Seamless announces offering to its shareholders to acquire shares in the subsidiary Seamless Distribution Systems AB

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On June 19, 2017, the Board of Directors of Seamless Distribution AB (“Seamless”) resolved to offer the shareholders in Seamless to acquire up to 85 per cent of the shares in the subsidiary Seamless Distribution Systems AB (“SDS” or the “Company”) (the “Offering”) and in connection therewith list SDS on Nasdaq First North Premier. The purpose is to unlock values present in the group and create the best possible conditions for the future development of each company.

The Offering in brief

• Shareholders in Seamless will be allotted one (1) purchase right (Sw. Inköpsrätt) for each share held in Seamless. Ten (10) purchase rights grant the right to acquire one (1) SDS share for SEK 36.
• In aggregate, 5,876,530 shares in SDS, corresponding to 85 per cent of the outstanding shares in the Company (votes as well as capital), will be offered for sale.
• The Offering is underwritten to approximately 57 per cent, partly through undertakings from certain shareholders in Seamless to exercise the purchase rights received, partly through undertakings from certain shareholders in Seamless as well as external guarantors to acquire shares not sold through the exercise of purchase rights or in any other way. Undertakings from existing shareholders to exercise the purchase rights amount to approximately 24 per cent of the Offering and undertakings to purchase shares not sold through the exercise of purchase rights amount to approximately 33 per cent of the Offering. Seamless reserves the right to obtain additional underwritings up to 70 per cent of the Offering.
• The sale of the SDS shares included in the Offering will bring at least SEK 120.0 million and up to SEK 211.6 million to Seamless, before deduction of expenses related to the Offering.
• The record date for receiving purchase rights is June 28, 2017. Last day of trading in the Seamless share including rights to allotment of purchase rights in the Offering is June 26, 2017. First day of trading in the Seamless share without rights to allotment of purchase rights is June 27, 2017.
  • The price in the Offering corresponds to a market capitalisation of SDS of approximately SEK 248.9 million.

Background and reasons

Seamless has two main business areas under its current structure: SEQR (mobile payments conducted through the subsidiary SEQR Group AB) and digital distribution of airtime and mobile data, conducted by SDS. The technological and industrial synergies between SDS and SEQR are nowadays severely limited. SDS’ technology was essential for SEQR during the start-up phase of SEQR, but the technological synergies have thereafter practically ceased. Furthermore, the companies are operating in different geographical markets and target different customer groups. Due to these circumstances, the Board of Directors of Seamless deems that there is no longer any industrial logic in maintaining the subsidiaries within the same group. Moreover, the Board of Directors does not consider Seamless’ current market capitalisation to be satisfactory reflecting the progression and potential within each business area. The Board of Directors of Seamless has, against this background, decided to split the group by divesting 85 per cent of the shares in SDS, thus unlocking value present in the group while creating the best possible conditions for SEQR and SDS to develop in a positive direction. The development of SEQR has predominantly been financed through funds generated in SDS. Consequently, SDS has had limited financial means for expanding the Company’s business. As SDS will no longer be a subsidiary of Seamless, the Board of Directors deems SDS to have better prospects of continuing the Company’s positive trend going forward. Furthermore, the Board of Directors of SDS has identified a number of interesting expansion opportunities that increased access to capital may enable. On the back of this and the assessed capital requirements of SEQR, the Board of Directors of Seamless has resolved to offer the shareholders in Seamless to acquire up to 85 per cent of the shares in SDS. Seamless will remain a shareholder in SDS with at least 15 per cent of the shares.

Terms and conditions for the Offering

The Board of Directors of Seamless has with support from the authorisation given at the annual general meeting on April 20, 2017, resolved to divest up to 85 per cent of the shares in the wholly owned subsidiary SDS, whereby the shareholders in Seamless are offered to acquire these shares.

The decision entails that shareholders in Seamless on the record day, June 28, 2017, will be allotted one (1) purchase right for each share in Seamless. Ten (10) purchase rights grant the right to acquire one (1) SDS share. SEK 36 should be paid in cash for each acquired SDS share.

In total, 5,876,530 shares in SDS will be offered for sale. In the event not all shares in the Offering are acquired by exercise of purchase rights (primary purchase rights) the Board of Directors will, within the framework of the Offering, resolve on the allocation of SDS shares without support from purchase rights, whereby the allocation shall be made in the following order:

(a)   Those who have acquired shares in SDS by exercise of purchase rights (whether or not they were shareholders on the record date) and have applied to acquire additional shares in SDS without support of purchase rights pro rata in relation to the number of SDS shares acquired by exercise of purchase rights.

(b)   Others who have applied for acquiring shares in SDS without the support of purchase rights, pro rata in relation to their reported interest.

(c)   Those who have undertaken to acquire shares not sold as per above.

Through the Offering, which is underwritten to approximately 57 per cent (see undertakings to exercise purchase rights and undertakings to acquire shares in SDS below), will bring at least SEK 120.0 million and up to SEK 211.6 million to Seamless, before deduction of expenses related to the Offering.

The record date for obtaining purchase rights is June 28, 2017. Last day of trading in the Seamless share including rights to allotment of purchase rights in the Offering is June 26, 2017. First day of trading in the Seamless share excluding rights to allotment of purchase rights is June 27, 2017. Application to acquire SDS shares shall be made between June 29 – July 14, 2017. Trading with purchase rights occurs between June 29 – July 12, 2017, and is arranged on the Mangold list through Mangold Fondkommission AB.

No financial compensation is paid for non-utilised purchase rights. Shareholders who are allotted purchase rights should notice that taxation occurs in different ways depending on whether purchase rights are exercised, sold or expire unused.

For further information and the complete terms and conditions for the Offering, please refer to the prospectus that is estimated to be published around June 27, 2017.

Undertakings to exercise purchase rights and undertakings to acquire shares in SDS

The Offering is underwritten to approximately 57 per cent through undertakings from certain shareholders in Seamless to exercise received purchase rights corresponding to approximately 24 per cent of the Offering and through purchase undertakings for shares not sold in the Offering from certain Seamless shareholders and certain external investors corresponding to approximately 33 per cent of the Offering. Among these are Danske Invest Fonder and Kinnevik Consumer Finance. Seamless reserves the right to obtain additional underwritings up to 70 per cent of the Offering.

Listing on Nasdaq First North Premier

The Board of Directors of SDS has applied for, and received, approval from Nasdaq Stockholm regarding the listing of the Company’s shares on Nasdaq First North Premier, provided that customary conditions are fulfilled, including that the Swedish Financial Supervisory Authority (Sw. Finansinspektionen)  approves the prospectus prepared for the Offering, and that the distribution requirements in respect of the Company’s shares being fulfilled no later than on the first day of trading. The first day of trading in the SDS share on Nasdaq First North Premier is expected to July 21, 2017, and the share will be traded under the ticker symbol SDS. The Board’s ambition is to, dependent on market conditions, list the Company’s shares on Nasdaq Stockholm’s main list within 12 months after the listing on Nasdaq First North Premier has been completed.

Prospectus

A prospectus with complete terms and conditions for the Offering is estimated to be published around June 27, 2017, on SDS’ website (sds.seamless.se), Seamless’ website (www.seamless.se), ABG’s website (www.abgsc.com) and DNB’s website (www.dnb.no/emisjoner).

Preliminary timetable

About SDS

SDS is a global and fast-growing software development company specialising in technology solutions for electronic distribution. The Company, with origins dating back to 2001, was founded in 2014 as a subsidiary of Seamless Distribution AB in order to focus on the parent company’s original business idea, to develop and sell distribution systems for electronic top-up of prepaid cards to mobile operators

SDS’ systems streamline the distribution of airtime by replacing physical vouchers and scratch cards, which results in cost savings for mobile operators while improving flexibility and limiting delivery risk. The Company’s transaction engine ERS 360 is the hub of SDS’ operations and handles more than 5.3 billion mobile transactions every year, and is utilised in more than 675,000 sales outlets on 28 markets. Furthermore, SDS provides support, operations and management services for the distribution systems.

The Company has a strong market position in developing countries, particularly in Africa, and provides transaction systems to several leading mobile operators. SDS is headquartered in Stockholm with local offices in Asia, Africa and South America.

Strengths and opportunities

• Strong structural growth for the telecom sector in Africa and the Middle East – SDS’ main markets
• Proven and scalable business model uniquely positioned in an attractive niche market
• SDS is positioned to take advantage of market growth trends and meet wider demand
• Unique platform and effective R&D organisation in place for further expansion through new products
• Solid financial history characterised by high degree of cash conversion

Financial targets and dividend policy

SDS established financial targets for the first years’ operations in 2014, when the Company was founded. The aim was to rapidly increase revenue with retained or increased profitability, which was successfully achieved. Going forward, the target is that the Company’s core business, i.e. the sale of ERS 360, will continue to grow by about 20 per cent per year with an operating margin of 20 to 30 per cent.

The Company deems that there are a number of interesting business opportunities related to the core business, which has evolved steadily in recent years. However, with respect to SDS’ newly established business area for reseller credits, uncertainty exists about the group’s future revenue distribution and, consequently, the Company’s margins and working capital requirements. Therefore, the Board of Directors of SDS has decided, for the time being, not to present any financial targets for SDS. The intention is to establish financial targets for the SDS when it is more clearly known how the new business area of offering reseller credits is developing.

Financial overview

Advisers

ABG Sundal Collier and DNB Markets are financial advisers to Seamless in the Offering. Wigge & Partners Advokat KB is legal adviser to Seamless.

For more information, please contact:

Martin Larsson, Head of Treasury & Investor Relations

Telephone: +46 707 22 56 65

Email: martin.larsson@seamless.se

Albin Rännar, CEO, SDS

Telephone: +46 704 44 52 52

Email: albin.rannar@seamless.se

This information is information that Seamless Distribution AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. This information was submitted for publication, through the agency of the contact person set out above, at 8.50 a.m. CET on June 20, 2017.

Important information

This press release is 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 (the “Securities Act”). Neither Seamless Dstribution AB nor Seamless Distribution Systems AB intend to register any part of the offering in the United States or to conduct a public offering of Shares in the United States. Any securities sold in the United States will be sold only to qualified institutional buyers (as defined in Rule 144A under the Securities Act) in a transaction exempt from the registration requirements under the Securities Act.

This press release is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to 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 in (i), (ii) and (iii) above together being referred to as “relevant persons”). The Shares and Rights 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.

FCA/ICMA Stabilization applies.

In any EEA Member State that has implemented the Prospectus Directive (other than Sweden), this press release is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive. The expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including Directive 2010/73/EU, to the extent implemented in any relevant Member State) and includes any relevant implementing measure in the relevant Member State.

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