Inside information: YIT has executed a substantial financing arrangement including equity and enhancements to existing loan terms, leading to an improvement in liquidity in excess of EUR 100 million
YIT Corporation Inside Information 12 March 2024 at 9:15 a.m.
Inside information: YIT has executed a substantial financing arrangement including equity and enhancements to existing loan terms, leading to an improvement in liquidity in excess of EUR 100 million
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The financing arrangement comprises: a directed share issue of EUR 33.5 million at market price, an issue of EUR 36 million convertible notes due March 2029 with a coupon of 8% p.a. and a strike price of EUR 2.25 per share, and maturity extensions of the revolving credit facility (EUR 300 million) and the term loan (EUR 140 million) with other positive amendments to key loan terms including postponements of amortizations. Combined, the amendments to loan terms increase available liquidity by over EUR 30 million.
YIT Corporation has concluded a substantial financing arrangement including new capital and enhancements to existing loan terms, together leading to an overall improvement in the company’s liquidity in excess of EUR 100 million.
The capital raise of EUR 69.5 million consists of:
- a directed share issue of 20,960,000 new shares in the company (EUR 33.5 million) to several institutional and professional investors who are predominantly existing shareholders in the company; and
- an issue of EUR 36 million senior unsecured convertible notes due March 2029 with a coupon of 8% per annum and an initial conversion price of EUR 2.25 per share to some of the largest Finnish institutional investors.
The company and its main lenders have also committed to make amendments to the company’s existing EUR 300 million revolving credit facility agreement and EUR 140 million term loan facility agreement, including the extension of the maturities until January 2026 with a pre-agreed conditional option for the company to extend the maturities until January 2027, as well as certain other positive amendments to key loan terms including postponements of amortizations which combined increase the available liquidity by over EUR 30 million.
Comment from the CEO and President Heikki Vuorenmaa:
“The news announced today reinforce our position as the largest and strongest player in Finland with a significant position in the Baltics and the CEE countries and ensure our ability to respond to upcoming opportunities especially in the Finnish housing market. The company’s more than EUR 800 million land bank and our skilled personnel will support the company's strengthening performance in the years to come.
Overall, the year has started on a positive note with continued strong housing sales in Central Eastern Europe and a clear pick-up in the Baltics, anticipating continued strong performance for the year in these markets. This year, over 70% of our apartments will be completed in our international operations thus the good market conditions are key to the Group’s performance. The Finnish housing market has seen positive developments in terms of reservations, ongoing negotiations and completed transactions, although the overall market has remained weak. The market has received the 5-year, 2% interest rate cap campaign very well and consumers have understood its significant potential impact in improving housing affordability in the current interest rate environment through lowering the monthly cost of housing.
Supported by this news, we will continue to work with determination to achieve the transformation program and the potential release actions of capital, as announced earlier on 20 June 2023.”
The company expects to receive aggregate gross proceeds of approximately EUR 69.5 million from the issues, of which approximately EUR 33.5 million as a result of the share issue and approximately EUR 36 million as a result of the notes issue. The arrangement strengthens the company’s balance sheet and improves the company’s liquidity position, enabling YIT to retain its leading position in the Finnish and CEE construction markets. In market conditions characterised by scarcity of capital, the arrangement offers the company the foundation to take action and to tap select growth opportunities.
“I am very pleased with this funding exceeding EUR 500 million in total. I want to express my sincere gratitude to all the stakeholders involved for their trust placed in the company. The transaction brings continued long-term support to our operative business and strategy implementation as we now have funding arranged for years to come. This package facilitates us to return to the debt capital markets when the market situation offers the opportunity” said Tuomas Mäkipeska, CFO, YIT.
The company will also continue with its strategic review, announced on 20 June 2023 and updated in the Financial Statements Release on 9 February 2024, regarding certain assets and operations and selected investments. The company’s non-core asset disposals and capital release measures have successfully resulted in more than EUR 100 million cash generation to date. As previously communicated, the company is planning to use proceeds from asset disposals and capital release measures to redeem the EUR 100 million bond maturing in spring 2024.
Details of the directed share issue
The Board of Directors of the company resolved in its meeting today, 12 March 2024, to issue 20,960,000 new shares based on the authorisation granted to it by the Annual General Meeting of the company on 16 March 2023 and in deviation from the shareholders’ pre-emptive subscription rights. The investors of the directed share issue include several long-only institutional and professional investors, predominantly existing shareholders of the company, such as Tercero Invest AB, Security Trading Oy, Varma Mutual Pension Insurance Company, Ilmarinen Mutual Pension Insurance Company, Elo Mutual Pension Insurance Company, Ahlstrom Invest B.V. and Conficap Oy.
The Board of Directors has accepted the terms and conditions of the share issue and the subscriptions made in accordance with the terms and conditions of the share issue. The terms and conditions of the share issue are attached to this stock exchange release.
The subscription price was at EUR 1.60 per share, reflecting the current market value determined based on 5-day volume-weighted average price, rounded to the nearest cent. The closing price of the company’s share was EUR 1.59 per share on 11 March 2023. The subscription price will be credited in full to the company’s reserve for invested unrestricted equity.
There are weighty financial reasons for the company to deviate from shareholders’ pre-emptive subscription rights, as the share issue strengthens the company’s balance sheet, improves the company’s liquidity position, enables the execution of beneficial loan terms for the company, and provides equity on terms and timetable that, in the assessment of the Board of Directors, would otherwise not be available.
The shares subscribed for in the share issue represent approximately 9.9 per cent of all of the company’s shares immediately prior to the share issue and approximately 9.0 per cent of all of the company’s shares following the share issue. After the shares subscribed in the share issue have been registered with the Finnish Trade Register, the total number of all registered shares in the company will be 232,059,853.
The new shares are expected to be registered with the Finnish Trade Register on or about 12 March 2024 and to be ready for delivery to the investors against payment through Euroclear Finland Ltd on or about 14 March 2024. Trading in the new shares is expected to commence on the official list of Nasdaq Helsinki Ltd on or about 14 March 2024. The shares will rank pari passu in all respects with the existing shares of the company once they have been registered with the Finnish Trade Register.
Details of the convertible notes issue
The Board of Directors of the company also resolved in its meeting today, 12 March 2024, to issue senior unsecured convertible notes due March 2029 with a total nominal amount of EUR 36 million. The notes will carry a coupon of 8.00 per cent per annum and are convertible into a maximum of 16,000,000 new shares in the company, the conversion being subject to the authorisation to the Board of Directors being given by the Annual General Meeting of the company to be held on 14 March 2024 to issue shares upon conversion of the notes. The investors of the notes issue include Varma Mutual Pension Insurance Company, Ilmarinen Mutual Pension Insurance Company, and Elo Mutual Pension Insurance Company.
The initial conversion price has been set at EUR 2.25 per share, representing a conversion premium of approximately 40.6 per cent to the subscription price of the directed share issue. The conversion price will be subject to (a) certain customary adjustments in the event of specified corporate events, (b) adjustments for any dividend in cash or in kind, as well as (c) customary anti-dilution adjustments, pursuant to the terms and conditions of the notes.
The notes will be issued at 100 per cent of the nominal amount and, unless previously converted, redeemed or purchased and cancelled, will be redeemed at 100 per cent of the nominal amount on the maturity date, being 19 March 2029. If an authorisation to issue shares would not be received from the company’s general meeting, the noteholders would be entitled to a cash settlement at a fair value of the underlying shares. The closing is expected to occur on or about 19 March 2024.
The maximum number of the shares underlying the notes represent approximately 7.6 per cent of all of the company’s shares immediately prior to the share issue and the notes issue and approximately 6.9 per cent of all of the company’s shares following the share issue and the notes issue, subject to potential adjustments to the conversion price. The aggregate number of the shares issued in the share issue and the notes issue, provided that the maximum number of shares underlying the notes is issued, represent approximately 17.5 per cent of all of the company’s shares immediately prior to the share issue and the notes issue and approximately 15.9 per cent of all of the company’s shares following the share issue and the notes issue, subject to potential adjustments to the conversion price.
Amendments to the existing facility agreements
The company and its main lenders have also committed to make amendments to the company’s existing EUR 300 million revolving credit facility agreement and EUR 140 million term loan facility agreement. The amendments will include the extension of the maturities of both facilities to January 2026, with a pre-agreed conditional option to extend the maturities to January 2027. The amendments will also include that the company is allowed to increase the amount of debt secured by the security pool as well as positive changes to the company’s current financial covenants and their testing as disclosed on 21 November 2023. The facilities will include certain covenants as well as restrictions to distribute funds based on the company’s leverage ratio. The amended financing arrangement will allow operational and financial flexibility to execute the strategy and will continue to be secured by certain assets of the Group.
Advisors
Nordea Bank Abp and Skandinaviska Enskilda Banken AB (publ) Helsinki Branch act as Global Coordinators and Bookrunners of the issues and Danske Bank A/S, Finland Branch and Swedbank AB (publ), acting through its branch in Finland, as Bookrunners. Hannes Snellman Attorneys Ltd is acting as the legal adviser to the company and Roschier, Attorneys Ltd. is acting as the legal adviser to the Global Coordinators and Bookrunners in the issues.
Further information:
Heikki Vuorenmaa, President and CEO, YIT Corporation, tel. +358 20 433 111, heikki.vuorenmaa@yit.fi
Tuomas Mäkipeska, Chief Financial Officer, YIT Corporation, tel. +358 20 433 111, tuomas.makipeska@yit.fi
YIT Corporation
Board of Directors
Distribution: NASDAQ Helsinki, major media, www.yitgroup.com
YIT is a leading construction and development company. Building on over 110 years of experience, we develop and build sustainable living environments: functional homes, future-proof public and commercial buildings, and infrastructure to support the green transition. We employ approximately 4,300 professionals in eight countries. Our revenue in 2023 was EUR 2.2 billion. YIT Corporation's shares are listed on Nasdaq Helsinki.
Read more: www.yitgroup.com and follow us on Linkedin I X I Instagram I Facebook
APPENDIX 1: TERMS AND CONDITIONS OF THE DIRECTED SHARE ISSUE
Forward-Looking Statements
This release contains forward-looking statements, including, without limitation, statements regarding YIT Corporation’s strategy, business plans and focus. The words “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “target” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any forward-looking statements in this release are based on management’s current expectations and beliefs and are subject to a number of risks, uncertainties and important factors that may cause actual events or results to differ materially from those expressed or implied by any forward-looking statements contained in this release, including, without limitation, any related to YIT Corporation’s business, operations, supply chain, strategy, goals and anticipated timelines and competition from other companies. YIT Corporation cautions you not to place undue reliance on any forward-looking statements, which speak only as of the date they are made. YIT Corporation disclaims any obligation to publicly update or revise any such statements to reflect any change in expectations or in events, conditions or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements. Any forward-looking statements contained in this release represent YIT Corporation’s views only as of the date hereof and should not be relied upon as representing its views as of any subsequent date.
Important notice
The information contained herein shall not constitute an offer to sell or the solicitation of any offer to buy or subscribe for, nor shall there be any sale of the securities referred to herein in any jurisdiction.
The information contained herein may not be announced, published, copied, reproduced or distributed, directly or indirectly, in whole or in part, within or into the United States, Australia, Canada, Hong Kong, South Africa, Singapore, New Zealand or Japan or in any other jurisdiction in which such announcement, publication or distribution would not comply with applicable laws and regulations or where such actions are subject to legal restrictions or would require additional registration or other measures than what is required under Finnish law. This press release does not constitute an offer of securities for sale in the United States, nor may the securities be offered or sold in the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements under the U.S. Securities Act of 1933, as amended, and the rules and regulations thereunder. There is no intention to register any portion of the offering in the United States or to conduct a public offering of the securities in the United States.
In any EEA Member State, this announcement is only addressed to and is only directed at qualified investors in that Member State within the meaning of Regulation (EU) 2017/1129 (“Relevant Persons”). Persons who are not Relevant Persons should not take any action on the basis of this announcement and should not act or rely on it.
Nordea Bank Abp, Skandinaviska Enskilda Banken AB (publ) Helsinki Branch, Danske Bank A/S, Finland Branch and Swedbank AB (publ), acting through its branch in Finland, act only for and on behalf of the company in connection of the share issue and notes issue. Nordea Bank Abp, Skandinaviska Enskilda Banken AB (publ) Helsinki Branch, Danske Bank A/S, Finland Branch and Swedbank AB (publ), acting through its branch in Finland, do not hold any other party as their client or cannot be held accountable to advise or indemnify other parties than the company with regards to the share issue and the notes issue or other matters referred here to.