The sale price for the shares is NOK 7 550 million (2), which after adjustment for cash and other financial capital, is equivalent to an Enterprise Value for the transferred assets of

NOK 6 966 million (12.0x 2005 reported EBITDA)

 

The sale will take place in return for cash consideration in the amount of NOK 5 608 million, shares in Mecom for a total value of GBP 73 million (NOK 852 million) and a vendor loan note(3) of GBP 93,4 million (NOK 1 090 million) issued by Mecom to Orkla ASA. These shares will constitute a stake of 19.97% in Mecom. Orkla will be entitled to appoint one director to the Mecom board.

 

The agreement is expected to be effected around the end of September. Mecom shall draw up an admission document in connection with its capital increase and readmission to the Alternative Investment Market (AIM) of the London Stock Exchange. The capital increase is conditional, inter alia, on the approval of Mecom's shareholders at an extraordinary general meeting and the receipt of certain competition clearances.

 

"The negotiated sale price of NOK 7.6 billion provides good value creation for Orkla shareholders. As a result of the agreement, NOK 5.6 billion will be freed up and Orkla will acquire an interesting financial position in an exciting new European media company with growth potential. The agreement is also good for Orkla Media, which will continue to run its operations from Oslo. It also makes us happy that Bjørn Wiggen, Managing Director of Orkla Media, has been offered and accepted the position as CEO of Mecom Europe," says Group President and CEO Dag J. Opedal.

 

 

 

(1) Orkla ASA will retain its equity interest in Hjemmet Mortensen (50 per cent of shares, 40 per cent financial interest) and the German online newspaper company Netzeitung Gmbh. In 2005, Hjemmet Mortensen had an EBITDA (100 per cent) of NOK 344 million.

 

(2) The agreement covers certain assets whose existing owners have a pre-emptive right of purchase. A solution will be sought with the other owners. Should a solution not be reached, these assets will be retained by Orkla until further notice and Mecom will in that event be duly compensated. The total transaction value of these assets is NOK 544 million.

 

(3) The vendor loan note has an interest rate of 6-month LIBOR + 5 % and Mecom can at any time during a period of two years repay the vendor loan note. In the event that the vendor loan note is not repaid after two years, it will automatically be converted into shares in Mecom based on a share price of 65 p or the average price of the Mecom share in the last 30 days if the latter is lower than 65 p. However, the total holding in Mecom of Orkla and any parties acting in concert with Orkla immediately following such conversion must not exceed 29.99 %. Any remaining amount outstanding will in such case remain outstanding as a negotiable bond with an interest rate of 6-month LIBOR + 10 % and a remaining maturity of 8 years subject to a right for Mecom to prepay at any time. Mecom has the right to capitalise accrued interest at all times.

 

Deutsche Bank has acted as the financial adviser to Orkla in this transaction.

 

A press conference will be held at Orkla's head office in Skøyen at 11 a.m.

 

Attached please find Mecom's stock exchange notice.