Frequently asked questions
Forward-Looking Statements
This document contains forward-looking statements that reflect management’s current views with respect to certain future events and potential financial performance. Although Eniro believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, results could differ materially from those set out in the forward-looking statements as a result of various factors.
General questions
- How large is the rights offering?
- Why are you raising capital?
- How did you arrive at the rights offering amount of SEK 2.5 billion?
- Why are you raising capital now – shouldn’t you have done this earlier?
- Is the rights offering underwritten?
- What will the proceeds from the rights offering be used for?
- Will your dividend policy be affected by the rights offering?
- Is this capital raising sufficient or is there a risk that you will have to ask for more capital in a few months?
- What commitments have been made by Eniro’s existing shareholders?
Details about the rights offering
- How can I get further information on the rights offering?
- What are the terms and conditions of the rights offering?
- Why are the shares expected to be offered at a discount to the share price?
- What is the discount to the share price in the rights offering?
- What if a shareholder does not have the funds to subscribe?
- When is the record date?
- How long is the rights trading period?
- How long is the subscription period?
- How do I subscribe?
- What is the subscription price?
- What happens if I do not do anything with my subscription rights?
- When can I subscribe for new shares?
- When can I trade subscription rights?
- I am currently not a shareholder. How can I participate in the transaction?
- How can an investor estimate the value of the subscription rights?
- Is this an attractive investment for a private individual?
- What are my alternatives in the rights issue?
- Will the new shares entitle the holder to dividends?
- What does a reverse split of shares mean and what is the objective?
General questions regarding rights offerings
- What is a rights offering?
- What is a subscription right?
- What is an interim share?
- What does it mean that there is a pre-emptive right for existing shareholders in a rights offering?
- What is subscription without subscription rights?
General questions
1. How large is the rights offering?
The rights offering will raise approximately SEK 2.5 billion.
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2. Why are you raising capital?
The main objectives of the rights offering are to strengthen the company’s balance sheet, thereby creating financial flexibility to secure the implementation of the strategy and prepare for an uncertain market outlook. Prior to raising equity we also have very limited headroom to our bank covenants, and without the rights issue there would have been a significant risk that we would have broken our covenants in 2009.
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3. How did you arrive at the rights offering amount of SEK 2.5 billion?
One of the main objectives of the rights offering is to strengthen the balance sheet by bringing down the net debt by 26%. By undertaking the proposed rights offering, the company will reduce net debt and create significant headroom to the bank covenants.
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4. Why are you raising capital now – shouldn’t you have done this earlier?
While not immune to the challenging economic environment, Eniro has shown a high degree of resilience to the economic downturn, primarily due to its diversified customer base, as well as its leading market positions and strong cash flow generation. The rights offering, in connection with the cancelled dividend for 2008, are aimed to secure the implementation of the strategy.
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5. Is the rights offering underwritten?
Yes, the transaction is fully underwritten by certain major shareholders, external guarantors as well as a group of underwriting banks.
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6. What will the proceeds from the rights offering be used for?
The proceeds will be used to strengthen the company’s balance sheet. By doing this we can accelerate the achievement of the desired debt level, substantially improve the covenant headroom and thereby the operational flexibility. This will also strengthen the company’s refinancing position and prepare for a continued challenging economic outlook.
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7. Will your dividend policy be affected by the rights offering?
No. According to the strategy in the medium term, during the investment period, reduction of net debt will be given priority over dividend.
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8. Is this capital raising sufficient or is there a risk that you will have to ask for more capital in a few months?
We feel comfortable with our capital position post the rights offering and have no plans to ask shareholders for more in the foreseeable future.
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9. What commitments have been made by Eniro’s existing shareholders?
A group of major shareholders, including F&C, the 1st, 2nd, 4th and 7th Swedish National AP-funds, Futuris and Catella have committed to subscribe for 32% of the offering. In addition, a number of Swedish and international institutional investors have agreed to subscribe for another 37% of the rights offering. The remaining portion of the rights offering is underwritten by the Joint Lead Managers. Consequently, 100% of the rights offering is committed and underwritten.
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Details about the rights offering
10. How can I get further information on the rights offering?
A prospectus with full details about the transaction is expected to be published on or about May 28, 2009 and subsequently sent to shareholders. If you are a shareholder who is registered with a trustee you will receive detailed instructions from your trustee.
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11. What are the terms and conditions of the rights offering?
For every share held in Eniro, the holder is entitled to three subscription rights. One subscription right entitles the holder to subscribe for one new share. The subscription price is SEK 5.20 per share which implies that the rights offering will raise a maximum of approximately SEK 2,517 million for Eniro, before transaction costs, through the issue of no more than 484,100,000 new shares.
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12. Why are the shares expected to be offered at a discount to the share price?
It is market practise to issue new shares at a discount. However, this is merely a technicality to create value in the subscription rights and incentives for shareholders to participate in the transaction.
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13. What is the discount to the share price in the rights offering?
The subscription price corresponds to a discount of approximately 43% to the theoretical ex-rights price of SEK 9.17 based on Eniro’s volume-weighted average share price during the last ten trading days 1 and a discount of approximately 48% to the theoretical ex-rights price of SEK 10.08 based on Eniro’s closing share price1 on May 22, 2009.
However, it must be noted that the so-called discount only is a technical effect of the value distribution between the shares and subscription rights, the lower the subscription price, the higher value of the subscription right.
1 Eniro’s volume-weighted average share price during the ten last trading days is SEK 21.08 and the closing price on May 22, 2009 is SEK 24.70
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14. What if a shareholder does not have the funds to subscribe?
The subscription rights that shareholders receive are expected to have an economic value. Shareholders can sell a portion of the subscription rights and use the proceeds to subscribe for shares, or alternatively sell all of their subscription rights.
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15. When is the record date?
May 29, 2009
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16. How long is the rights trading period?
June 2-11, 2009
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17. How long is the subscription period?
June 2-16, 2009
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18. How do I subscribe?
If you are a directly registered shareholder, please use the pre-printed bank giro slip that will be sent to you or use the subscription forms which will be available at www.eniro.com. If you are a trustee registered shareholder, please follow the instructions that you will receive from your trustee.
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19. What is the subscription price?
The subscription price will be announced on May 25, 2009.
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20. What happens if I do not do anything with my subscription rights?
The subscription rights are expected to have an economic value. If you do not exercise or sell your subscription rights, the rights will become void.
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21. When can I subscribe for new shares?
June 2-16, 2009, or during the period set by your trustee.
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22. When can I trade subscription rights?
June 2-11, 2009.
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23. I am currently not a shareholder. How can I participate in the transaction?
The record date will be May 29, 2009 so you will receive subscription rights if you are registered as a shareholder on that date. There is also an opportunity to subscribe for shares without preferential rights. However, there is no certainty that those subscribing without preferential rights will receive any shares in the secondary allocation.
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24. How can an investor estimate the value of the subscription rights?
The subscription price will be set with a discount to TERP in order for the subscription rights to have an economic value. It is possible to mathematically calculate the value of the subscription rights after the terms have been announced. The rights will also have a market value as they will be traded on Nasdaq OMX Stockholm between June 2 and June 11, 2009.
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25. Is this an attractive investment for a private individual?
Your investment in Eniro should be based on your view of the company. It is important to either exercise the rights or sell them in order not the loose any economic value.
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26. What are my alternatives in the rights issue?
You should exercise or sell your subscription rights in order to not loose any economic value.
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27. Will the new shares entitle the holder to dividends?
The new shares will entitle the holders to dividends in the same way as the existing shares. Please note that the Board has decided not to declare any dividend with respect to the 2008 financial year.
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28. What does a reverse split of shares mean and what is the objective?
The purpose of a reverse split is to decrease the total number of shares without changing the share capital. The Board of Directors proposes a reverse split 1:4 of the company’s shares following the completion of the rights offering. The reverse split will have the effect that 4 shares are consolidated into one share.
A reverse split means that the total number of shares in a company decreases. As a result of that, the value of the new shares increases after the reverse split is completed. The shareholders will thus hold a smaller number of shares, but with a higher value per share, which means that the total investment value is unchanged.
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General questions regarding rights offerings
29. What is a rights offering?
A rights offering enables a company to raise more money to its operations by issuing new shares to existing and/or new shareholders.
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30. What is a subscription right?
A subscription right is a financial instrument which entitles the holder to subscribe for a certain number of new shares at a defined subscription price.
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31. What is an interim share?
An interim share (BTA, Sw: Betald Tecknad Aktie) is a share which exists during a limited time period. Subscription rights are converted to interim shares and booked on subscribing investors' accounts when the subscription period expires. The interim shares are converted into regular shares after the increase of the share capital has been validly registered. The interim shares are often traded on the stock exchange.
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32. What does it mean that there is a pre-emptive right for existing shareholders in a rights offering?
A rights offering with pre-emptive rights for existing shareholders is a type of rights offering where a company’s shareholders as of a defined day (the record date) are given the primary right to subscribe for new shares. The shareholding on the record date will determine how many shares a shareholder has the pre-emptive right to subscribe for. The pre-emptive right is represented by subscription rights.
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33. What is subscription without subscription rights?
New shares which are not subscribed for with subscription rights can be offered to the public. Application to subscribe for new shares without subscription right can be submitted by any investor, but the investor is not guaranteed to be granted the number of shares applied for.
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