Sappi announces terms of rights offer to acquire M-real’s coated graphic paper business
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Sappi has finalised the terms of its proposed rights offer to facilitate the acquisition of the coated graphic paper business of M-real, as announced on 29 September 2008. This follows receipt of shareholder approval for the acquisition on 03 November 2008 and competition clearance from the European Commission on 31 October 2008.
Sappi is seeking to raise approximately ZAR5,815 million (€450 million based on an exchange rate of ZAR12.925/€) through a fully underwritten renounceable rights offer of 286,886,270 new ordinary shares of ZAR1.00 each. The subscription price will be ZAR20.27 per rights offer share and be issued in the ratio of 6 rights offer shares for every 5 Sappi shares held. The subscription price is at a discount of 65.2% to the closing price of Sappi ordinary shares on 6 November 2008 of ZAR58.25, at a discount of 46.0% to the theoretical ex-rights price of a Sappi ordinary share of ZAR37.53 on the same day and at a discount of 44.9% to the theoretical ex-rights price of a Sappi ordinary share (adjusted for the dividend of US$0.16 per share) of ZAR36.80 on the same day.
The rights offer has been fully underwritten, subject to certain conditions, by Citigroup Global Markets Limited and J.P. Morgan Securities Limited. Certain significant Sappi’s shareholders, including Allan Gray and RMB, who between them account for 34.5% of the current share capital, have already agreed to subscribe for their full entitlement under the proposed rights offer.
Commenting on the rights offer, Sappi chief executive Ralph Boëttger said:
“We are delighted to have successfully cleared each procedural step to date in this acquisition, obtaining competition clearance and gaining approval from our shareholders. It is reassuring at this stage to hold firm pledges of commitment to this rights offer from certain key shareholders. We would like to thank them for their continued support and reassure them that we remain absolutely committed to delivering value to all of our shareholders.”
The transaction to acquire M-real’s coated graphic paper business meets Sappi’s strategic and financial criteria for acquisitions as it enhances Sappi’s global presence, provides an opportunity to increase Sappi’s customer base, improves Sappi’s strategic flexibility in regards to capacity utilisation, increases the range of products offered and provides anticipated growth and cost synergies. Sappi also expects benefits from increased profitability and returns and improved cash flows for the Sappi group. The acquisition allows Sappi to strengthen its competitive position in the coated graphic paper industry in Europe and globally.
ENDS