Back
ReleasesSolteq Plc Stock Exchange Release 22.6.2015 at 12.30 pm
Solteq Plc (Solteq) has on 17 June 2015 published an agreement pursuant to which Solteq will purchase the entire share capital and capital loans of Descom Group Oy (Descom Group or Descom) (Acquisition). Descom Data Center Solutions business will not be included in the Acquisition. The Acquisition is subject to, among other things, Solteq having obtained sufficient financing for the Acquisition and the repayment of the existing financial indebtedness of Descom’s group and of Solteq.
The aim is to complete the Acquisition by 31 August 2015.
Solteq plans to obtain the aforesaid financing by issuing an unsecured bond in the estimated amount of MEUR 25-30 to a limited number of Finnish and Nordic institutional and other professional investors. The maturity of the bond would be 5 years. Solteq has planned to apply for the bond to be admitted to the Nasdaq OMX Helsinki Stock Exchange. Danske Bank Plc will act as lead arranger in the potential bond issue.
Estimate of the amounts to the financed by the contemplated bond
The proceeds of the contemplated bond are purported to be used to finance the cash contribution payable as part of the purchase price for the shares and the purchase price of the capital loans of Descom and to refinance of the existing bank loans and other financial indebtedness of the groups of Solteq and Descom. The part of the financing which is not used for the aforesaid purposes is intended to be used for general corporate purposes of Solteq. With respect to the Acquisition and the intended bond issue referred to above as well as to the marketing of the bond, Solteq has estimated that aggregated amounts to be financed by the contemplated bond as at 30 June 2015 would be as follows:
- purchase of capital loans of Descom (including the interest accrued thereon) of 11,9 EURm
- financial indebtedness of the groups of Descom and Solteq to be refinanced of 6,6 EURm
- estimated cash consideration payable as part of the purchase price for the shares in Descom 6,5 EURm
- Cash costs related to the Acquisition and bond issue and transfer tax 1,4 EURm
Other financial liabilities of Solteq and Descom group are estimated to amount to 4,0 EURm in the aggregate as at 30 June 2015.
The estimated amounts of Descom’s capital loans (including the interest accrued thereon), the financial indebtedness and other financial liabilities as at 30 June 2015 are based on the information received by Solteq in connection with the acquisition process. Additionally, it should be noted that the final purchase price of Descom to be paid by Solteq will be determined based on Descom’s balance sheet as at 30 June 2015. The cash consideration payable as partial purchase price as presented above is based on the estimate by Solteq’s management and information received from Descom in connection with the acquisitionprocess. Considering that Solteq has had only limited access to the accounting records and other internal documentation of Descom in connection with the acquisition process, the estimates set out above may include material uncertainties and due to this, the estimates may differ materially from the actual amounts of the above mentioned items as at 30 June 2015. The estimates on Solteq’s financial liabilities and cost related to the Acquisition and the contemplated bond issue reflect Solteq’s management’s current views and understanding with respect to Solteq’s financial position as at 30 June 2015. All the estimates presented above address matters that involve risks and uncertainties as a result of which Solteq’s actual financial position may differ materially from those described above. These estimates are unaudited and reflect the current views of the management of Solteq with respect to future events.
Unaudited provisional pro forma financial information and their basis of compilation
With respect to the above mentioned Acquisition and the intended bond issue and marketing of it, Solteq has compiled the following unaudited and provisional pro forma financial information (“pro forma”) to demonstrate what could have been the results of operations and the financial position of the combined Solteq and Descom (Group) if Solteq’s acquisition of Descom (after the divestment of Descom Data Center Solutions business) and the financing of the Acquisition and refinancing of Group’s indebtedness through bond issuance (together with Acquisition, Transaction) had taken place at an earlier date.
This pro forma is presented for illustrative purposes only. Because of its nature, the pro forma illustrates what the hypothetical impacts would have been if the Transaction had been consummated at an earlier point in time, and, therefore, does not represent the actual results of operations or financial position of the Group. The pro forma is not intended to project the results of operations or financial position of the Group as of any future date.
The pro forma includes that based upon available information and assumptions, which are described in accompanying notes to the pro forma. It should be noted that Solteq has had only limited access to Descom’s accounting records or to any other Descom’s internal documentation in connection with the acquisition process and, as a result, the pro forma is mainly based on publicly available consolidated financial statement information of Descom.
Transaction
Solteq has signed an agreement on June 17, 2015 to acquire 100% of the share capital of Descom and purchase the capital loans of Descom (Acquisition). Descom’s Data Center Solutions business will not be included in the Acquisition. The prerequisites for the Acquisition are (i) the divestment of Descom’s Data Center Solutions business, (ii) a full conversion of the convertible bond in Descom to shares and (iii) Solteq has sufficient funding to finance the cash consideration portion of the purchase price to repay Descom’s loans, purchase capital loans of Descom and refinance its own loans.
Consequently, Solteq plans, subject to market conditions, to issue a bond in range of 25-30 EURm to Finnish and Nordic institutional investors and other professional investors. The prerequisite for financial closing of the contemplated bond will be that the prerequisites for completion for Acquisition will be met.
The estimated and provisional purchase price of the Descom used for pro forma purposes is 10.8 EURm based on 31 December 2014 financial information of Descom, which is 0.3 EURm less than Solteq’s estimated purchase price stated in its stock exchange release on June 17, 2015. The final purchase price of the shares will be determined on the basis of Descom’s balance Sheet at June 30, 2015. About 4.6 EURm of the purchase price will be paid with Solteq’s new shares, and the remainder purchase price will be paid in cash. As a result of the Acquisition, a total of 2.8 million new shares will be issued to the shareholders of Descom that will subsequently hold approximately 16 % of the total number of the shares of Solteq after the directed share issue.
Accounting for the Transaction
The pro forma presents the Acquisition as being accounted for under the acquisition method under IFRS 3 “Business Combinations”. Under the acquisition method, the acquired assets and liabilities of Descom are recorded at their fair values on the date when the control over Descom’s operations transfers to Solteq (the “Acquisition Date”) and the excess of the total consideration transferred is recognised as goodwill. The share and cash considerations to be transferred form the basis for the purchase price of Descom and the value of the share consideration per share for the accounting purposes will be the Solteq’s share price at the Acquisition Date when the new shares are issued. The provisional fair value of 4.6 EURm has been used in the pro forma for the new shares to be issued by Solteq in the Acquisition using the share price of June 16, 2015 EUR 1.65 for Solteq share.. The final purchase price of the shares will be determined on the basis of Descom’s balance Sheet at June 30, 2015. Provisional purchase price in the pro forma is based on 31 December 2014 financial information of Descom.
The preliminary purchase price could differ materially from the final purchase price to effectuate the Acquisition, and the final fair values of the assets acquired and liabilities assumed at the Acquisition Date could differ materially from the provisional fair values used for pro forma purposes. The pro forma has been compiled based on the December 31, 2014 net assets which could materially differ from the net assets at the Acquisition Date. The impact of the divested net assets of Data Center Solutions and result of the sales for Descom’s equity is preliminary and includes assumptions which will change when the divestment is completed. The IFRS accounting policy alignments presented are preliminary for the reasons described above. The effect of the refinancing to the pro forma is provisional as no final financing agreements exist at the time of this pro forma and the final amounts and terms and conditions are not known. All of above could result in a significant variation in the results of operations and financial position presented in this pro forma and the pro forma information to be compiled and presented after the Transaction has been completed and to be presented in the prospectus to be prepared for listing of the contemplated bond and/or shares issued in connection with the directed share issue.Due to the reasons described above, accordingly, the amount of goodwill to be recognized by Solteq upon completion of the Acquisition may significantly differ from the amounts presented in this pro forma. Synergy benefits have been not been taken into account within the pro forma.
Pro forma periods and historical financial information
The pro forma has been compiled on a basis consistent with the guidance specified in the Annex II of the Commission Regulation (EC) No 809/2004 but does not include all the information required to be presented in the prospectus. The pro forma statement of comprehensive income for the year ended December 31, 2014 has been compiled assuming that the Transaction had been completed on January 1, 2014 and the pro forma balance sheet as at December 31, 2014 has been compiled assuming that the Transaction had been completed on December 31, 2014. The pro forma below is based on financial information derived from Solteq’s audited consolidated financial statements as at and for the year ended December 31, 2014 prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the EU and Descom’s audited consolidated financial statements as at and for the year ended December 31, 2014 prepared in accordance with Finnish Accounting Standards (“FAS”) and conformed to the IFRS accounting policies applied by Solteq. The pro forma has been compiled on a basis consistent with IFRS and in a manner consistent with the accounting principles applied in Solteq’s audited consolidated financial statements as at and for the year ended December 31, 2014.
The pro forma enclosed in this bulletin should be read in conjunction with the financial information published on June 17, 2015 and Solteq’s consolidated financial statements which can be found from webpage of Solteq: www.solteq.com.
SOLTEQ PLC
Board of Directors
For more information, please contact:
CEO Repe Harmanen
Telephone 0400 467 717
Email: repe.harmanen@solteq.com
CFO Antti Kärkkäinen
Telephone 040 8444 393
Email: antti.karkkainen@solteq.com
Distribution:
NASDAQ OMX Helsinki
Key media
www.solteq.com
