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Press release, 2 November 2018
The Board of Directors of Cavotec SA (“Cavotec” or the “Company”) has resolved to conduct a rights issue of SEK 204 million with pre-emptive rights for Cavotec’s shareholders.
The rights issue in brief
“Our transformation of Cavotec is progressing well. We see strong demand from our customers and are starting to see tangible results from our transformation plan A New Day, which translated into higher gross and EBIT margins in the third quarter 2018, commented Mikael Norin, CEO of Cavotec. In the beginning of October, we announced the second phase in the transformation of Cavotec, with a programme to address structural inefficiencies. The programme will focus on reducing SG&A and other inefficiencies and is targeting annual savings of approximately EUR 10 million by 2021, whereof significant run-rate savings already in 2019. Short-term the restructuring will result in one-off costs expected to amount to EUR 7 million, a majority of which will be accounted for in 2018. The rights issue gives us the full firepower needed to swiftly execute on the restructuring and also provides room for quick actions on opportunities for accelerated growth”.
“We are encouraged by the progress of the transformation of Cavotec and we remain convinced that the company due to its innovative technologies and strong customer position is in an excellent position to deliver above average returns for its shareholders in the mid to long term”, commented Henrik Blomquist, CEO of Bure Equity AB.
Stefan Widegren, Lars Hellman and Peter Brandel, founding shareholders, made the following joint statement; “It is with satisfaction we see that the management is working to strengthen Cavotec and putting the company on a path of renewed profitable growth and we fully support the steps being taken”.
Background and reasons
In the end of 2017, Cavotec developed a transformation strategy to achieve long term profitable growth. The first steps included streamlining and simplifying decision-making, creating three business divisions with clear profit and loss ownership and strengthening the top management team considerably. In addition, a transformation plan called A New Day, was launched. A New Day is progressing well with two thirds of the 50 projects completed or almost completed. Cavotec sees clear signs that the transformation is starting to take hold. Higher quality decision making as a result of the new processes has increased the cost control in the Company. This translated into higher gross and EBIT margins in the third quarter 2018.
At the beginning of October 2018, Cavotec announced the second phase in the transformation of the Company with a programme to address structural inefficiencies in the Company caused by a historically fragmented organization. The programme will focus on reducing SG&A and other inefficiencies and is targeting annual savings of approximately EUR 10 million by 2021, whereof significant run-rate savings already in 2019.
The reduction in headcount as a consequence of the restructuring is estimated to be around 100 people spread across multiple locations. In addition, the programme will include a reduction in the number of legal entities Cavotec has today. This is expected to improve the effective tax rate and result in lower statutory costs.
Short-term the restructuring will result in one-off costs expected to amount to EUR 7 million, a majority of which will be accounted for in 2018 and as such would put pressure on the Company’s current capital structure. The Board of Directors of Cavotec has therefore resolved to strengthen the Company’s balance sheet through a rights issue, also aimed at providing firepower to accelerate future growth prospects.
Terms and conditions for the rights issue
Shareholders will receive one (1) subscription right for each ordinary share held on the record date. Five (5) subscription rights will carry an entitlement to subscribe for one (1) new ordinary share. The subscription price is SEK 13.00per ordinary share which corresponds to a discount of 35.5% to the theoretical share price post separation of the subscription rights (the so-called TERP – theoretical ex-rights price) based on the closing price of Cavotec’s ordinary shares on Nasdaq Stockholm on 1November 2018 (SEK 21.60). The new ordinary shares carry full dividend rights from the first record date for dividend that follows the registration of the new ordinary shares at the Ticino Registry of Commerce.
Shareholders who choose not to participate in the rights issue may be able to compensate for the resulting dilution by selling their subscription rights.
Cavotec’s shareholders will have preferential rights to subscribe for new ordinary shares in proportion to their holdings. If all of the new ordinary shares are not subscribed for by exercise of subscription rights, the Board of Directors shall, up to the maximum amount of the rights issue, resolve on allotment of ordinary shares subscribed for without the exercise of subscription rights where in such case, allotment shall be made in the following order:
(a) Those who have subscribed for new ordinary shares by the exercise of subscription rights (irrespective of whether or not they were shareholders on the record date) pro rata in relation to the number of new ordinary shares subscribed for by exercise of subscription rights.
(b) Others who have notified the Company of their interest in subscribing for new ordinary shares without the exercise of rights, pro rata in relation to such declared interest.
(c) Those who have made an underwriting commitment regarding subscription for new ordinary shares.
Not more than 15,707,200 new ordinary shares shall be issued. Assuming full subscription, the number of ordinary shares in the Company will increase from 78,536,000 ordinary shares to 94,243,200 ordinary shares and the nominal share capital will increase from CHF 100,526,080 to CHF 120,631,296, representing an increase of 20per cent. Assuming full subscription, the proceeds amount to SEK 204million before costs related to the rights issue. For existing shareholders who do not participate in the rights issue, a dilution effect arises corresponding to 16.7per cent of the total number of ordinary shares and votes in the Company after the rights issue.
The complete terms and conditions for the rights issue, together with other information about the Company, will be presented in the prospectus that is estimated to be published on or around 6December 2018.
Subscription undertakings and underwriting commitments
The rights issue is covered by a subscription undertaking from Bure Equity AB, corresponding to 25.36 per cent of the rights issue. The remaining portion of the rights issue is underwritten by Bure Equity AB.
The Fourth Swedish National Pension Fund has expressed support for the rights issue and has the intention to subscribe to its pro rata share. The founding shareholders and Fabio Cannavale intend to subscribe fully or partially to the rights issue.
An investor acquiring or subscribing for shares in a Swiss company only listed on a regulated market in the EU, will not trigger any mandatory bid provisions when acquiring or subscribing for 30 per cent, or more, of the shares in such company.
3 December Last day of trading for Cavotec’s ordinary shares including the right to participate in the rights issue
4 December First day of trading for Cavotec’s ordinary shares excluding the right to participate in the rights issue
5 December Record date, i.e. ordinary shareholders registered in the share register on this day will receive subscription rights giving the right to participate in the rights issue
6 December Estimated date of publication of the prospectus
7-19 December Trading in subscription rights
7-21 December Subscription period
2 January Estimated date of publication of the preliminary result of the rights issue
4 January Estimated date of publication of the final result of the rights issue
The preliminary timetable above is based on that the prospectus that Cavotec needs to prepare and register with the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) (the “SFSA”) in relation to the rights issue is approved and registered with the SFSA prior to 6 December 2018. The timing for the publication of the prospectus is subject to the SFSA’s review and registration process which include uncertainty. Any changes to the timetable will be announced in accordance with applicable rules and regulations.
Financial and legal advisors
ABG Sundal Collier is acting as Sole Global Coordinator and Bookrunner in the contemplated rights issue. Vinge is acting as legal advisor in relation to Swedish law to Cavotec and Bär & Karrer SA is acting as legal advisors in relation to Swiss law.
For more information, please contact
Johan Hähnel, Investor Relations Manager | Telephone: +46 70 605 63 34 | Email: firstname.lastname@example.org
This information is information that Cavotec is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication through the agency of the contact person set out above on 2 November 2018 at 07.00 CET.
Cavotec is a leading engineering group that designs and manufactures automated connection and electrification systems for ports, airports and industrial applications worldwide. Cavotec innovative technologies ensure safe, efficient and sustainable operations. To find out more about Cavotec, visit our website at cavotec.com.
The information in this press release does not contain or constitute an offer to acquire, subscribe or otherwise trade in shares or other securities in Cavotec. No action has been taken and measures will not be taken to permit a public offering in any jurisdictions other than Sweden. Any invitation to the persons concerned to subscribe for shares in Cavotec will only been made through the prospectus that Cavotec expects to publish in December 2018.
The information in this press release may not be released, published or distributed, directly or indirectly, in or into the United States (including its territories and provinces, every state in the United States and the District of Columbia), Canada, Australia, Japan, Hong Kong, New Zealand, Singapore, South Africa or any other jurisdiction in which such action is subject to legal restrictions or would require other measures than those required by Swedish law. Actions in violation of these restrictions may constitute a violation of applicable securities laws.
No shares or other securities in Cavotec have been registered, and no shares or other securities will be registered, under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or the securities legislation of any state or other jurisdiction in the United States and no shares or other securities may be offered, sold or otherwise transferred, directly or indirectly, in or into the United States, except under an available exemption from, or in a transaction not subject to, the registration requirements under the U.S. Securities Act and in compliance with the securities legislation in the relevant state or any other jurisdiction of the United States.
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