STATEMENT OF THE BOARD OF DIRECTORS OF TECNOTREE CORPORATION REGARDING THE VOLUNTARY PUBLIC TENDER OFFER BY VIKING ACQUISITIONS CORP.

Tecnotree Corporation
Stock exchange release
March 13, 2018 at 8:30

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG OR IN ANY OTHER JURISDICTION IN WHICH THE TENDER OFFER WOULD BE PROHIBITED BY APPLICABLE LAW.

Statement of the Board of Directors of Tecnotree Corporation regarding the voluntary public tender offer by Viking Acquisitions Corp.

Viking Acquisitions Corp. (“Viking” or the “Offeror”) and Tecnotree Corporation (“Tecnotree” or the “Company”) have announced on 8 March, 2018 that Viking makes a voluntary public cash tender offer to purchase all issued and outstanding shares in Tecnotree (the “Tender Offer”).

The Board of Directors of Tecnotree has on 12 March, 2018 decided to issue the below statement regarding the Tender Offer as required by the Finnish Securities Markets Act (746/2012, as amended).

TENDER OFFER IN BRIEF

Viking and Tecnotree have on 8 March, 2018 entered into a transaction agreement (the “Transaction Agreement”) setting out, among others, the terms and conditions pursuant to which the Tender Offer shall be made by the Offeror. The Tender Offer will be made in accordance with the terms and conditions of the tender offer document expected to be published by the Offeror on or about 16 March, 2018 (the “Tender Offer Document”).

The price offered for each Tecnotree share validly tendered in the Tender Offer is EUR 0.10 in cash. The Tender Offer values Tecnotree at approximately EUR 12,26 million. The offer price represents a premium of:

  • 26.6 percent compared to the closing price of the shares on Nasdaq Helsinki Ltd. (“Nasdaq Helsinki”) on 7 March, 2018, the last trading day before the announcement of the Tender Offer;
  • 28.1 percent compared to the volume-weighted average trading price of the Tecnotree shares on Nasdaq Helsinki during the 3-month period preceding the date of the announcement of the Tender Offer; and
  • 18.8 percent compared to the volume-weighted average trading price of the Tecnotree shares on Nasdaq Helsinki during the 12-month period preceding the date of the announcement of the Tender Offer.

The Offeror announced the Tender Offer on 8 March, 2018. According to the terms of the Tender Offer, any distribution of funds by Tecnotree decided after the date of the announcement of the Tender Offer, which a shareholder who has accepted the Tender Offer is entitled to, will be deducted from the offer price. The Board of Directors has proposed to the annual general meeting that no dividend is payable for the financial year 2017.

Pursuant to the Transaction Agreement, subject to completion of the Tender Offer, the Offeror is to acquire all issued and outstanding shares in Tecnotree.

According to the Offeror’s announcement, Viking will finance the Tender Offer (including any subsequent redemption proceedings in accordance with the Finnish Companies Act) through financing arrangements that will be unconditionally at its disposal and no third party consent or financing is required by the Offeror to finance the Tender Offer. According to the Transaction Agreement, Viking’s obligation to complete the Tender Offer is not conditional upon receipt of financing. The Offeror is the main creditor of the Company. The Offeror’s outstanding receivables from the Company amount to approximately EUR 21.64 million and consist of both secured and unsecured debt included in the restructuring programme.

Shareholders of Tecnotree, including the members of the Tecnotree Board of Directors and the CEO of Tecnotree, representing jointly approximately 41.45 percent of the shares and votes in Tecnotree have irrevocably undertaken to accept the Tender Offer subject to certain customary conditions.

The Tender Offer is subject to necessary regulatory approvals, including competition clearances, and the Offeror gaining control of more than 90 percent of the issued and outstanding shares and voting rights of Tecnotree.

The offer period under the Tender Offer is expected to commence on or about 19 March, 2018 and to run for approximately four weeks. The Offeror reserves the right to extend the offer period from time to time in accordance with the terms and conditions of the Tender Offer.

STATEMENT OF THE BOARD OF DIRECTORS

1. Background for the statement

Pursuant to the Finnish Securities Market Act, the Board of Directors of Tecnotree shall prepare a public statement regarding the Tender Offer.

The statement shall include a well-founded assessment of the Tender Offer from the perspective of Tecnotree and its shareholders as well as of the strategic plans and their likely effects on the operations and employment of Tecnotree presented by the Offeror in the Tender Offer Document.

For the purposes of issuing this statement, the Offeror has submitted to the Board of Directors of Tecnotree a draft version of the Tender Offer Document on 9 March, 2018.

In preparing its statement, the Board of Directors of Tecnotree has relied on information provided in the Offeror’s announcement regarding the Tender Offer published on 8 March, 2018 and the draft Tender Offer Document by the Offeror and has not independently verified this information. Accordingly, the Board of Directors’ assessments of the consequences of the Tender Offer on Tecnotree’s business and employees should be treated with caution.

2. Assessment of the Board of Directors from the perspective of Tecnotree and its shareholders

Introduction

In evaluating the Tender Offer, analyzing potential alternative opportunities available to Tecnotree and concluding on its statement, the Board of Directors has considered several factors, such as Tecnotree’s current financial situation, current position and future prospects, and the historical trading price of Tecnotree’s share.

The Board of Directors’ assessment of continuing the business operations of Tecnotree as an independent company has been based on reasonable future-oriented estimates which include several uncertainty factors due to the current critical financial situation of the Company whereas the offer consideration and the premium included therein is not subject to any uncertainty other than the fulfillment of the conditions to completion of the Tender Offer.

According to the Board of Director’s assessment, the company’s ability as going concern is dependent on the successful completion of getting new financing. The company did not succeed in realizing the required financing during 2017 as envisaged.

In order to support its assessment of the Tender Offer, the Board of Directors of Tecnotree has received a fairness opinion regarding the Tender Offer (the “Fairness Opinion”) from Tecnotree’s financial advisor, Ernst & Young Oy. The Fairness Opinion, subject to the assumptions and qualifications set out therein and dated 12 March, 2018, states that as of the date of the fairness opinion the offer consideration, from a financial point of view, is believed to be fair. The Fairness Opinion is attached as Appendix 1 to this statement.

Board assessment

The Board of Directors of Tecnotree believes that the consideration offered by the Offeror to the shareholders is fair to the shareholders based on an assessment of the issues and factors, which the Board of Directors has concluded to be material in evaluating the Tender Offer. These include, amongst other factors:

  • the current critical financial situation and liquidity of Tecnotree and the fact that there is currently no certainty about the sufficiency of long-term, short-term and working capital financing;
  • despite significant efforts during a long period of time, the company has not succeeded in getting new financing;
  • the information and assumptions on the business operations of Tecnotree at the date of this statement and their expected future development, taking into account that the current financial distress of the company causes uncertainty in acquiring new customers and orders as well as reduces the possibilities for product development;
  • the premium of 26.6 percent being offered compared to the closing price of Tecnotree share on Nasdaq Helsinki on 7 March, 2018;
  • the illiquidity of Tecnotree’s share;
  • valuations and analysis made and commissioned by the Board of Directors as well as discussions with external financial advisors;
  • support by significant shareholders in Tecnotree for the Tender Offer;
  • the fact that the Tender Offer is a cash offer and availability of financing to complete the Tender Offer is confirmed by the Offeror; and
  • the Fairness Opinion issued by Ernst & Young Oy.

Taking into consideration the risks and uncertainties as well as the terms and conditions of the draft Tender Offer Document, the Board of Directors has concluded that the Tender Offer is a positive alternative for the shareholders.

Tecnotree has in the Transaction Agreement agreed to a standard non-solicitation clause whereby Tecnotree has undertaken not to solicit competing proposals or, subject to the fiduciary duties of the Board of Directors of Tecnotree, promote the progress of such proposals. Having carefully assessed the terms and conditions of the Tender Offer, the Board of Directors of Tecnotree has concluded that entering into the Transaction Agreement, including said non-solicitation clause, is in the interest of Tecnotree’s shareholders.

3. Assessment regarding strategic plans presented by the Offeror and their likely effects on the operations and employment of Tecnotree

Information given by the Offeror in the Tender Offer Document

The Board of Directors of Tecnotree has assessed the Offeror’s strategic plans based on the statements in Offeror’s announcement regarding the Tender Offer published on 8 March, 2018 and the draft Tender Offer Document.

The Offeror and its affiliates focus on buying, strengthening and growing software companies worldwide. According to the information available in the draft Tender Offer Document, the acquisition of Tecnotree represents an opportunity for the Offeror to leverage its strong history revitalizing enterprise software companies and selling solutions in the telecommunications industry.

Based on information provided by Viking, the Offeror’s aim is to return the Company to sustainable profitability and to develop the business globally going forward. The Offeror will focus on ensuring long term financial viability and is committed to taking the necessary steps to ensure that this is achieved. Upon completion of the contemplated Tender Offer, Tecnotree would be the only subsidiary of the Offeror and on a consolidated basis represent substantially all of its consolidated earnings, assets and liabilities.

Based on the information in the Tender Offer Document, the Offeror is analyzing necessary measures to be taken after the completion of the Tender Offer but no decisions have been made so far. Any measures taken will be done keeping in mind the best interest of Tecnotree’s valued customers and long term viability of the company and in accordance with the restructuring programme. In accordance with the Offeror’s current view, the planned measures may include also cost savings and restructurings.

Board assessment

The Board of Directors of Tecnotree believes that the Offeror possess the resources and knowledge required to support, stabilize and develop the Company and to provide the additional financing that the Company requires both short-term and long-term. It is the view of the Board of Directors that these opportunities will benefit the activities of Tecnotree.

The Board of Directors of Tecnotree believes that the Tender Offer provides a good and durable solution for Tecnotree’s financial needs. Further, the Board of Directors of Tecnotree believes that the acquisition will provide possibility for the Company to continue as going concern, to further develop its business and products as well as provide jobs within the group in the future.  

The Board of Directors of Tecnotree considers that the information on the Offeror’s strategic plans concerning Tecnotree included in the announcement regarding the Tender Offer published on 8 March, 2018 and in the draft Tender Offer Document is of a general nature. However, considering the critical financial position of the company, the Board of Directors of Tecnotree evaluates that it cannot be ruled out that the completion of the Tender Offer could have effects on Tecnotree’s operations and business locations and on the number of jobs at Tecnotree.

On the date of this statement the Board of Directors of Tecnotree has not received any formal statement from Tecnotree's employees as to the effects of the Tender Offer to the employments at Tecnotree.

4. Recommendation of the Board of Directors

The Board of Directors of Tecnotree has carefully assessed the Tender Offer and its terms and conditions based on the draft Tender Offer Document, the Fairness Opinion, and other available information.

Based on the foregoing, the Board of Directors of Tecnotree deems that the Tender Offer and the amount of the offer consideration offered for the shares are under the prevailing circumstances fair to Tecnotree’s shareholders.

Given the above-presented viewpoints, the Board of Directors of Tecnotree unanimously recommends that the shareholders of Tecnotree accept the Tender Offer.

This statement is based on an assessment of the issues and factors which the Board of Directors has concluded to be material in evaluating the Tender Offer, including, but not limited to, the information and assumptions on the current financial situation and liquidity as well as the business operations of Tecnotree at the date of this statement and their expected future development.

All members of the Board of Directors have participated in the decision-making concerning the statement. Having regard to the fact that each board member, either directly or through a company under his control, owns shares in Tecnotree, each member of the Board of Directors has independently assessed whether he can, unconstrained by undue influences, participate in the preparations of this statement and decision to recommend the Tender Offer to the shareholders and further the interests of the shareholders collective. Each of them has determined that the ownership of shares in the Company will not affect his possibilities to act in accordance with a board member’s fiduciary duties towards the shareholders collective.  

The evaluation of independence of the members of the Board of Directors is available on the website of Tecnotree.

5. Other Issues

The Board of Directors of Tecnotree notes that the shareholders of Tecnotree should also take into account the risks related to non-acceptance of the Tender Offer. If the Offeror waives the acceptance condition of 90 per cent of the shares and votes, the completion of the Tender Offer would reduce the number of Tecnotree shareholders and the number of shares, which would otherwise be publicly traded. Depending on the number of shares validly tendered in the Tender Offer, this could have an adverse effect on the liquidity and value of the shares.

Pursuant to Chapter 18 of the Finnish Companies Act (624/2006, as amended), a shareholder with more than 90 per cent of all shares and votes in a company shall have the right to acquire, and subject to a demand by the other shareholders also be obligated to redeem, the shares owned by the other shareholders. The shares held by Tecnotree’s shareholders who have not accepted the Tender Offer may be redeemed through compulsory redemption proceedings under the Finnish Companies Act under the conditions set out therein.

Tecnotree has undertaken to comply with the Helsinki Takeover Code referred to in Chapter 11 Section 28 of the Finnish Securities Markets Act.

This statement of the Board of Directors of Tecnotree does not constitute investment or tax advice, and the Board of Directors of Tecnotree does not specifically evaluate herein the general price development or the risks relating to the shares in general. Shareholders must independently decide whether to accept the Tender Offer, and they should take into account all relevant information available to them, including information presented in the Tender Offer Document and this statement as well as any other factors affecting the value of the shares.

Tecnotree is being advised by EY LLP as financial advisor and Fondia Plc as legal advisor.

12 March 2018

THE BOARD OF DIRECTORS OF TECNOTREE

Further information:

Harri Koponen, chairman of the Board of Tecnotree, phone +358 40 1922 464

APPENDIX: Ernst & Young Oy’s Fairness Opinion

Tecnotree in brief:

Tecnotree is a global supplier of telecom IT software products and solutions, for charging, billing, customer care, messaging and content management services. The Company’s product portfolio comprises virtually the full range (order-to-cash) business management solutions for telecom operators, with standard solutions for fixed networks, mobile services and broadband and for managing subscriptions, services and cash flows for prepaid and post-paid customers.

Tecnotree is listed on Nasdaq Helsinki (TEM1V). For more information, please visit www.tecnotree.com.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG OR IN ANY OTHER JURISDICTION IN WHICH THE TENDER OFFER WOULD BE PROHIBITED BY APPLICABLE LAW.

THIS RELEASE IS NOT A TENDER OFFER DOCUMENT AND AS SUCH DOES NOT CONSTITUTE AN OFFER OR INVITATION TO MAKE A SALES OFFER. IN PARTICULAR, THIS RELEASE IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES DESCRIBED HEREIN, AND IS NOT AN EXTENSION OF THE TENDER OFFER, IN THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG. INVESTORS SHALL ACCEPT THE TENDER OFFER FOR THE SHARES AND OPTION RIGHTS ONLY ON THE BASIS OF THE INFORMATION PROVIDED IN A TENDER OFFER DOCUMENT. OFFERS WILL NOT BE MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE EITHER AN OFFER OR PARTICIPATION THEREIN IS PROHIBITED BY APPLICABLE LAW OR WHERE ANY TENDER OFFER DOCUMENT OR REGISTRATION OR OTHER REQUIREMENTS WOULD APPLY IN ADDITION TO THOSE UNDERTAKEN IN FINLAND.

THE TENDER OFFER IS NOT BEING MADE DIRECTLY OR INDIRECTLY IN ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW AND, WHEN PUBLISHED, THE TENDER OFFER DOCUMENT AND RELATED ACCEPTANCE FORMS WILL NOT AND MAY NOT BE DISTRIBUTED, FORWARDED OR TRANSMITTED INTO OR FROM ANY JURISDICTION WHERE PROHIBITED BY APPLICABLE LAW. IN PARTICULAR, THE TENDER OFFER IS NOT BEING MADE, DIRECTLY OR INDIRECTLY, IN OR INTO, OR BY USE OF THE POSTAL SERVICE OF, OR BY ANY MEANS OR INSTRUMENTALITY (INCLUDING, WITHOUT LIMITATION, FACSIMILE TRANSMISSION, TELEX, TELEPHONE OR THE INTERNET) OF INTERSTATE OR FOREIGN COMMERCE OF, OR ANY FACILITIES OF A NATIONAL SECURITIES EXCHANGE OF, THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG. THE TENDER OFFER CANNOT BE ACCEPTED, DIRECTLY OR INDIRECTLY, BY ANY SUCH USE, MEANS OR INSTRUMENTALITY OR FROM WITHIN THE UNITED STATES, CANADA, JAPAN, AUSTRALIA, SOUTH AFRICA OR HONG KONG.

About Tecnotree

Tecnotree is a global provider of IT solutions for the management of services, products, customers and revenue for Communications Service Providers. Tecnotree helps customers to monetise and transform their business towards a marketplace of digital services. Together with its customers, Tecnotree empowers people to self-serve, engage and take control of their own digital life.

Tecnotree is listed on Nasdaq Helsinki (TEM1V). For more information, please visit

www.tecnotree.com.

About Us

Tecnotree is a global provider of IT solutions for the management of services, products, customers and revenue for Communications Service Providers. Tecnotree helps customers to monetise and transform their business towards a marketplace of digital services. Together with its customers, Tecnotree empowers people to self-serve, engage and take control of their own digital life. Tecnotree is listed on Nasdaq Helsinki (TEM1V). For more information, please visit www.tecnotree.com.

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