Guaranteed Pre-emptive Rights Issue in SinterCast
* The Board of Directors proposes a pre-emptive rights issue of
shares and warrants, subject to approval at an Extraordinary
General Meeting (EGM) of the shareholders, to be held on 20
August 2009
* New share issue to generate SEK 23.1 million, prior to
transaction costs. Additional capital will be generated in the
event that the associated warrants are exercised
* Term of subscription to run from 31 August to 14 September 2009
* Rights issue fully guaranteed through subscription undertakings
and guarantee commitments
* New Employee Option Programme to be proposed to the EGM
[Stockholm, 4 August 2009] - During the 7 May 2009 Annual General
Meeting (AGM), SinterCast's shareholders authorised the Board of
Directors to increase the share capital prior to the next AGM,
through one or more new share issues with pre-emptive rights. This
pro-active authorisation was motivated by the overall decline in
global automotive production and the associated delay in capital
expenditure related to the installation of new production capacity
and process control equipment throughout the foundry industry.
The Managing Director's presentation at the AGM noted that SinterCast
requires series production levels of approximately 800,000 Engine
Equivalents per year, plus some installation revenue, in order to
achieve positive cashflow. SinterCast's series production reached
750,000 Engine Equivalents during the second half of 2008, but has
since declined and stabilised at approximately 400,000 Engine
Equivalents, directly paralleling the overall reductions in the wider
automotive industry. The Managing Director's AGM presentation also
noted that the Company would immediately intensify its ongoing
discussions with foundries in Europe, Asia and the Americas regarding
new installations, in order to quantify the near-term liquidity
outlook. While these efforts have since resulted in a successful
installation at the Luitpoldhütte foundry in Germany, and a hardware
upgrade/expansion at one existing installation, it has become
apparent that decisions regarding the majority of the ongoing
installation discussions will be delayed beyond the second-half of
2009.
The Board of Directors remains optimistic for additional installation
revenue in the near term and anticipates the start of series
production of at least one new SinterCast-CGI engine programme during
2009. Accordingly, the Board of Directors remains confident in
market opportunities and growth potential for the Company. However,
in consideration of the uncertain timing of the overall recovery in
the automotive and foundry industries, the Board of Directors judges
that it is in the best interest of the shareholders to proceed with
the new rights issue at this time, in order to ensure the long-term
security of the Company and to enable the Company to take offensive
operational actions as the market recovers. On this basis, the Board
of Directors has decided to propose a pre-emptive rights issue of
shares and warrants that initially will generate SEK 23.1 million,
prior to transaction costs.
Terms of the Pre-emptive Rights Issue
The Board of Directors hereby proposes to the Extraordinary General
Meeting of shareholders, to be held on 20 August 2009, a pre-emptive
rights issue of a maximum of 925,483 new shares and 925,483 new
warrants. It is noted that a pre-emptive rights issue has already
been authorised by the 7 May 2009 AGM, however, the inclusion of the
warrants in the present proposal requires a new and separate mandate
from the shareholders. The warrants have been added to the present
proposal as an incentive to further encourage shareholder
participation in the rights issue.
According to the present proposal, shareholders will receive one (1)
subscription right (unit right) for each share currently held. Every
six (6) unit rights entitle the holder to subscribe to one Unit at
the subscription price SEK 25 per Unit. Each Unit consists of one (1)
share and one (1) warrant. Every two (2) warrants entitle the holder
to subscribe to one (1) share at SEK 25 during the period 1-30
September 2010. The subscription price represents a discount of
approximately 40% relative to the current share price, without
consideration for the warrants.
Units that have not been subscribed to pursuant to the pre-emptive
rights will be offered to shareholders who applied to subscribe for
Units without pre-emptive rights. Such Units shall be distributed
pro rata in relation to the number of Units the shareholder has
subscribed to with support of the pre-emptive rights. In addition
thereto, other investors are offered to subscribe to Units without
the support of unit rights. The term of subscription shall run from
31 August to 14 September 2009. As the proposal does not affect the
shareholders' pre-emptive rights, resolution at the EGM requires a
simple majority (50%) of the votes cast.
Subscription Undertakings and Guarantee Commitment
All members of the Board of Directors and senior management have
declared their support and have undertaken to participate in the
pre-emptive rights issue. Certain other shareholders have also
declared their support for the pre-emptive rights issue and have
likewise undertaken to participate. Additionally, certain investors,
both existing shareholders and non-shareholders, have entered into
guarantee commitments. In total, the subscription undertakings and
the guarantee commitments equal the full amount of SEK 23.1 million,
corresponding to 100% of the initial capital raised in the
pre-emptive rights issue.
Indicative Time Schedule
Extraordinary General Meeting: 20 August 2009
Preliminary date for publication 24 August 2009
of prospectus:
Last day of trading in the shares 24 August, 2009
with the right to participate in
the rights issue:
First day of trading in the 25 August 2009
shares without the right to
participate in the rights issue:
Record date for participation in 27 August 2009
the rights issue:
Trading in unit rights: 31 August to 9 September 2009
Trading in paid subscribed units: 31 August 2009 until the rights
issue is registered with the
Swedish Companies Registration
Office
Subscription period in the rights 31 August to 14 September 2009
issue:
Trading in warrants: Mid-October 2009 to 27 September
2010
Financial Advisor
Remium AB is acting as advisor to SinterCast in conjunction with the
pre-emptive rights issue.
Employee Option Programme
The Board of Directors also proposes that a new employee stock option
programme be approved by the EGM. This proposal is motivated by the
fact that the employees are effectively without a current incentive
programme and that the Board judges that it is critical for
SinterCast, as a technology specialist company, to motivate and
secure its key staff.
It is proposed that the options, which will be received free of
charge, shall be allotted to all staff currently employed in the
SinterCast Group and that an allocation be reserved for individuals
who may be employed in the future. Each option will entitle the
holder to subscribe to one share. The maximum number of options
allotted shall be 300,000, of which the President & CEO will be
allocated 150,000. A total of 15,000 options will be reserved to
cover the social costs of the programme and 5,000 options will be
reserved for new employees that may join the company during the term
of the programme. The remaining options will be distributed among
the employees, as determined by the Board of Directors. The
subscription of shares via the options will take place annually over
a four year period, with the subscription price being equivalent to
an annual increase of ten (10) percent of the average volume-weighted
price paid for one SinterCast share on the Stockholm Stock Exchange
on each trading day during the period 6-19 August 2009. This
corresponds to a 46.5% increase over the four year term of the
programme.
The employee stock options shall be subject to a ceiling such that
any profit, at exercise, cannot exceed SEK 50 per option. In
consideration of the time required to administer the programme
following the EGM, and SinterCast's internal policy preventing
trading prior to the publication of quarterly reports, the annual
subscription period is proposed to run from 1 November to 15 December
each year. The proposed employee option programme shall therefore
expire on 15 December 2013 and convey the right to subscribe to:
15% of the options during the period 1 November to 15 December 2010
20% of the options during the period 1 November to 15 December 2011
25% of the options during the period 1 November to 15 December 2012
40% of the options during the period 1 November to 15 December 2013
The options can only be subscribed to provided that the option-holder
has not been terminated from his or her position or voluntarily left
the Company prior to any of the exercise periods. By entering into
the proposed option programme, all employees will automatically
forfeit any options that may currently be held, such that there will
only be one active programme at the outset of the proposed new option
programme.
In order to implement the option programme, the Board of Directors
proposes that the EGM resolve to undertake the issue of a total of
300,000 warrants, which each convey the right to subscribe to one
share. Based on an average volume-weighted price of SEK 40 during
6-19 August 2009, and the assumption that all options will be
realised at the maximum ceiling of SEK 50, the reported statutory
cost for the employee options is calculated to amount to
approximately SEK 4.8 million during the 2009 to 2013 period. With
full exercise of the options, the Company's share capital will
increase by SEK 300,000. This increase is equivalent to a dilution
effect of approximately 5.1% of the total number of shares and votes
in the Company (4.4% of the total number of shares and votes after
the proposed rights issue and, 4.2% of the total number of shares and
votes if the warrants associated with the new rights issue are
exercised). A valid resolution requires that the proposal is
supported by shareholders representing at least nine-tenths (90%) of
the votes (shares) represented at the EGM.
EGM Date and Location
The EGM will be held at 14:00 on Thursday 20 August 2009 at the
premises of Remium AB, Kungsgatan 12-14, Stockholm, Sweden.
Additional Information
Further information about the proposed new rights issue and the
proposed employee stock option programme will available in the notice
to the EGM, which will be posted on the Company's website,
www.sintercast.com, and published in Svenska Dagbladet and Post- och
Inrikes Tidningar on 6 August 2009. The Board's complete proposals
will also be available on the Company's website as of 6 August 2009.
The preliminary publication date for the prospectus related to the
new rights issue is 24 August 2009.
For and on behalf of the Board of Directors,
Ulla-Britt Fräjdin-Hellqvist
Chairman
SinterCast AB (publ)
Box 10203
SE-100 55 Stockholm
Sweden
Tel: +46 8 660 7750
e-mail: u-b.frajdin-hellqvist@sintercast.com
Important information
The publication or distribution of this press release may in certain
jurisdictions be subject to restrictions by law and persons in such
jurisdictions where this press release has been made public or
distributed should inform themselves about such restrictions and act
accordingly.
This press release may not be announced, published or distributed,
directly or indirectly, to or in the United States of America,
Canada, Japan New Zealand South Africa or Australia or in any other
country where such measure wholly or partly is subject to
restrictions by law. The information in this press release may not be
forwarded, reproduced or shown in any way that is in conflict with
such restrictions. Failure to comply with this instruction may
constitute a violation of the United States Securities Act of 1933
("Securities Act") or applicable laws in other jurisdictions.
Nothing in this press release shall be deemed to constitute an
invitation or an offer to invest, subscribe or otherwise deal with
shares, subscription rights or other securities in SinterCast. The
invitation to relevant persons to subscribe for shares in SinterCast
will only be made in the prospectus which SinterCast is intending to
make public on 24 August 2009. The prospectus will inter alia contain
accounting records and information about the Board of Directors and
the auditor of SinterCast.
Neither unit rights, nor paid and subscribed units or new shares will
be registered pursuant to the Securities Act or to any provincial law
in Canada and may not be transferred or offered for sale in the
United States of America or Canada, or to a person domiciled in such
state or for such persons account other in such cases, where
registration is not required pursuant to the Securities Act or any
provincial law in Canada.
SinterCast is the world's leading supplier of process control
technology for the reliable high volume production of Compacted
Graphite Iron (CGI). With at least 75% higher tensile strength, 45%
higher stiffness and approximately double the fatigue strength of
conventional grey cast iron and aluminium, CGI allows engine
designers to improve performance, fuel economy and durability while
reducing engine weight, noise and emissions. SinterCast produces a
variety of CGI components ranging from 2 kg to 17 tonnes, all using
the same process control technology. The end-users of SinterCast-CGI
components include Aston Martin, Audi, Caterpillar, Chrysler, DAF
Trucks, Ford, Ford-Otosan, General Electric Transportation Systems,
General Motors, Hyundai, Navistar, Jaguar, Kia, Land Rover, MAN, MAN
B&W Diesel, Porsche, PSA Peugeot-Citroën, Renault, Rolls-Royce Power
Engineering, Toyota, Volkswagen, Volvo and Waukesha Engine. The
SinterCast share is quoted on the Small Cap segment of the Nordic
Exchange OMX, Stockholm (Stockholmsbörsen: SINT).
END
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