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Eniro announces fully committed and underwritten rights offering of SEK 2.5 bn to strengthen its financial position

This press release may not be announced, published or disseminated, directly or indirectly, in the United States, Australia, Canada, Hong Kong or Japan

2009-04-27 07:59 CET

Press release (pdf)

The Board of Directors of Eniro has resolved on a rights offering, subject to approval by the Annual General Meeting, which is intended to raise approximately SEK 2.5 bn. The main objective is to significantly strengthen the company’s balance sheet, thereby securing the continued implementation of its strategy for long term growth and preparing for an economic environment which remains challenging.

Summary

• Rights offering of approximately SEK 2.5 bn with preferential rights for shareholders in Eniro
• The rights offering is fully committed and underwritten by a combination of major shareholders in Eniro, external guarantors and a consortium of underwriting banks
• The rights offering will significantly strengthen Eniro’s balance sheet and secure continued implementation of its strategy for long term growth
• The rights offering is subject to approval at the Annual General Meeting, which is being rescheduled to May 26, 2009
• Subscription price and offer ratio to be announced on May 25, 2009
• Subscription period from June 2 to June 16, 2009
• A press conference will be held today at 10.30 CET at Hotel Anglais, Humlegårdsgatan 23, Stockholm

“I am encouraged by the strong support from our shareholders in pursuing these measures to strengthen our balance sheet. The rights offering, in combination with the previously proposed cancellation of the dividend for 2008, will give Eniro the financial flexibility to implement its strategy for long term growth and cost rationalization, thereby strengthening the company’s position as the leading search company in the Nordic media market”, says Lars Berg, Chairman of the Eniro Board.

Background and rationale

Eniro is in the midst of a gradual transformation from a declining print operation into a growing online business. The pace of this strategic transformation position Eniro amongst the leaders in the industry; illustrated by online revenues, which despite the challenging economic environment, increased organically by 7% in the first quarter of 2009, and contributed 44% of total revenues over the last 12 months (excluding Voice).

The high degree of resilience that Eniro has shown in the recent quarters, in spite of sharp decreases in overall advertising markets, is primarily explained by the services offered by Eniro which fulfill basic and critical marketing needs of small and mid-sized companies in Eniro's markets. Coupled with a diverse customer base, a large sales force and leading market positions, this has enabled Eniro to deliver strong results and cash flow in a challenging market environment.

In November 2008, the company announced that in order to secure continued implementation of its strategy for long term growth, the target for net debt was set at 3.0-3.5 times EBITDA. The company subsequently initiated bank negotiations aimed at amending the terms of the bank debt agreements in order to establish a long term arrangement more suitable for the current economic outlook. Following these discussions, the Board of Directors of Eniro and its management have concluded that a rights offering is a more attractive alternative for the company and its shareholders, as it enables Eniro to reach its desired debt level faster, strengthens the company’s refinancing position and substantially improves the company’s headroom to debt covenants, thereby creating the financial flexibility to secure the implementation of the company’s strategic plan and prepare for a continued challenging economic outlook.

Eniro’s bank debt agreements include covenants on net debt/EBITDA, EBITDA/net interest and cash flow to interest payments and debt amortization. As of March 31, 2009 the company was in compliance with all debt covenants. The bank debt agreements allow Eniro to be in breach of its net debt/EBITDA covenant for one quarter until the end of 2009, if certain conditions are met, without having to renegotiate the terms of the agreements. That right has not yet been utilized. By undertaking the proposed rights offering, the company will reduce net debt by approximately 26% before transaction related costs, and create significant headroom to its debt covenants. The majority of Eniro’s bank loans will mature in August 2012 and the proposed rights offering will also allow Eniro to retain its attractive current loan terms unaltered.

Summary pro forma financial effects of the rights offering

⁽¹⁾ Excluding transaction related costs
⁽²⁾ 12-month period ended March 31, 2009

Principal terms of the rights offering

In the rights offering, the company intends to grant shareholders subscription rights which entitle the holder of such rights to subscribe for a certain number of new shares at the issue price. Where all new shares have not been subscribed for by the exercise of such subscription rights, the Board of Directors will determine the allocation of new shares subscribed for without subscription rights.

The record date at Euroclear Sweden, the Swedish Central Securities Depository, for participation in the rights offering is expected to be May 29, 2009. The subscription rights may be exercised during the subscription period which is expected to run from and including June 2, 2009 until and including June 16, 2009. The subscription period may be extended.

The Board of Directors’ decision on increase of the share capital, the number of shares to be issued, and the subscription price for the new shares, will be disclosed on or about May 25, 2009.

The rights offering is subject to approval by the Annual General Meeting of shareholders which has been rescheduled to Tuesday May 26, 2009.

Commitments and underwriting

Certain major shareholders in Eniro, including Catella Kapitalförvaltning AB, Eikos, F&C Asset Management, First Swedish National Pension Fund, Fourth Swedish National Pension Fund, Futuris Asset Management AB, Second Swedish National Pension Fund and Seventh Swedish National Pension Fund have entered into agreements which include an undertaking, subject to certain conditions, to subscribe for their respective pro rata shares in the rights offering, corresponding to approximately 25% of the rights offering in total. In addition, F&C Asset Management, Fourth Swedish National Pension Fund and Catella Kapitalförvaltning AB have entered into underwriting agreements which include an undertaking to, subject to certain conditions, subscribe for shares, bringing the total amount committed and underwritten by current shareholders to approximately 32% of the rights offering. In addition, a number of Swedish and international institutional investors have agreed, subject to certain conditions, to subscribe for or purchase shares at the issue price, in an amount corresponding to 37% of the rights offering.

The remaining portion of the rights offering is, subject to certain conditions, underwritten by the Joint Lead Managers. Consequently, 100% of the rights offering is committed and underwritten.

In addition to the abovementioned commitments, a number of Swedish and international shareholders, including Fidelity International, Lannebo Fonder and Swedbank Robur and representing approximately in aggregate 12% of Eniro's share capital, have stated that they are supportive of the rights offering, and intend to vote in favor of the rights offering at the Annual General Meeting.

Indicative time schedule for the rights offering

Financial and legal advisors

Ovington Financial Partners is acting as advisor to Eniro. Carnegie, Morgan Stanley, SEB Enskilda, ABN AMRO Bank N.V, London Branch, Danske Markets (Division of Danske Bank A/S), Handelsbanken Capital Markets and Nordea Markets are acting as Joint Lead Managers. White & Case LLP is acting as legal advisor to Eniro. Linklaters LLP is acting as legal advisor to the Joint Lead Managers.

News wire conference call

Date: April 27, 2009
Time: 8.15 CET
Call-in number: SE + 46 (0)856 619 338, UK +44 (0) 1452 555 566
Confirmation Code: 97250678

Press and analyst conference

Date: April 27, 2009
Time: 10.30 CET
Place: Hotel Anglais, Humlegårdsgatan 23, Stockholm – room “Birk”
Call-in number: SE +46 (0)8 5051 3785, UK +44 (0)20 7138 0826
Confirmation Code: 3607644

Jesper Kärrbrink, CEO, and Jan Johansson, CFO, will present the results of the first quarter 2009, give an overview of the rights offering and answer questions. The press conference will be conducted in English and will be webcasted at www.eniro.com.

For more information, please contact:

Jesper Kärrbrink, CEO, at +46 (0)8 553 31001
Jan Johansson, CFO, at +46 (0)8 553 31015
Åsa Wallenberg, Head of IR and Communications, at +46 (0)8 553 31066

Eniro is the leading directory and search company in the Nordic media market. Eniro's search database connects sellers to buyers and makes it easy to find people using Online, Offline Media and Voice channels. Eniro has operations in Sweden, Norway, Finland, Denmark and Poland.

Eniro is listed on NASDAQ OMX Stockholm and has some 5,000 employees. In 2008, revenues amounted to SEK 6,645 M, with EBITDA of SEK 2,064 M.

Stockholm, April 27, 2009
Eniro AB (publ)

The above information has been made public in accordance with the Securities Market Act and/or the Financial Instruments Trading Act. The information was published at 08.00 CET on April 27, 2009.

IMPORTANT NOTICE:

The information in this press release is not for release, publication or distribution, directly or indirectly, in or into the United States, Australia, Canada, Hong Kong or Japan.

The distribution of this press release in certain jurisdictions may be restricted. The information in this press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the securities referred to herein in any jurisdiction in which such offer, solicitation or sale would require preparation of further prospectuses or other offer documentation, or be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction.

This press release does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein may not be offered or sold in the United States absent registration or an exemption from registration as provided in the U.S. Securities Act of 1933, as amended. Eniro does not intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement are not being made and may not be distributed or sent into the United States, Australia, Canada, Hong Kong or Japan.

This document has not been approved by any regulatory authority. This document is an advertisement and not a prospectus and investors should not subscribe for or purchase any securities referred to in this document except on the basis of information provided in the prospectus to be published by Eniro on its website in due course.

European Economic Area

Eniro has not authorized any offer to the public of shares or rights in any Member State of the European Economic Area other than Sweden and any other jurisdiction into which the offering of shares or rights has been passported. With respect to each Member State of the European Economic Area other than Sweden (and any other jurisdiction into which the offering of shares or rights has been passported) and which has implemented the Prospectus Directive (each, a “Relevant Member State”), no action has been undertaken to date to make an offer to the public of shares or rights requiring a publication of a prospectus in any Relevant Member State. As a result, the shares or rights may only be offered in Relevant Member States:

(a) to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

(b) to any legal entity meeting two or more of the following criteria: (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than EUR 43 million and (3) an annual net turnover of more than EUR 50 million, as shown in its last annual or consolidated accounts; or

(c) in any other circumstances, not requiring the Company to publish a prospectus as provide under Article 3(2) of the Prospectus Directive. For the purposes hereof, the expression an “offer to the public of Shares or Rights” in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares or rights to be offered so as to enable an investor to decide to purchase any securities, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State and the expression “Prospectus Directive” means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

Carnegie Investment Bank AB, Morgan Stanley & Co. International plc, Skandinaviska Enskilda Banken AB (publ), ABN AMRO Bank N.V., London Branch, Danske Markets (Division of Danske Bank A/S), Svenska Handelsbanken AB (publ) and Nordea Bank AB (publ) (the “Joint Lead Managers”) are acting for the company and no one else in connection with the rights offering and will not be responsible to anyone other than the company for providing the protections afforded to their respective clients or for providing advice in relation to the rights offering and/or any other matter referred to in this announcement.

Each of the Joint Lead Managers accepts no responsibility whatsoever and makes no representation or warranty, express or implied, for the contents of this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with the company and the new shares, or the rights offering, and nothing in this announcement is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. Each of the Joint Lead Managers accordingly disclaim to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise which they might otherwise have in respect of this announcement or any such statement.

Forward-Looking Statements

This press release 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.

You are advised to read this announcement and, once available the Prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect the Eniro’s future performance and the industries in which it operates. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur.

Eniro AB (publ). Address: Eniro AB, SE-169 87 Stockholm, Sweden. Visiting address: Gustav III:s Boulevard 40, Solna, Stockholm, Sweden. Phone: +46 8 553 310 00. Fax: +46 8 585 097 25.  E-mail. © Copyright Eniro AB (publ). Web policy.