NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO
In order handle the unfavorable external factors that have affected
The Board of Directors of
The Rights Issue in brief
- The purpose of the Rights Issue is to ensure continued successful development in accordance with DistIT’s strategy and to provide sufficient resources for payment of the dividend resolved at the annual general meeting held on
April 28, 2022 and to fulfill commitments under the terms of the Company’s outstanding bonds. - Those who on the record date
March 24, 2023 , are registered as shareholders inDistIT and are eligible to participate in the Rights Issue will receive one (1) subscription right for every existing share. One (1) subscription right will carry an entitlement to subscribe for one (1) new share, i.e., a subscription ratio of 1:1. - The subscription period will run from and including
March 28, 2023 up to and includingApril 11, 2023 . The Board of Directors has the right to extend the subscription period and the time for payment, which, if applicable, will be announced by the Company via press release no later thanApril 11, 2023 . - The subscription price has been set to
SEK 7.00 per share which corresponds to a discount of approximately 61.9 percent to the theoretical ex-rights price, based on the closing price onFebruary 21, 2023 . - The subscription rights will be traded on Nasdaq Stockholm during the period
March 28, 2023 –April 6, 2023 . - Assuming that the Rights Issue is fully subscribed, the Company will receive issue proceeds of approximately
SEK 98.3 million before deduction of issue costs. - The Rights Issue comprises a maximum of 14,040,466 shares and will, if fully subscribed, increase DistITs share capital by
SEK 28,080,932 from the currentSEK 28,080,932 toSEK 56,161,864 . After the Rights issue, the number of shares inDistIT will amount to not more than 28,080,932 shares. - Shareholders who do not participate in the Rights Issue will have their ownership diluted by up to 50 percent, but will have the possibility to compensate themselves for the dilution by selling their subscription rights.
- Existing shareholders,
Athanase Industrial Partners ,Redstone Investment Group SA ,Ribbskottet AB ,Måns Flodberg , as well as the Company’s CEO,Robert Rosenzweig , have undertaken to subscribe for their respective pro rata share of the newly issued shares, representing approximately 50.4 percent of the Rights Issue and corresponding to approximatelySEK 49.6 million . Athanase Industrial Partners has undertaken to guarantee approximatelySEK 48.7 million , corresponding to approximately 49.6 percent of the Rights Issue, free of charge. Consequently, the Rights Issue is secured in its entirety.- The Board of Directors’ resolution on the Rights Issue is subject to approval by the EGM, to be held on
March 21, 2023 .
The complete terms for the rights issue and information regarding
DistIT’s CEO
Background and rationale
- The past year has been characterized by a challenging business climate, including the aftermath of Covid, rising inflation and interest rates, and uncertainty among customers and consumers as a result of
Russia 's invasion ofUkraine . Overall, revenue and margins have not corresponded to the Company's set goals. As a result, there has been a breach of covenants under the T&Cs of the Company’s bonds. Furthermore, a need for additional capital has arisen regarding the resolved dividend, the earn-out related toEFUEL and the Company’s continued development. Therefore, the management and the board of directors, together with the Company's major stakeholders, have carried out valuable work to reach a solution that strengthensDistIT in the long term.
The solution has been jointly developed and gives the Company financial room to continue to develop and grow. The Rights Issue of approximately
Several of DistIT’s stakeholders have accepted amended terms for relevant financial undertakings to improve the Company’s financial position.
- Measures to reduce the Company’s working capital have been taken, and cost savings are being implemented which are deemed to improve the margin profile sufficiently, even if the business climate remains challenging for a longer period. When market conditions improve, the Company assesses that the conditions are favorable for a return to sales growth and a superior better profile. This, together with the cost rationalizations implemented and gradually affecting profits, lays the foundation for a potentially significant improvement in profitability in the coming years.
In order to ensure continued successful development in accordance with
Assuming that the Rights Issue is fully subscribed,
- Payment of dividends to shareholders, resolved by the Annual General Meeting on
April 28, 2022 , in the approximate total amount ofSEK 28.1 million (approximately 35.5 percent). - General corporate purposes, including product development (approximately 64.5 percent).
Terms of the Rights Issue
The Board of Directors’ resolution on the Rights Issue is subject to approval by the EGM, to be held on
The record date for the right to participate in the Rights Issue is
In connection with the Rights Issue, the Company will undertake not to issue additional shares for a period of six months after the settlement of the Rights Issue, without the prior written consent of
The Board of Directors has resolved to postpone the publication of the Company’s interim report for the period January –
The Annual General Meeting held on
In the event that not all shares are subscribed for under subscription rights, the Board of Directors shall, within the maximum amount of the Rights Issue, resolve on allotment of shares without subscription rights. Allotment will then take place in the following order of priority: firstly, allotment shall be made to those who subscribed for shares with the support of subscription rights, regardless of whether the subscriber was a shareholder on the record date or not, pro rata in relation to the number of subscription rights exercised for subscription and, to the extent that this cannot be done, by drawing lots; secondarily, allotment shall be made to others who have signed up for subscription without subscription rights. In the event that they cannot receive full allotment, allotment shall be made pro rata in proportion to the number of shares subscribed for by each and, to the extent that this cannot be done, by drawing lots; and in the third and final stage, any remaining shares shall be allotted to the parties who have guaranteed the Rights Issue, in relation to the guarantee commitments made and, to the extent that this cannot be done, by drawing lots.
Subscription and guarantee commitments
The Rights Issue is fully secured through subscription and guarantee commitments.
Existing shareholders,
The subscription and guarantee commitments are provided free of charge. The subscription and guarantee commitments are not secured by bank guarantee, escrow funds, pledging or similar arrangements.
Preliminary timetable for the Rights Issue
The below timetable for the Rights Issue is preliminary and may be adjusted.
Last day of trading including the right to receive subscription rights | |
First day of trading without the right to receive subscription rights | |
Publication of the prospectus | |
Record date for participation in the Rights Issue with preferential rights | |
Trading in subscription rights | |
Subscription period | |
Announcement of preliminary outcome of the Rights Issue | |
Announcement of final outcome of the Rights Issue |
Amendment agreement regarding the earn-out consideration relating to the acquisition of
In connection with the Rights Issue, the Company has entered into an amendment agreement regarding the payment of the potential earn-out consideration payable to the seller of
Senior Unsecured Callable Floating Rate Bonds due 2025 (the ”Bonds”)
As there has been a breach of the covenants under the T&Cs of the bonds in that the Company does not maintain a ratio between net debt and EBITDA greater than 4.0x. In accordance with the T&Cs, the Company has 60 calendar days from
In connection with the Rights Issue, the Company will also instigate a written procedure with a view to amending certain aspects of the T&Cs and to obtain certain waivers and consents from the holders of the Bonds. More particularly, in connection with the written procedure the Company is looking to achieve the following in relation to the Bonds:
- Obtain the waivers necessary for the Company’s deferring the remaining part of the earn-out consideration due to the seller of
EFUEL ,Redstone Investment Group SA and to the issuance of the promissory note of approximatelySEK 12.2 million , in each case as described in more detail above; and - Obtain consent from the holders of the Bonds to the proceeds of the Rights Issue being added to EBITDA in determining whether the payment of the dividend declared at the annual general meeting in 2022 is permitted under the T&Cs.
Adoption of the Company’s proposals requires that holders of 2/3 of Bonds represented in the written procedure vote in favor of the proposals. A quorum is constituted by at least 20 percent of the total outstanding nominal amount of the Bond providing replies in the written procedure.
The Company has secured voting undertakings from holders of Bonds representing
Advisors
Important information
This press release and the information herein is not for publication, release or distribution, in whole or in part, directly or indirectly, in or into
The press release is for informational purposes only and does not constitute an offer to sell or issue, or the solicitation of an offer to buy or acquire, or subscribe for, any of the securities mentioned herein (collectively, the “Securities”) or any other financial instruments in
The Securities mentioned in this press release have not been registered and will not be registered under any applicable securities law in
None of the Securities have been or will be registered under the United States Securities Act of 1933, as amended (the “Securities Act”), or the securities laws of any state or other jurisdiction in
In the EEA Member States, with the exception of
In the
This announcement does not constitute an investment recommendation. The price and value of Securities and any income from them can go down as well as up and you could lose your entire investment. Past performance is not a guide to future performance. Information in this announcement cannot be relied upon as a guide to future performance.
This press release contains forward-looking statements that reflect DistIT AB’s current view of future events as well as financial and operational development.
Words such as “intend”, “assess”, “expect”, “may”, “plan”, “estimate” and other expressions involving indications or predictions regarding future development or trends, not based on historical facts, identify forward-looking statements and reflect DistIT AB’s beliefs and expectations and involve a number of risks, uncertainties and assumptions which could cause actual events and performance to differ materially from any expected future events or performance expressed or implied by the forward-looking statement. The information contained in this press release is subject to change without notice and, except as required by applicable law,
Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the shares in the Company have been subject to a product approval process, which has determined that such shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market Assessment”).
Notwithstanding the Target Market Assessment, Distributors should note that: the price of the shares in the Company may decline and investors could lose all or part of their investment; the shares in the Company offer no guaranteed income and no capital protection; and an investment in the shares in the Company is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Rights Issue.
For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the shares in the Company. Each distributor is responsible for undertaking its own target market assessment in respect of the shares in the Company and determining appropriate distribution channels.
The English text is an unofficial translation of the original Swedish text. In case of any discrepancies between the Swedish text and the English translation, the Swedish text shall prevail.
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