590 million. These shareholders
include Investment AB Öresund (”Öresund”), Mats Qviberg (including
family) and Sten Dybeck (including family).   
  · The board will announce an extraordinary general meeting to seek
endorsement of the Rights Issue and associated decisions as well as
approval in accordance with NASDAQ OMX Stockholm AB's regulations for
issuers regarding both the transfer of, and the board's decision in
principle to buy back HQ Fonder, and the issue of preference shares in
HQ Bank AB (”HQ Bank”) directed to Öresund. The extraordinary general
meeting will be held on September 28, 2010. 
  · In good time before the extraordinary general meeting, HQ's
nomination committee will announce its proposals regarding the election
of a board and auditors. The work of the nomination committee with
regard to candidates has already been completed in principle, but the
committee wishes to await the decision that the Swedish Financial
Supervisory Authority intends to issue.

 

Background and reasons
On May 26, 2010, HQ announced its decision to implement an accelerated
closure, in an orderly manner, of its proprietary trading, the so-called
trading operations (the ”Trading Operations”), as a consequence of
unfavourable market conditions and an excessive level of risk in the
Trading Operations. Considering the actual and estimated losses in
conjunction with the closure, which led to a need to strengthen HQ's
capital base, the board proposed a rights issue of common stock whereby
HQ would raise approximately SEK 559 million before deductions for issue
expenses. In accordance with this proposal an extraordinary general
meeting was to be held on June 28, 2010 to decide on the rights issue
and, in accordance with the timetable at that time, it was estimated
that HQ would be able to receive the issue settlement during August.

During the period that the work of closing the Trading Operations
proceeded, and the losses were realised or could be predicted to be
realised shortly, HQ's capital need increased at a pace whereby it would
not be possible to await the planned rights issue. In order to
immediately strengthen the Company's capital base, the board of HQ
therefore decided on June 8, 2010 to sell its subsidiary HQ Fonder to
the Company's principal shareholder, Öresund. The price was SEK 850
million with a right for HQ to buy back the shares in HQ Fonder for a
price equivalent to that paid by Öresund, with an additional amount
principally corresponding to the net profit of HQ Fonder during
Öresund's time as owner of HQ Fonder (the ”Buyback Option”).

The board of HQ has taken a decision in principle to exercise the
Buyback Option immediately following completion of the Preferential
Rights Issue, but not later than November 30, 2010, given that the
forthcoming Preferential Rights Issue is completed, that the
extraordinary general meeting approves the decision in principle of the
board to exercise the Buyback Option, and that HQ's capital situation
subsequently permits a buyback.

Given the above the board of HQ has decided, on condition of endorsement
by the extraordinary general meeting of September 28, 2010, to conduct a
rights issue of common stock with preferential rights for existing
shareholders of a maximum of SEK 1,000 million and a minimum of SEK 900
million.

The intention of the Rights Issue is to finance the buyback of all
outstanding shares in HQ Fonder so that HQ is able to focus on its core
business - financial advisory services and wealth and asset management
with relatively low risk and a high proportion of recurring revenue -
and to strengthen HQ's capital base.

For additional information about the background to the Rights Issue, the
sale of HQ Fonder and advance payments by Öresund and others of the
issue proceeds in the Rights Issue, please refer to earlier press
releases dated May 26, 2010, June 8, 2010, and June 29, 2010.

HQ Fonder in brief
HQ Fonder is a leading independent Swedish fund company with operations
comprising of the management and sale of fund units in Sweden. Sales
take place through HQ Private Banking and via external distributors in
Sweden and abroad. HQ Fonder has a stable fund management organisation
with longstanding experience and good management outcomes. The fund
management is primarily focused on Swedish equities and interest-bearing
securities as well as equities on emerging markets.  

Assets under management per June 30, 2010 were SEK 29.1 billion
distributed among approximately 23,000 directly registered clients. HQ
Fonder manages a total of 25 mutual funds, of which 19 in HQ Fonder
Sverige AB, and of these are four so called exchange-traded funds. The
remaining six funds are administered by SEB Fund Services S.A. in
Luxembourg. The company has 28 employees.

HQ Fonder reported during the twelve-month period July 1, 2009 - June
30, 2010 revenues of SEK 190 million and operating profit of SEK 105
million. Shareholders equity in HQ Fonder as of June 30, 2010 was SEK
163 million.

Indicative terms for the Rights Issue
The board of HQ has decided - on condition of endorsement by the
extraordinary general meeting - on a rights issue of common stock that
will provide HQ with proceeds of a maximum of SEK 1,000 million and a
minimum of SEK 900 million. If the proceeds are less than SEK 900
million the board has the right to cancel and recall the Rights Issue.

Shareholders of HQ will have preferential rights to subscribe for the
new shares in relation to the number of existing shares they own and
with a customary issue discount. The magnitude of the increase in share
capital, the number of common shares to be issued and the subscription
price for the new shares in the Rights Issue are expected to be
announced by the board not later than two bank days before the day of
the extraordinary general meeting to be held on September 28, 2010.

On June 28, 2010, HQ received an advance payment for the Rights Issue
[1] totalling SEK 256 million, partly through the issue of preference
shares in HQ Bank to Öresund, Johan Qviberg, Anna Qviberg and Jacob
Qviberg, and partly through HQ Bank's receipt of perpetual subordinated
debentures from Mats Qviberg and Eva Qviberg.

The board's decision with regard to the Rights Issue also confers a
right for the holders of preference shares and perpetual subordinated
debentures to provide these as payment within the framework of the
Rights Issue.

If the Rights Issue is not fully subscribed through the exercise of
subscription rights, shareholders and others will be offered an
opportunity to subscribe for shares without the support of subscription
rights.

The new common stock will confer the same rights as the existing common
stock, including the right to future dividends and other distributions
decided upon or paid out subsequent to the allocation and registration
of the new common stock. 

Subscription obligations and issue guarantees
The Rights Issue is entirely secured through separate subscription
obligations and guarantee undertakings by existing shareholders.
Shareholders representing 41 percent of the issued shares in HQ have
undertaken in advance to subscribe to their respective pro rata portion
of the Rights Issue. In addition the same shareholders have undertaken
to together guarantee an additional SEK 590 million. These shareholders
include Öresund, Mats Qviberg (including family) and Sten Dybeck
(including family).

These shareholders, who together own 41 percent of the total number of
issued shares in HQ, have also undertaken to vote in favour of the
Rights Issue at the extraordinary general meeting.

The subscription undertakings and issue guarantees are associated with
customary terms and conditions for this type of transaction. Considering
its current shareholding in HQ Öresund has sought dispensation from the
compulsory bid obligation that may arise if Öresund's ownership in HQ
exceeds 30 percent of votes due to its guarantee undertaking.

Extraordinary general meeting
It is intended that the board's decision regarding the Rights Issue and
associated decisions as well as the approvals in accordance with NASDAQ
OMX Stockholm AB's regulations for issuers regarding both the sale of,
and the board's decision in principle to buy back, HQ Fonder not later
than November 30, 2010 be endorsed by the extraordinary general meeting
of September 28, 2010. In addition it is intended that the same
extraordinary general meeting endorse, in accordance with the
regulations of NASDAQ OMX Stockholm for issuers, the issue of preference
shares in HQ Bank directed to Öresund.

Shareholders together holding 41 percent of both capital and votes in
the Company have undertaken to vote in favour of the board's decision
regarding the Rights Issue etc at the extraordinary general meeting.

For formal notice of the extraordinary general meeting please refer to
separate press release.

Indicative timetable in summary

Sep 24             Final terms and conditions for the Rights Issue are
decided
Sep 27             Prospectus for the Rights Issue is published
Sep 28             Extraordinary general meeting
Sep 29              First day of trading in the HQ share excluding the
right to participate in the Rights Issue
Oct 1                Record date for the right to participate in the
Rights Issue
Oct 6 - Oct 21   Trading in subscription rights
Oct 6 - Oct 26   Subscription period
Oct 15               Interim report for third quarter published 

 

The work of the nomination committee
The nomination committee will publish its proposals regarding the
election of a board and auditors in good time before the extraordinary
general meeting. The work of the nomination committee with regard to
candidates has already been completed in principle. However, the
committee wishes to await the report that the Swedish Financial
Supervisory Authority intends to issue regarding HQ Bank, among other
things, so that the committee and candidate directors can base their
final decision on the most complete information possible. The report by
the Swedish Financial Supervisory Authority will be issued, as far as
the committee is able to ascertain, during September.

Miscellaneous
Lenner & Partners and HQ Bank Corporate Finance are financial advisors
and Setterwalls Advokatbyrå and Bergh & Co are legal advisors to HQ.

[1] See press release of June 29, 2010

For further information:
Mats Qviberg, Chairman HQ, tel: +46 (0)8 696 17 00
Stefan Dahlbo, Acting President and CEO HQ, tel: +46 (0)8 696 17 00
Mikael Nachemson, Chairman HQ Bank, tel: +46 (0)8 696 17 00

Media enquiries:
Erik Amcoff, Head of Corporate Communications HQ, tel +46 (0)730 891 761

 

HQ Bank explores, innovates and performs in order to improve wealth and
deliver financial success.
HQ Bank conducts operations within the business units Private Banking
and Investment Banking.
HQ Bank is represented in six locations in Sweden and has its head
office in Stockholm.
The parent company HQ AB is quoted on the NASDAQ OMX Stockholm AB
Swedish Mid Cap List (HQ). 

The above information is information that HQ AB (publ) is obliged to
publish in accordance with the Swedish Securities Market Act and/or the
Swedish Financial Instruments Trading Act. This information was
disclosed to the market for publication at 08.30 on August 27, 2010.

This press release may not be published or distributed, directly or
indirectly, in the USA, Canada, Japan, Hong Kong, New Zealand, South
Africa or Australia. Nothing in this press release should be interpreted
as constituting an offer to invest in or otherwise trade in shares in HQ
or other financial instruments issued by HQ. The intended new rights
issue will not be directed towards persons domiciled or resident in the
USA, Canada, Japan, Hong Kong, New Zealand, South Africa or Australia,
or in any other country where participation would require an additional
prospectus or other offer documentation, registration or other measures
in addition to those required by Swedish law, aside from applicable
exceptions. No securities in HQ will be registered pursuant to the
United States Securities Act of 1933 or any provincial law in Canada.