SRV commences written procedures to amend the terms and conditions of its hybrid bonds

SRV GROUP PLC                        STOCK EXCHANGE RELEASE   28 April 2022  8.25 EET

SRV commences written procedures to amend the terms and conditions of its hybrid bonds

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SRV Group Plc (“SRV” or “Company”) discloses its intention to commence written procedures regarding potential amendments to the terms and conditions of SRV's EUR 45 million hybrid bond issued on 22 March 2016 (of which EUR 11.8 million is outstanding) (“EUR 45 million Notes”) and EUR 58.4 million hybrid bond issued on 23 May 2019 (of which EUR 3.6 million is outstanding) (“EUR 58.4 million Notes” and together with the EUR 45 million Notes “Hybrid Bonds”).

On 28 April 2022, SRV announced that it has initiated a programme with the aim of achieving a full reorganisation of the company’s financing due to Russia’s war in Ukraine and the impairments of its Russian business operations caused by the related financial sanctions. The objective of the reorganisation is to increase equity by approximately EUR 100 million, and at the same time decrease interest-bearing debt by the same amount. The reorganisation of the company’s financing has strong support from SRV’s largest shareholders, bond and hybrid bond holders as well as banks, which is why SRV trusts that the programme will be implemented. Upon completion of the restructuring, SRV will be almost free of net debt (IFRS 16 adjusted) construction company and its Russia related risks will be small. The Company has a good and healthy construction business in Finland.

The measures described above are part of the reorganisation programme which consists of the following measures:

1. a rights issue for approximately EUR 35 million that is issued to the Company’s current shareholders (“Subscription Rights Issue”);
2. the conversion of the company’s EUR 100 million unsecured fixed-interest bond which becomes due and payable on 23 March 2025 (with an outstanding unpaid principal of EUR 34.9 million) and another EUR 75 million unsecured fixed-interest bond which becomes due and payable on 27 March 2025 (with an outstanding unpaid principal of EUR 64.9 million) (the “Bonds”) into hybrid convertible bonds in written procedure (“Hybrid Conversion”). The conversion into a convertible bond will be executed by amending the terms of the Bonds by including in the terms a special right under the Companies Act to convert the Bonds into shares. In addition, the holders of the Bonds will be given the opportunity to tender their Bonds for full or partial redemption at a price that corresponds to 60% of the nominal value of the Bonds (“Tender”);
3. using the Hybrid Bonds to subscribe the company’s shares for 45% of the Bonds’ principal as part of a directed share issue of a maximum of EUR 6.9 million, which will be directed to the holders of the Hybrid Bonds (the “Directed Share Issue”). Altogether 55% of the principal of the Hybrid Bonds and any unpaid interest that has accumulated for the Hybrid Bonds as of the moment of conversion will be cut entirely as part of the arrangement; and
4. the extension of the liquidity and project financing facility granted to SRV (the “Credit Facility”) by 12 months and the implementation of necessary amendments to the agreement governing the Credit Facility in order to account for the new equity structure and the impact of the company’s Russian business operation in those terms and conditions the fulfilment of which may be affected by the changed circumstances.

The interest accruing on the EUR 58.4 Notes until the interest payment date of 23 May 2022 will be paid in cash before the conversion and write-down referred to above in section (iii) in connection with the reorganisation.

Written procedures to amend the terms and conditions of the Hybrid Bonds

Due to the programme set out above, SRV will commence written procedures regarding the Hybrid Bonds with the aim of amending the terms and conditions of the Hybrid Bonds so that SRV has (provided that the certain preconditions set out in the amended terms are met) the right to request the holders of the Hybrid Bonds to use 45% of the principal of the Hybrid Bonds they own to subscribe for SRV's shares so that when SRV uses the said right, any amounts outstanding under the Hybrid Bonds that will not be used for the subscription of the shares, will be written-down in full.

The written procedures will be commenced under the terms and conditions of the notices of written procedure dated 28 April 2022. The notices are enclosed as appendices to this stock exchange release. There will be separate written procedures in terms of the EUR 45 million Notes and the EUR 58.4 million Notes.

In the written procedures, SRV proposes to the holders of the Hybrid Bonds that provisions be added to the terms and conditions of the Hybrid Bonds that entitle SRV to request that the Holders use the Hybrid Bonds, as described above, to subscribe shares and the consequent cut-down of the Hybrid Bonds.

During the written procedures, SRV will propose to the holders of each Hybrid Bonds that

1. The definition of the term “Conversion Conditions” be added to the terms and conditions of the Hybrid Bonds, which refers to the Conversion Conditions (defined below) that are set out in section 7.11.3 of the amended provisions. In the event that the Conversion Conditions are met, SRV will be entitled to request each holder of the Hybrid Bonds to use 45% of the nominal amount of the Hybrid Bonds in its possession to subscribe shares (on certain conditions that are set out in the terms and conditions). The subscription will be implemented with the aforementioned Directed Share Issue;
2. The amount of Hybrid Bonds that has not been used to subscribe SRV’s shares by the end of the subscription period will be written down, including any interest that has accumulated up to that point in time;
3. SRV’s right to request the holders of the Hybrid Bonds to subscribe SRV’s shares will be subject to the following terms and conditions (the “Conversion Conditions”);
   1. in respect of the senior Bonds:
      1. written procedures have been completed in respect of the senior Bonds whereby the Bonds shall be converted into convertible Hybrid Bonds upon the occurrence of the effective date; and
      2. the redemption process involving the senior Bonds has been concluded (excluding the actual settlement);
   2. SRV’s extraordinary general meeting has agreed to:
      1. certain share issues in an aggregate amount of no less than EUR 20,000,000;
      2. a Directed Share Issue for the holders of the Hybrid Bonds;
      3. the issuance of special rights that relate to the senior Bonds;
   3. The holders of both Hybrid Bonds have accepted the amendments to their terms and conditions in written procuders that will enable the use of the Hybrid Bonds in their possession to subscribe shares;
   4. the lenders of the Company’s Credit Facility have committed to extend the Credit Facility’s termination date until 28 April 2024 (subject to the implementation of the overall reorganisation as described above and customary conditions precedent applied by lenders);
4. The subscription price of the shares subscribed by the holders of the Hybrid Bonds is subject to measures implemented by SRV that affect the share price, such as any combination or split of shares;
5. The definition of the term agent will be added to the terms and conditions of the Hybrid Bonds, and Nordic Trustee Oy will be appointed as the agent (the “Agent”). The Agent is responsible for ensuring that the Conversion Conditions are met and for organising and supervising any meetings or written procedures held by the holders of the Hybrid Bonds with regard to the Hybrid Bonds. In addition, standard provisions regarding the conduct, obligations, liabilities, appointment and replacement of the Agent will be added to the terms and conditions of the Hybrid Bonds; and
6. Other clarifying definitions regarding financing arrangements will be added to the terms and conditions of the Hybrid Bonds.

SRV has held discussions with several of its larger Hybrid Bond investors which have all signed voting undertaking in favour of the amendments. In aggregate, SRV has received signed voting undertakings representing (i) (i) 28.8% of the principal of the EUR 45 million Notes and 56.2% of the principal of the EUR 58.4 million.

A written procedure referred to in the terms and conditions of the EUR 45 million Notes and the EUR 58.4 million Notes is quorate only if noteholders that represent at least 50 per cent of the Adjusted Nominal Amount (as defined in the terms and conditions of the EUR 45 million Notes and the EUR 58.4 million Notes) respond in the written procedures. The amendments proposed in the written procedure require the consent of noteholders that represent at least 75 per cent of the Adjusted Nominal Amount (as defined in the terms and conditions of the EUR 45 million Notes and the EUR 58.4 million Notes) represented in the written procedure.

In order to be entitled to participate in the applicable written procedure, the participant must be registered as a holder of either the EUR 45 million Notes or the EUR 58.4 million Notes as at the time when the trading facilities maintained by Euroclear Finland Oy close for the day (“Business Day” as defined in the terms and conditions of the EUR 45 million Notes and the EUR 58,4 million Notes) on 21 April 2022. The deadline for submitting the appropriate voting form is at 5.00 pm (Finnish time) on 23 May 2022, by which hour Nordic Trustee Oy, which SRV has appointed to serve as the agent in these written procedures, must have received the voting form by email, mail or courier.

The holders of the Hybrid Bonds are instructed to carefully read notices to the written procedures in order to ensure that they are aware of the detailed and full information regarding the proposed amendments and the procedure for participating in the written procedures. The notices are enclosed as appendices to this stock exchange release.

In the event that either the written procedure concerning the EUR 45 million Notes or the written procedure pertaining to the EUR 58.4 million Notes does not approve the proposed amendments, the terms and conditions that govern the EUR 45 million Notes and those governing the EUR 58.4 million Notes will undergo no changes.

SRV has appointed Pareto Securities AB as its financial advisor in the written procedures concerning the Hybrid Bonds.

The holders of the Hybrid Bonds are advised to contact Pareto Securities AB (contact details below) to receive more information about the written procedures regarding the Hybrid Bonds.

Appendices:

Notice of written procedure regarding the EUR 45 million Notes

Amended terms and conditions of the EUR 45 million Notes
Notice of written procedure regarding the EUR 58.4 million Notes

Amended terms and conditions of the EUR 58.4 million Notes

Additional Information:

Jarkko Rantala, CFO, tel. +358 40 674 1949, jarkko.rantala@srv.fi
Ville Takala, CEO, Pareto Securities Oy, tel. +358 50 1745, ville.takala@paretosec.com

Henri Kaasalainen, Nordic Trustee Oy, tel. +358 400 202 474, finland@nordictrustee.com

Distribution:

Nasdaq Helsinki
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www.srv.fi

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About SRV in short

SRV is a Finnish developer and innovator in the construction industry. We build more sustainable and more responsible urban environment that ensures financial value and the well-being of the environment and residents. We call this approach a lifecycle-wise reality. Our genuine cooperation and enthusiasm for our work comes across in every encounter, and listening is one of the most important ways in which we act. We believe that discussion is the key to change the world.

Our company, established in 1987, is listed on the Helsinki Stock Exchange. We operate in growth centres in Finland. In 2021, our revenue totalled EUR 932.6 million. In addition to about 1,000 SRV employees, we employ a network of around 3,600 subcontractors.

SRV – Building for life

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The distribution of this release may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restrictions. The information contained herein is not for publication or distribution, directly or indirectly, in or into Australia, Canada, Japan or the United States. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This release is not directed to, and is not intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.

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This release is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) 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 together being referred to as “relevant persons”). Any securities mentioned herein 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 release or any of its contents.

This release does not constitute a prospectus as defined in the Prospectus Regulation and as such, does not constitute or form part of and should not be construed as, an offer to sell, or the solicitation or invitation of any offer to buy, acquire or subscribe for, any securities or an inducement to enter into investment activity.

The amended terms and conditions of the Hybrid Bonds as well as the instructions regarding the Hybrid Bonds are included in full in the notices of the written procedures regarding the Hybrid Bonds that SRV has drafted in connection with the written procedures. The notices of the written procedures are available at SRV’s web site at www.srv.fi/en/investors.

Investors are advised to familiarise themselves with the notices of written procedures and the information presented therein.

No part of this release, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. The information contained in this release has not been independently verified. No representation, warranty or undertaking, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. SRV or any of its respective affiliates, advisors or representatives or any other person, shall have no liability whatsoever (in negligence or otherwise) for any loss however arising from any use of this release or its contents or otherwise arising in connection with this release. Each person must rely on their own examination and analysis of SRV, its subsidiaries, its securities and the transactions, including the merits and risks involved.

Danske Bank and Pareto act exclusively for SRV and no one else. Danske Bank and Pareto do not regard any other person as a respective client in relation to the arrangement. Danske Bank and Pareto will not be responsible to anyone other than SRV for providing the protections afforded to their respective clients nor for giving advice in relation to the arrangement or any transaction or arrangement referred to herein.

This release includes forward-looking statements. These statements may not be based on historical facts but are statements about future expectations. When used in this release, the words “aims,” “anticipates,” “assumes,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “should,” “will,” “would” and similar expressions as they relate to SRV and the transactions identify certain of these forward-looking statements. Other forward-looking statements can be identified in the context in which the statements are made. These forward-looking statements are based on present plans, estimates, projections and expectations and are not guarantees of future performance. They are based on certain expectations, which, even though they seem to be reasonable at present, may turn out to be incorrect. Such forward-looking statements are based on assumptions and are subject to various risks and uncertainties. Readers should not rely on these forward-looking statements Numerous factors may cause the actual results of operations or financial condition of SRV to differ materially from those expressed or implied in the forward-looking statements. SRV or any of its affiliates, advisors or representatives or any other person undertakes no obligation to review or confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this release.