Ahlstrom-Munksjö announces the terms and conditions of its rights offering

AHLSTROM-MUNKSJÖ OYJ, STOCK EXCHANGE RELEASE November 19, 2018 at 7:50 a.m. EET

This stock exchange release may not be published or distributed, in whole or in part, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan, South Africa or the United States or any other country where such publication or distribution would violate applicable laws or rules or would require additional documents to be completed or registered or require any measure to be undertaken, in addition to the requirements under Finnish law. For further information, see “Important notice” below.

The Board of Directors of Ahlstrom-Munksjö Oyj (“Ahlstrom-Munksjö” or the “Company”) has resolved on the rights offering of approximately EUR 150 million (the “Offering”) with pre-emptive rights for existing shareholders based on the authorization granted by the Extraordinary General Meeting held on September 19, 2018. The proceeds from the Offering will be used to finance part of the acquisition of Expera Speciality Solutions Holdings, Inc (“Expera” and the “Expera Acquisition”) announced on July 23, 2018. The Board of Directors of Ahlstrom-Munksjö today announces the terms and conditions of the Offering.

The Offering in brief

• Offering of new shares (the “Offer Shares”) of approximately EUR 150 million with pre-emptive right of existing shareholders in Ahlstrom-Munksjö.

• Shareholders in Ahlstrom-Munksjö will receive one (1) subscription right in the form of a book-entry entitling them to subscribe for Offer Shares (the “Subscription Right”) for each share of the Company owned on the record date November 21, 2018 (“Record Date”).

• Each five (5) Subscription Rights entitles to subscribe for one (1) Offer Share at the subscription price.

• The subscription price is EUR 7.81 per Offer Share (“Subscription Price”). For subscription of Offer Shares that will be registered with Euroclear Sweden and listed on Nasdaq Stockholm, the Subscription Price is SEK 80.15 per Offer Share.

• Ahlstrom-Munksjö’s shares will trade ex-rights from November 20, 2018.

• The subscription period for the Offer Shares commences on November 26, 2018 at 9.30 a.m. Finnish time and ends on December 12, 2018 at 4.30 p.m. Finnish time.

• The Subscription Rights are freely transferable, and they are expected to be subject to trading on Nasdaq Helsinki between November 26, 2018 and December 5, 2018 and on Nasdaq Stockholm between November 26, 2018 and December 10, 2018.

• Certain shareholders of the Company, representing in aggregate approximately 36.9 percent of the issued and outstanding shares in the Company, have each separately and irrevocably committed to subscribe in full for the Offer Shares on the basis of Subscription Rights allocated to them. In addition, Antti Ahlström Perilliset Oy has irrevocably committed to subscribe for Offer Shares that may remain unsubscribed for in the Offering for an amount representing approximately 10.0 percent of the Offer Shares. For the remaining Offer Shares Nordea Bank Abp and Skandinaviska Enskilda Banken AB (publ) have entered into an underwriting agreement with the Company with customary terms and conditions (the “Underwriting Agreement”).

Background and rationale

The Company and Specialty Papers Holdings, L.P. have on July 23, 2018 signed the Share Purchase Agreement regarding the acquisition of Expera, a U.S. based specialty paper producer. The Expera Acquisition expands the Company’s presence in North America and further strengthens its offering of advanced custom-made fiber-based materials. The acquisition will almost triple Ahlstrom-Munksjö’s net sales in the U.S. and provide a platform for growth. The purchase price paid was USD 604 million (EUR 525 million[1])). The Expera Acquisition was completed on October 10, 2018.

The Expera Acquisition supports Ahlstrom-Munksjö’s ambition to strengthen its position in selected high-end, value adding areas of the global fiber-based materials market that offer positive growth outlook and are supported by market drivers for more sustainable products and solutions. The acquisition will be earnings enhancing. Expera is highly complementary to the Company and will provide opportunities for cross-selling and best practice sharing as well as preliminary recurring cost synergies of approximately EUR 8 million (USD 10 million1)) by year end 2019. In addition, value will be created from joint product development and sharing of best practices. One-time costs related to the achievement of synergies are estimated at EUR 7 million (USD 8 million1)). Strength in product development will help the Company to serve its customers better.

To repay the outstanding bridge facilities related to the Expera Acquisition, the Board of Directors of the Company resolved on November 19, 2018, based on the authorization granted by the Extraordinary General Meeting on 19 September 2018, to carry out the Offering. Assuming that all the Offer Shares are subscribed for in the Offering, the gross proceeds received by the Company from the Offering will be an amount of approximately EUR 150 million (before taking into account any transaction costs in relation to the Offering as well as any fluctuations in the EUR/SEK currency exchange rate). The Company estimates to pay approximately EUR 6.9 million in fees and other expenses in connection with the Offering, resulting in net proceeds of approximately EUR 144.5 million taking into account the tax impact of approximately EUR 1.4 million related to the transaction costs.

Terms of the Offering

Shareholders will receive one (1) Subscription Right for each existing share in the Company held on the Record Date, November 21, 2018. Each five (5) Subscription Rights entitles to subscribe for one (1) Offer Share at the Subscription Price (“Primary Subscription Right”). As a result of the Offering, the total number of the shares in the Company may increase from 96,438,573 shares to a maximum of 115,653,315 shares.

The Subscription Price is EUR 7.81 per Offer Share. As regards subscription of Offer Shares that will be registered with Euroclear Sweden and listed on Nasdaq Stockholm, payment shall be made in Swedish krona. The Subscription Price in Swedish krona is SEK 80.15 per Offer Share.

Subscription for Offer Shares without Subscription Rights may also be made (“Secondary Subscription Right”). Allotment of the Offer Shares subscribed for without the exercise of Subscription Rights will be allotted first to those that subscribed for Offer Shares also pursuant to Subscription Rights; second to those that have subscribed for Offer Shares without Subscription Rights only; third to the committed underwriting investor who has given a subscription guarantee described below; and fourth to subscribers procured by Nordea Bank Abp and Skandinaviska Enskilda Banken AB (publ) or, when such subscribers have not been procured, to Nordea Bank Abp or Skandinaviska Enskilda Banken AB (publ) in accordance with, and subject to, the terms and conditions of the Underwriting Agreement.

The Record Date for determining which holders of existing shares in the Company are entitled to receive Subscription Rights is November 21, 2018. The shares are traded including the right to participate in the Offering up to and including November 19, 2018. The subscription period for the Offer Shares commences on November 26, 2018 at 9.30 a.m. Finnish time and ends on December 12, 2018 at 4.30 p.m. Finnish time. The Subscription Rights are freely transferable, and they are expected to be subject to trading on Nasdaq Helsinki between November 26, 2018 and December 5, 2018 and on Nasdaq Stockholm between November 26, 2018 and December 10, 2018. Subscription Rights that remain unexercised at the end of the Subscription Period on December 12, 2018 at 4.30 p.m. Finnish time will expire without compensation.

The Subscription Rights, the interim shares (“Interim Shares”) in Finland and paid subscribed shares (“BTA”) in Sweden will be traded on Nasdaq Helsinki and Nasdaq Stockholm. It will not be possible to transfer Subscription Rights, Interim Shares and BTAs between Euroclear Finland and Euroclear Sweden.

Ahlstrom-Munksjö will publish the final results of the Offering in a stock exchange release on or about December 18, 2018.

Participation of the principal shareholders in the Offering and the Underwriting

Baltiska Handels A.B., Belgrano Inversiones Oy, Viknum AB, AC Invest Five B.V., Ilmarinen Mutual Pension Insurance Company, Varma Mutual Pension Insurance Company, Alexander Ehrnrooth and Peter Seligson, representing in aggregate approximately 36.9 percent of the issued and outstanding shares in the Company, have each separately and irrevocably committed to subscribe in full for the Offer Shares on the basis of Subscription Rights allocated to them (“Subscription Undertakings”). In addition, Antti Ahlström Perilliset Oy has irrevocably committed to subscribe for Offer Shares that may remain unsubscribed for in the Offering for an amount representing approximately 10.0 percent of the Offer Shares (the “Subscription Guarantor”). The subscription commitments covered by the Subscription Undertakings and the Subscription Guarantor represent in aggregate approximately 46.9 percent of the Offer Shares.

Nordea Bank Abp and Skandinaviska Enskilda Banken AB (publ) have entered into the Underwriting Agreement with Ahlstrom-Munksjö pursuant to which they have severally agreed, subject to certain terms and conditions, to procure subscribers for any Offer Shares that may remain unsubscribed for in the Offering, excluding the Offer Shares that are covered by the Subscription Undertakings and regarding which the Subscription Guarantor has committed to subscribe for, or to subscribe for such Offer Shares themselves.

Indicative timetable for the Offering

Finland

Sweden

The Company has submitted a Finnish language prospectus for approval by the Finnish Financial Supervisory Authority. The Finnish language prospectus is expected to be approved on or about November 19, 2018. 

The detailed Terms and Conditions of the Offering are attached to this release as Appendix 1.

Nordea Bank Abp and Skandinaviska Enskilda Banken AB (publ), Helsinki Branch act as managers and Hannes Snellman Attorneys Ltd as the Company’s legal adviser in the Offering.

For further information, please contact:

Hans Sohlström, President and CEO, tel. +358 10 888 2520
Johan Lindh, Head of Investor Relations, +358 10 888 4994, johan.lindh@ahlstrom-munksjo.com
Juho Erkheikki, Investor Relations Manager, +358 10 888 4731, juho.erkheikki@ahlstrom-munksjo.com

IMPORTANT NOTICE

These materials are not an offer for sale of securities in the United States. Securities may not be sold in the United States absent registration with the United States Securities and Exchange Commission or an exemption from registration under the U.S. Securities Act of 1933, as amended. Ahlstrom-Munksjö does not intend to register any part of the rights offering in the United States or to conduct a public offering of securities in the United States.

The distribution of this release may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restrictions. The information contained herein is not for publication or distribution, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan, South Africa or the United States. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This release is not directed to, and is not intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.

In the European Economic Area, with respect to any Member State, other than Finland and Sweden, that has implemented Directive 2003/71/EC or Directive 2010/73/EU (together with any applicable implementing measures in any Member State, the ("Prospectus Directive") this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive.

This communication is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). Any securities mentioned herein are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

In connection with the product governance requirements of: (a) EU directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”), (b) Articles 9 and 10 of the Commission Delegated Directive (EU) 2017/593 of April 7, 2016 supplementing MiFID II, and (c) Chapter 5 of the Swedish Financial Supervisory Authority’s regulations regarding investment services and activities, FFFS 2017:2 and (d) other local implementation activities, (together the “MiFID II Product Governance Requirements”), and aside from liability for damages which may be incumbent on a “producer” (in accordance with the MiFID II Product Governance Requirements), the shares in the Company have been subject to an authorization process, in which the target market for shares in the Company is (i) non-professional clients and investors who fulfil the requirements for professional clients and equal counterparties, each in accordance with MiFID II (the “Target Market”), and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II. Notwithstanding the Target Market assessment, the distributors should note that: the value of the shares in the Company may decrease and investors may not regain all or part of the invested amount; shares in the Company do not guarantee revenue or capital protection; and an investment in the Company’s shares are solely suited for investors who are not in need of a guaranteed revenue or a capital protection, who (either alone or together with a suitable financial or other advisor) are capable of evaluating the benefits and risks with such an investment and have sufficient means to carry such losses that may arise thereof. The Target Market evaluation does not affect the requirements in any contractual, legal or regulatory sales restrictions in relation to the Offering.

The Target Market evaluation should not be considered as (a) an eligibility or suitability evaluation in accordance with MiFID II; or (b) a recommendation to any investor or group of investors to invest in, obtain, or take any other action concerning the shares. Each distributor is responsible for its own evaluation of the Target Market concerning shares and for determining the appropriate distribution channels.

This release does not constitute a prospectus as defined in the Prospectus Directive and as such, does not constitute or form part of and should not be construed as, an offer to sell, or the solicitation or invitation of any offer to buy, acquire or subscribe for, any securities or an inducement to enter into investment activity. A prospectus prepared pursuant to the Prospectus Directive will be published, which when published can be obtained from the Company’s website.

No part of this release, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. The information contained in this release has not been independently verified. No representation, warranty or undertaking, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. Ahlstrom-Munksjö or any of its respective affiliates, advisors or representatives or any other person, shall have no liability whatsoever (in negligence or otherwise) for any loss however arising from any use of this release or its contents or otherwise arising in connection with this release. Each person must rely on their own examination and analysis of Ahlstrom-Munksjö, its subsidiaries, its securities and the transaction, including the merits and risks involved.

This release includes “forward-looking statements.” These statements may not be based on historical facts, but are statements about future expectations. When used in this release, the words “aims,” “anticipates,” “assumes,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “should,” “will,” “would” and similar expressions as they relate to Ahlstrom-Munksjö, Expera and the transaction identify certain of these forward-looking statements. Other forward-looking statements can be identified in the context in which the statements are made. Forward-looking statements are set forth in a number of places in this release, including wherever this release include information on the future results, plans and expectations with regard to the combined company’s business, including its strategic plans and plans on growth and profitability, and the general economic conditions. These forward-looking statements are based on present plans, estimates, projections and expectations and are not guarantees of future performance. They are based on certain expectations, which, even though they seem to be reasonable at present, may turn out to be incorrect. Such forward-looking statements are based on assumptions and are subject to various risks and uncertainties. Shareholders should not rely on these forward-looking statements. Numerous factors may cause the actual results of operations or financial condition of the combined company to differ materially from those expressed or implied in the forward-looking statements. Ahlstrom-Munksjö or any of its affiliates, advisors or representatives or any other person undertakes no obligation to review or confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this release.

This release includes estimates relating to the synergy benefits expected to arise from the transaction and the combination of the business operations of Ahlstrom-Munksjö and Expera as well as the related integration costs, which have been prepared by Ahlstrom-Munksjö and are based on a number of assumptions and judgments. Such estimates present the expected future impact of the transaction and the combination of the business operations of Ahlstrom-Munksjö and Expera on the combined company’s business, financial condition and results of operations. The assumptions relating to the estimated synergy benefits and related integration costs are inherently uncertain and are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause the actual synergy benefits from the transaction and the combination of the business operations of Ahlstrom-Munksjö and Expera, if any, and related integration costs to differ materially from the estimates in this release.

[1]) Figures in USD have been converted into EUR using the EUR/USD exchange rate 1.15. According to the Share Purchase Agreement, the enterprise value of Expera was USD 615 million (EUR 535 million), which pursuant to the Share Purchase Agreement has been adjusted based upon the level of working capital, cash and debt as well as certain other expenditures relating to the transaction in the acquired business on the closing date.

Ahlstrom-Munksjö in brief

Ahlstrom-Munksjö is a global leader in fiber-based materials, supplying innovative and sustainable solutions to its customers. Our mission is to expand the role of fiber-based solutions for sustainable every day life. Our offering include filter materials, release liners, food and beverage processing materials, decor papers, abrasive and tape backings, electrotechnical paper, glass fiber materials, medical fiber materials and solutions for diagnostics as well as a range of specialty papers for industrial and consumer end-uses. Our annual net sales is about EUR 3 billion and we employ some 8,000 people. The Ahlstrom-Munksjö share is listed on the Nasdaq Helsinki and Stockholm.  

Read more at www.ahlstrom-munksjo.com.