Hemtex to implement guaranteed new share issue in an amount of approximately SEK 150 M

• The Board of Directors of Hemtex has decided to implement a new issue of shares in an amount of SEK 150 M with preferential rights for current shareholders (rights issue).

• The rights issue will strengthen Hemtex’s financial position and enable the company to continue to aggressively pursue its long-term strategy.

• The rights issue is covered in full by subscription undertakings and/or guarantees from Hemtex’s major shareholders.

• The complete terms and conditions for the rights issue, including the subscription price, will be established and communicated in a press release no later than April 17, 2009. The Board of Directors’ decision concerning a rights issue is conditional upon the approval of an Extraordinary General Meeting, which will be held on April 21, 2009.

In connection with the rights issue, the company’s bank financing will be rearranged to longer-term commitments in the form of longer credit durations and amortization periods. It is considered that these actions will significantly improve the Group’s cash flow, while facilitating a return to profitability.


Background and reasons

Hemtex is the leading home textile chain in the Nordic region, with a total of 222 stores in six countries. As a result of the weak sales and earnings trends of the past six months, in combination with the difficult economic climate, Hemtex, despite its solid equity/assets ratio, wishes to strengthen its financial position. The Board of Directors has initiated a number of actions designed to enhance the company’s profitability and growth. A cost-saving and efficiency program is under way in the Group with the aim of reducing costs in comparable stores by more than SEK 35 M during the fiscal year. An adaptation of the customer offering is currently under way, whereby over time Hemtex will account for inspiration and renewal in terms of the product range and high-quality home-decor products. The communications strategy has been developed in order to enhance the company’s market impact. The price strategy has been changed through a reduction in the regular prices of a large number of products and Hemtex has established a powerful strategy for the communication of attractively priced high-quality home textiles.

In addition to these actions, the Board of Directors is convinced that the rights issue will significantly increase the company’s opportunities in respect of future growth and profitability. In view of the prevailing market conditions, the Board of Directors of Hemtex believes that a strengthening of the company’s financial position will provide stability, increased security and, above all, freedom of action in the future. The rights issue will increase the freedom of action of the company’s new President and Chief Executive Officer, Göran Ydstrand, to implement the long-term strategic changes that have been decided by the Board, even during the current recession. The rights issue will also enable aggressive actions aimed at, for example, stronger organic growth and the acquisition of suitable store locations.


Terms and conditions for the planned rights issue

Holders of existing shares will be provided with preferential rights to subscribe for new shares in relation to the number of shares already held. It will also be possible to subscribe for shares without preferential rights. The record date at Euroclear Sweden AB (formerly VPC AB) for qualifying for the right to participate in the share issue based on preferential rights (rights issue) is April 24, 2009 and the subscription period will extend from April 29 through May 13, 2009, or the later date decided by the Board of Directors.

The largest shareholders in Hemtex - Hakon Invest, Industrivärden, a consortium of current and former franchisees and the Second AP Fund – have undertaken to subscribe for shares from the issue equivalent to their current Hemtex holdings, which correspond to approximately 58% of the new issue. In addition, Hakon Invest has guaranteed the new issue and, in so doing, has undertaken to subscribe for those shares that are not subscribed for or paid for by any other party.

If the rights issue is not subscribed for in full on the basis of subscription rights, Hakon Invest could, due to its guarantee commitment, end up holding a maximum of approximately 53.5% of the voting rights and share capital in Hemtex after the rights issue has been implemented. Hakon Invest has been granted exemption by the Swedish Securities Council from having to make a statutory takeover offer for Hemtex in the event that Hakon Invest’s shareholding in Hemtex, through subscription via the rights issue, should end up amounting to 30% or more of the voting rights in the company; see statement 2009:08. A condition for the Swedish Securities Council’s decision to exempt Hakon Invest from the statutory takeover obligation is that a resolution of an Extraordinary General Meeting approving the rights issue is passed by shareholders corresponding to at least two thirds of both the votes cast and the shares represented at the Meeting, disregarding the shares represented by Hakon Invest.

The decision concerning a rights issue is subject to approval by an Extraordinary General Meeting of shareholders, which will be held at 4:30 p.m. on April 21, 2009 at Druveforsvägen 8 in Borås. Notice convening the Extraordinary General Meeting will be published no later than April 7, 2009 and will also be posted on www.hemtex.se.

Pro forma balance-sheet effects of the planned rights issue
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As a result of the rights issue, the balance sheet will be strengthened, so that net indebtedness in relation to EBITDA, if all other factors remain equal, would have amounted to a multiple of 1.6, before transaction costs, had the rights issue been implemented at the end of the third quarter, meaning on January 31, 2009. Based on the same method of calculation, the Group’s equity/assets ratio would have amounted to 61.3%, as opposed to the reported ratio of 46.1%.


Preliminary time schedule for the rights issue

April 17, 2009 Final day for the Board to decide on the amount by which the share capital is to be increased, the number of shares to be issued and the subscription price to be paid for the new common shares.

April 21, 2009 An Extraordinary General Meeting approves the rights issue.

April 22, 2009 First day of trading in the share ex-rights to participation in the rights issue.


April 24, 2009 Record date, meaning that shareholders who are registered in the Shareholder Register on this day will receive subscription rights that provide entitlement to participation in the rights issue.

April 29 – May 8, 2009 Trading in subscription rights.

April 29 – May 13, 2009 Subscription period.

May 19, 2009 Release on the results of the rights issue.

Mid-June 2009 Rights issue is completed.


Financial and legal advisers

Swedbank Markets is Hemtex’s financial adviser and Gernandt & Danielsson the legal adviser.