Cybercom carries out a guaranteed rights issue not exceeding SEK 127 million

This press release may not be made public, published or distributed, directly or indirectly, in the United States of America, Canada, Australia, Hong Kong or Japan. Please refer to the Important Notice below.

• The Board of Directors of Cybercom Group AB (publ) has resolved on a new share issue not exceeding SEK 127 million, with preferential rights for the company’s shareholders in order to strengthen the company’s capital structure and creating improved prerequisites for the measures now being implemented in Cybercom to achieve the company’s financial targets
• The rights issue is subject to approval by an Extraordinary General Meeting to be held on 1 October 2012 at 16:00 CET. Notice to the General Meeting will be published on 30 August 2012
• The rights issue is 100 percent underwritten by subscription undertakings from current shareholders including JCE Group corresponding to in total approximately 43 percent of the rights issue and by guarantee undertakings from external investors corresponding to in total approximately 57 percent of the rights issue
• Institutional owners, together representing approximately 13 percent of the shares in Cybercom, have in addition expressed their support for the rights issue and their intention to vote in favor of the rights issue at the Extraordinary General Meeting
• The rights issue is part of a new arrangement Cybercom has entered into with its bank which will result in Cybercom after the right issue will having a more balanced financing solution and which will result in a decrease of the annual interest costs by approximately SEK 8 million
• The complete terms and conditions of the rights issue, including subscription price, will be established and announced in a press release around 27 September 2012
• Subject to approval by the Extraordinary General Meeting, the subscription period will run 9-23 October 2012

Background and reasons

During the period 2006-2008 Cybercom went through a phase of rapid growth mainly based on a number of acquisitions implying that the company’s turnover multiplied in a short time and that the company went from a net cash position of SEK 89 million by the end of 2006 to a net debt of SEK 393 million by the end of 2008 when it peaked. The acquisition of auSystems resulted in a substantial increase in size of the Swedish business and provided capacity to deliver services from Poland. The acquisition of Plenware resulted in an establishment and a strong position in the Finnish market as well as the capacity to deliver services from Romania, Estonia and China. Additional minor acquisitions were carried out during the same period of time. The strategic acquisitions were in line with the company’s previous ambition and strategy to become an IT consultancy with strong focus on the telecom sector, capacity for international delivery of services and increased presence in markets with low cost production in Europe and Asia.

As a consequence of the financial crisis during 2009 Cybercom witnessed a weakened demand. The telecom sector was at the time an important customer category and represented a significant part of Cybercom’s turnover. The major changes in the Nordic telecom sector during the last years have affected the company considerably negative which has entailed a negative turnover and result for the company. It has also resulted in that part of Cybercom’s international business does not longer have the same strategic value.

Cybercom has moved forward its position with many of its customers and increased its business volume outside the telecom sector in recent years, but the profitability development has not been satisfactory. During the third quarter 2011 the Board of Directors established new financial targets for Cybercom and based on these the company’s strategy has been revised and a new business plan has been created. A, to a large extent, new group executive management, with among others a new chief executive officer and a new chief financial officer, carries out a number of measures aiming to create a stronger company that can fulfill the company’s long-term financial goals. The measures comprise of, inter alia, increased focus on the Nordics as home domestic market, a joint way of working within the group to create a uniformed Cybercom, increased focus on the customer base with regard to diversification and profitability and an increased sales of turnkey contracts. As part of the measurements, Cybercom has during 2012 divested its business in China and initiated a close down of the business in Romania. Further, the executive management has accomplished a streamline of the business implying that the number of administrative roles within segment International has decreased and the organisation in segment Sweden has been streamlined through a merger of business areas and a reduction of the number of offices.

Cybercom’s historical strategy to grow by acquisitions was to a large extent financed by bank loans which at the most amounted to SEK 730 million but as per 30 June 2012 the amount was amortised down to SEK 178 million. The high amortisation pace in combination with the weakened development in recent years, inter alia, due to Cybercom’s large exposure towards the Nordic telecom sector and losses in the Chinese business, have resulted in an impaired result and cash flow as well as a need to strengthen the capital structure.

Cybercom’s Board of Directors has resolved on a new share issue of up to SEK 127 million with preferential rights for the company’s shareholders. The reasons for the rights issue is to strengthen the company’s financial structure and create improved conditions for the changes that is now being carried out in Cybercom and to reach the company’s long-term financial targets where focus is increased profitability and decreased net indebtedness.

The rights issue is a condition for the new financing solution which is better suited for Cybercom’s business. The financing solution implies among other things that the current terms and conditions for the bank loan are improved and that the company replaces an expensive factoring solution with a more flexible overdraft facility. The proceeds from the rights issue is intended to be used as a one-time amortisation of approximately SEK 50 million on existing loans and the remaining amount to strengthen the company’s working capital to be able to, inter alia, handle the liquidity fluctuations in a more efficient way to be able to reach the company’s long-term financial targets.

New financing solution

The rights issue is a part of and a condition for the new financing solution which Cybercom has agreed with its bank. SEK 50 million of the rights issue proceeds will be used to amortise the company’s bank loan. Cybercom also intends to terminate its factoring solution which is a relatively expensive form of financing. This will be replaced with a new overdraft facility which is a more flexible and cost efficient alternative.

The company’s interest-bearing net debt will amount to SEK 162 million after the rights issue and the factoring solution has been replaced with an overdraft facility (based on the balance sheet as per 30 June 2012). The indebtedness measured as interest-bearing net debt in relation to the group’s equity will decrease to 22 percent, to be compared with the company’s financial target of maximum 30 percent.

With the new financing solution the company’s interest costs is estimated to decrease by approximately SEK 8 million annually. The cash flow will be effected positively since Cybercom does not have to do any additional amortisation on the bank loan until 30 June 2013.

The rights issue

On 29 August 2012 the Board of Directors of Cybercom resolved on, subject to approval by the Extraordinary General Meeting, a new share issue not exceeding SEK 127 million with preferential rights for the company’s shareholders, in proportion to existing shareholdings as of the record date, 4 October 2012. If all shares are not subscribed for on the basis of subscription rights the Board of Directors shall decide on allotment, within the maximum amount of the issue, to those who have subscribed without preferential right according to the following priority. If allotment of shares subscribed for without subscription rights cannot be made in full, allotment will be made in relation to the number of exercised subscription rights in the rights issue, and if such allotment cannot be made, it will be made by drawing of lots. In the event that not all shares are allotted according to the above, allotment of shares will be made primarily to those who have subscribed without subscription rights, and, in case of oversubscriptions, in relation to the number of shares each of them have subscribed for, and if such allotment cannot be made, it will be made by drawing of lots. Finally of all allotment is made to the parties by which Cybercom has entered into underwriting agreements, in accordance with the terms and conditions set out in respective underwriter’s agreement.

The subscription period runs from and including 9 October 2012 up to and including 23 October 2012, or such later date decided by the Board of Directors.

The Board of Directors will around 27 September 2012 resolve on, and announce, the increase of the share capital, the number of subscription rights received per share, the number of subscription rights required for subscription for one new share, the number of shares to be issued and the subscription price to be paid for each new share.

Extraordinary General Meeting

The rights issue is subject to approval by an Extraordinary General Meeting. The Extraordinary General Meeting will be held on 1 October 2012 at 16:00 CET in Stockholm, Lindhagensgatan 126. The notice for the Extraordinary General Meeting will be published on Cybercom’s website www.cybercom.se on 30 August 2012 and in Post- och Inrikes Tidningar on 3 September 2012. There will be an announcement in Dagens Industri that the notice has been published.

In connection with the rights issue, the Board of Directors has also proposed to the Extraordinary General Meeting to make necessary amendments to the articles of association as well as to decrease the share capital enabling the execution of the rights issue. In the proposal for the amendments to the articles of associations there are two alternatives with regard to the new limits for the number of shares and the share capital. The reason for providing the two alternatives is to create flexibility for the decision by the Board of Directors on the complete terms and conditions. In addition to the items related to the issue of new shares, the notice will also include the item election of a board member on the agenda.

Subscription and guarantee undertakings

Existing shareholders in Cybercom, including the company’s largest shareholder JCE Group AB, representing in total approximately 43 percent of the capital and votes in the company have, through subscription undertakings, undertaken to subscribe for shares in the rights issue corresponding to their respective pro rata shareholding in Cybercom. In addition, the external investors Svolder AB, Traction Delta AB, Provobis Holding AB, Skandrenting AB and Prior & Nilsson Fond och Kapitalförvaltning have through underwriting agreements undertaken to subscribe for any shares in the rights issue that have not been subscribed for with or without subscription rights, corresponding to in total approximately 57 percent of the shares in the rights issue.

Consequently, the rights issue is fully underwritten by means of subscription and guarantee undertakings.

Institutional owners, together representing approximately 13 percent of the shares in Cybercom, have in addition expressed their support for the rights issue and the intention to vote in favor of the rights issue at the Extraordinary General Meeting.

Preliminary rights issue timetable

24 September 2012                         Cybercom announces preliminary outcome for the third quarter of the financial year 2012

27 September 2012                         The complete terms and conditions of the rights issue are announced

1 October 2012                               The Extraordinary General Meeting resolves on approval of the Board of Directors’ rights issue resolution and amendments to the articles of association

2 October 2012                               First day of trading in the Cybercom share excluding subscription rights

4 October 2012                               Record date for allotment of subscription rights

8 October 2012                               Estimated date for publication of the prospectus

9-18 October 2012                          Trading in subscription rights

9-23 October 2012                          Subscription period

25 October 2012                             Cybercom announces the interim report for the third quarter of the financial year 2012 and the preliminary outcome of the rights issue

31 October 2012                             Estimated date for announcement of the final outcome of the rights issue

Financial and legal advisors

Nordea Corporate Finance is acting as financial advisor to Cybercom in the rights issue and Advokatfirman Törngren Magnell is acting as legal advisor to Cybercom.

Cybercom Group AB (publ) discloses this information pursuant to the Securities Market Act and/or the Financial Instruments Trading Act. The information was submitted for publication on 30 August 2012, 08:30 CET.

For further information please contact:

About Cybercom

Cybercom is an IT consulting company that assists leading companies and organisations to benefit from the opportunities of the connected world. The company’s areas of expertise span the entire ecosystem of communications services. Cybercom’s domestic market is the Nordic region, and in addition the company offers global delivery capacity for local and international business. Cybercom was founded in 1995 and has been quoted on the NASDAQ OMX Stockholm exchange since 1999.

IMPORTANT NOTICE

In certain jurisdictions, the publication or distribution of this press release may be subject to legal restrictions and persons in those jurisdictions where this press release has been published or distributed should inform themselves about and abide by such legal restrictions.

This press release may not be published or distributed, directly or indirectly, in or to the United States, Canada, Australia, Hong Kong, Japan or any other jurisdiction where such action is wholly or partially subject to legal restrictions. Nor may the information in this press release be forwarded, reproduced or disclosed in such a manner that contravenes such restrictions. Failure to comply with this instruction may result in a violation of the United States Securities Act of 1933 ("Securities Act") or laws applicable in other jurisdictions.

This press release does not contain or constitute an invitation or an offer to acquire, subscribe for or otherwise trade in shares, subscription rights or other securities in Cybercom Group AB (publ). Any invitation to the persons concerned to subscribe for shares in Cybercom Group AB (publ) will only be made through the prospectus Cybercom Group AB (publ) intends to publish by the beginning of October 2012.

Neither of the subscription rights, the BTAs (interim shares) or the new shares will be registered in accordance with the Securities Act or any provincial act in Canada. The subscription rights, the BTAs (interim shares) or the new shares may not, directly or indirectly, be transferred or offered for sale in the United States, Canada, Australia, Hong Kong, Japan or any other country where such action is wholly or partially subject to legal restrictions, or to persons resident there or on account of such persons other than in such exceptional cases that do not require registration in accordance with the Securities Act or any provincial act in Canada or corresponding measure according to applicable legislation in other jurisdictions.