Information to ordinary shareholders in Eniro Eniro has decided to carry out a new issue of ordinary shares in which you as a n ordinary shareholder in Eniro have preferential right to participate The application for subscription must be submitted between March 16 and March 30, 2015 This Brochure is not, nor should be considered, a prospectus under prevailing legislation and rules. The Prospectus, which has been approved and registered by the Swedish Financial Supervisory Authority, has been published and is available on Eniro’s website, www.enirogroup.com, and on SEB’s website, www.sebgroup.com/prospectuses. The Prospectus includes information about Eniro, the Rights Issue and the risks associated with an investment in Eniro and participation in the Rights Issue. The Brochure is not intended to replace the Prospectus as a basis for decisions to subscribe for ordinary shares in Eniro, nor does it constitute a recommendation to subscribe for ordinary shares in Eniro.
Transcript
Information to ordinary shareholders in EniroEniro has decided to carry out a new issue of ordinary shares in which you as a n ordinary shareholder in Eniro have preferential right to participate
The application for subscription must
be submitted between March 16 and
March 30, 2015
This Brochure is not, nor should be considered, a prospectus under prevailing legislation and rules. The Prospectus, which has been approved and registered by the Swedish Financial Supervisory Authority, has been published and is available on Eniro’s website, www.enirogroup.com, and on SEB’s website, www.sebgroup.com/prospectuses. The Prospectus includes information about Eniro, the Rights Issue and the risks associated with an investment in Eniro and participation in the Rights Issue. The Brochure is not intended to replace the Prospectus as a basis for decisions to subscribe for ordinary shares in Eniro, nor does it constitute a recommendation to subscribe for ordinary shares in Eniro.
2Information to ordinary shareholders in Eniro AB (Publ)
Important informationThe Brochure is a simplified description of Eniro’s new issue of a maximum of 305,642,220 new ordinary shares with preferential rights for existing shareholders of ordi-nary in Eniro AB (publ) and has not been approved by any supervisory authority. The Brochure only includes general information and does not constitute a prospectus. Investors should not subscribe for or acquire any securities that are described in this Brochure based on any information other than that stated in the Prospectus, which was specifically prepared for the Rights Issue. The Prospectus includes among other things a detailed description of Eniro, the Rights Issue and the risks involved when participating in the Rights Issue and investing in Eniro. The Prospectus is available on Eniro’s webpage, www.enirogroup.com, and on SEB’s website, www.sebgroup.com/prospectuses. The Brochure is only intended for shareholders of ordinary shares in Eniro.
Eniro has not taken and will not take any action to permit an offer to the general public in any jurisdiction other than Sweden. No subscription rights, paid sub-scribed shares or new shares (“Securities”) may be offered, subscribed for, sold or transferred, directly or indirectly, in or to the USA except in accordance with an exemption from the registration requirement in the
United States Securities Act of 1933 in the current wording (“The Securities Act”) or any securities authority in any state of the USA. This Brochure represents neither an offer to transfer nor an invitation regarding an offer to acquire any securities other than the securities. This Brochure is not directed to people with domicile in the USA, Australia, Singapore, New Zealand, Japan, Canada, Switzerland, Hong Kong or South Africa, or in any other jurisdiction where participation would require a further Prospectus, registra-tion or other measures than those that follow from Swedish law. Consequently this Brochure, the Prospectus, marketing material or other material relating to the new issue may not be distributed in or to any other jurisdiction where distribution or the offer according to the prospectus requires such actions or contravenes the rules of such jurisdiction. People who receive copies of the Prospectus, the Brochure or marketing materials must familiarise themselves with and follow such restrictions. Actions in contravention of the restrictions may represent a breach of applicable securities legislation. Eniro reserves the right, on its own judgement, to invalidate subscriptions that Eniro or its agents consider may involve the infringement or disregarding of laws, rules or regulations in any jurisdiction.
DefinitionsThe terms Eniro or the Company refer to Eniro AB (publ), a Swedish, publicly listed, limited liability company, the Group or a subsidiary of the Group, depending on context
The term Group refers to Eniro AB (publ), including subsidiaries
The term Prospectus refers to the prospectus prepared by Eniro dated March 13, 2015, pertaining to the offer for the subscription of ordinary shares in Eniro AB (publ), corporate registration number 556588-0936, and which was registered and approved by the Swedish Financial Supervisory Authority, which is not to be confused with this Brochure
The term The Rights Issue refers to the invitation to subscribe for new ordinary shares in accordance with the Prospectus
The term Brochure refers to this brochure, which is a simplified description of Rights Issue and has not been approved by any supervisory authority
The term SEK refers to Swedish kronor and SEKm refers to millions of SEK.
The term Ordinary Shares refers to the shares which the invitation to subscribe for relates to and are regulated by Eniro’s Articles of Association
The term Euroclear refers to Euroclear Sweden AB
The term ABG refers to ABG Sundal Collier AB and
The term SEB refers to Skandinaviska Enskilda Banken AB
Key datesSubscription period March 16 to March 30, 2015Trading with subscription rights
March 16 to March 26, 2015
Trading with paid subscribed shares
March 16 to April 24, 2015
Re-classification from paid subscribed shares to ordinary shares
Around April 30, 2015
Other informationMarket Nasdaq StockholmShort Name Ordinary share ENRO
Subscription right ENRO TRPaid subscribed share ENRO BTA
ISIN codes Ordinary share SE0000718017Subscription right SE0006881314Paid subscribed share SE0006881322
3Information to ordinary shareholders in Eniro AB (Publ)
Table of content
4 CEO comments
5 Eniro in short
6 Background and reasons
7 The issues in short and the amended loan agreement
8 How to participate in the Rights Issue
11 Selected financial information
15 Risk factors
16 Questions and answers
4Information to ordinary shareholders in Eniro AB (Publ)
CEO comments
I took over the role as President & CEO with an ambition to focus on growing sales and build motivation among our employees. This work has set the tone and became even more important during the turbulent autumn, when, among other things, the forecast was lowered for the second time during 2014 due to overly optimistic assessments.
The changed forecast gave rise to discussions with our creditors on amending the terms of the Company’s loans to the new conditions – a dialog that required extensive analyses and lengthy discussions in order to reach an agreement with a consortium of six banks. Parallel with this we conducted a review of our strategy, resulting in a clear strategic direction to work towards in 2015.
To capitalize on the opportunities that exist in the growing market for digital marketing and lower the Company’s debt, the Board of Directors has proposed a fully guaranteed Rights Issue and converti-ble issue.
The financing package comes with a re-negotiated and extended loan agreement. The amended agreement will initially be reduced by a one-time amortization of at least SEK 650 million and the annual amortizations will be reduced by more than half.
Eniro’s transformation entails that we today have an attractive product offer. Now we take the next step in the transformation. We aim to increase profitability by adding new related services to the prod-uct portfolio, continue with the streamlining of the organization and to fully exploit our unique data-base, strong sales force and well-known brands. This financing package will give us the vigour needed to realize our plans . We will ensure stability within Eniro. We will also ensure that our activities will develop in the best possible way in order to be competitive and create shareholder value.
Stefan KerczaPresident & CEO
”The transactions and the re-negotiated and amended
loan agreement increase the financial flexibility of the Company, which is an important prerequisite in
the work with realizing our strategy on a growing digital
media market”
5Information to ordinary shareholders in Eniro AB (Publ)
CEO comments Eniro in shortBusiness descriptionEniro is a leading local search company with activities in Scandinavia, Finland and Poland. The Company has more than 250,000 customers and approximately 1,300 sales represen tatives. Eniro has a unique database that is continuously refined and updated with relevant content, which the approximately 8 million unique visitors per week use through Eniro’s search offering. Eniro has a brand awareness exceeding 90 per cent on all Scandinavian markets and just below 80 per cent in Poland.1)
The Company was spun off from Telia in 2000, the share is listed on Nasdaq Stockholm and the head quarter is located in Solna outside Stockholm. Eniro’s operating revenues for 2014 amounted to SEK 3,002 million and the number of full-time employees was 2,256.
Operational goalsEniro’s strategy is steered by a set of operational goals for ensuring stability and profitability. Eniro’s user benefit is measured in terms of the number of unique visitors to the search sites and their frequency of visits. The goal for 2015 is to both increase the number of visitors to sites and how often the same visitors return to the sites. By adapting the offering to advertisers’ needs to a greater extent, their exposure will
improve. This will be reflected in the level of traffic documented in the effect reports and can be measured in terms of customer satisfaction. The goal for 2015 is to continue to improve customer satisfaction.
Another goal is to increase employee satisfaction, which is measured by monitoring staff turnover, among other things. The goal for 2015 is continuously to reduce staff turnover.
Financial goalsThe strategic actions outlined above will lead to improved profitability over time.
Dividend policyEniro prioritizes reducing the Company’s net debt over payment of a dividend. Accordingly, the Board of Directors of Eniro proposes that no dividend be paid for the Company’s ordinary shares for the 2014 fiscal year. The Board of Directors proposes payment of a dividend of SEK 48 per share for 2014 to owners of preference shares, which corresponds to a total dividend payout of SEK 48 million. It is proposed that dividends be paid out in three-month intervals. Please, see page 25 in the annual report 2014.
Business conceptEniro’s business concept is the same as when the Company was started more than 130 years ago – to provide the best local information and thereby bring buyers and sellers together. Eniro aggregates and processes information from a vast range of information sources, including information registers, websites, telecom operators and sales organizations. This information is filtered, sorted and organized in the database, which is Eniro’s most important asset. Revenues from Local Search are generated through exposure and rankings by advertisers in Eniro’s search services.
• Devoted • Perceptive • Reliable
ValuesEniro’s three values – devoted, perceptive, and reliable – are to permeate the entire organization.
Devoted entails that Eniro always strive to offer customers and users the best possible solution.
Perceptive means that Eniro works according to the needs of the specific target groups by actively listening and having an open dialog.
Reliable – Eniro will be perceived as being reliable by delivering what we have promised.
VisionEniro’s vision is to be the symbol for local search. Eniro has an established position to work with as a foundation to continue developing the best quality and technology for meeting users’ future needs for local search in Scandinavia, Finland and Poland.
The symbol of local search
VISION, BUSINESS CONCEPT & VALUES
1) Source: LynxEye 2014 and Brand Tracking Study, Nepa Research (ages 15-75)
6Information to ordinary shareholders in Eniro AB (Publ)
Background and reasons
The media market has changed considerably in recent years. The digital marketing segment has grown rapidly, and is currently representing more than one third of the advertising market in Scandinavia. Eniro has been early in the digital transition. From being a catalogue company, the Company today offers a complete digital product range where digital segments represented 88 per cent of total advertising revenues in 2014. The Company has approximately 8 million unique visitors on Eniro’s sites every week and over 250,000 customers that have chosen to increase visibility in Eniro’s different marketing channels.
During the fall of 2014, Eniro went through a leadership change and the new management has determined a strategic approach with three clear focus areas, as described on pages 36-37 in the Prospectus. The ambition is also to make Eniro’s products even more attractive and create a more customer- and market oriented sales organization. Eniro will work more clearly with business development and focus on related services that complement and add value to the current local search offerings. Together with Eniro’s unique and extensive local database, the 1,300 person strong sales force and well-known brands, this provides potential to create additional business opportunities in the growing digital media market and increase profitability. In parallel with the work to strengthen the position in Local Search, the Company is handling the shrinking but continuously profitable Print and Voice segments.
At the end of 2014, after a SEK 1.3 billion reduction of debt during the last three years Eniro’s net debt amounted to approximately SEK 2.2 billion. During the same period, Eniro has put a strong focus on optimizing the cost structure and has
implemented cost savings exceeding SEK 900 million. Despite these initiatives, the Company has a high net debt level in relation to the Company’s current profitability. The Company does not have sufficient working capital to cover the current needs during the next 12 months as from the date of this Prospectus. As part of the review of the Company’s capital structure, Eniro has agreed on amendments to the loan agreement with the bank syndicate, subject to completion of the issuances. Among other things, the new agreement means an extension of the maturity and a significantly lower amorti-zation rate, which provides greater financial flexibility and discretion.
Due to these circumstances, the Board of Directors of Eniro has decided, subject to EGM approval, on a fully guaranteed Rights Issue of ordinary shares of approximately SEK 458 million and a placed directed convertible bond issue in the principal amount of SEK 500 million . The EGM resolved to approve the Board of Directors decision on 9 March 2015.
The aggregate issue proceeds is SEK 933 million before issuance costs, whereof at least SEK 650 million will be applied towards repayment the Company’s bank debt. The purpose of the issuances is to amortize on the bank loans and to create a greater financial flexibility to realize the Company’s strategy. Thus, additional value will be created for the Company’s shareholders and other stakeholders.
1) The subscription price is 95 per cent of the nominal amount of the convertibles which entails that the Company will be provided SEK 475 million before issue costs.
7Information to ordinary shareholders in Eniro AB (Publ)
The issues in short and the amended loan agreementThe Rights Issue in shortPreferential right: Each existing ordinary share in the Company is eligible for three (3) subscription rights. One (1) subscription right entitles the holder to subscribe for one (1) new ordinary share.
Subscription and payment with preferential right: Subscription with subscription rights is done through simultaneous cash payment during the subscription period
Trading with subscription rights: March 16 – March 26, 2015
Trading with paid subscribed shares: March 16 – April 24, 2015
The convertible bond issue in short In addition to the Rights Issue, Eniro’s Board of Directors decided on February 5, 2015 on a convertible bond issue subject to EGM approval. The Board of Directors’ decision was approved at the EGM on March 9, 2015. Through the convertible bond issue, the Company issues a convertible loan for a principal amount of SEK 500 million through the issue of convertibles. The convertible bond issue has been directed to, and placed with, a number of Swedish and international institutional and qualified investors.
Amount: Principal amount of SEK 500 million
Term: 5 years
Coupon: Annual interest of 6 per cent paid semi-annually
Conversion price: SEK 1.95
Potential dilution: 39 per cent assuming full conversion
The subscriptions of the convertible issue are conditional on the Rights Issue being carried out, the bank loan agreement not being terminated for repayment and the amendment agreement regarding the bank loan not being terminated
Loan agreement with existing bank consortiumPrior to the Rights Issue, the Company has reached an agreement with the existing bank syndicate on certain amendments in the loan agreement. The amendments in the loan agreement will enter into effect only after the Rights Issue of approximately SEK 458 million and the convertible bond issue for a principal amount of SEK 500 million have been completed and certain other conditions as stated in the amended agreement are met. The amended agreement covers a long term financing until the end of 2018.
The agreement covers three loan facilities, of which one is a revolving credit facility. The first loan facility amounts to SEK 1,100 million and is repaid on a semi-annual basis in the total amount of SEK 150 million per year, beginning on June 30, 2015. The second facility amounts to SEK 600 million and is repaid SEK 25 million per year in total on a semi-annual basis, beginning on June 30, 2016. The revolving credit facility amounts to SEK 150 million.
The interest on the facilities is determined by a reference rate plus a margin. For the first facility and the revolving credit facility, the margin is at starting point 4.00 per cent. If the ratio between total net debt to EBITDA is less than 1.5, the margin is 3.50 per cent. For the second facility, the margin is initially 5.00 per cent.
8Information to ordinary shareholders in Eniro AB (Publ)
How to participate in the Rights Issue
Subscription for new ordinary shares with subscription rights1. YOU WILL BE ALLOTTED SUBSCRIPTION RIGHTSFor every ordinary share in Eniro that you hold on March 12, 2015 you receive three (3) subscription rights
2. HOW TO USE THE SUBSCRIPTION RIGHTSOne (1) subscription right + SEK 1.50 gives one (1) new ordinary share in Eniro
3. ARE YOU A DIRECTLY REGISTERED SHAREHOLDER OR DO YOU HAVE THE SHARES WITH A NOMINEE?
Subscription for ordinary shares with subsidiary preferential right or without preferential right (by shareholders and others)2)
1) Note that certain rules apply to shareholders resident in the USA and certain other jurisdictions. See ”Shareholders registered in certain unauthorised jurisdictions” in the section ” Terms, conditions and instructions” in the Prospectus.
2 Allotment will be in accordance with what is stated under ”allotment of new ordinary shares subscribed for with subsidiary preferential rights or without subscription rights” in the section ”Terms, conditions and instructions” in the Prospectus.
3) Note that some nominees may have shorter deadlines for applications. Check the instructions from your nominee(s).
Terms For each share in Eniro you will receive three (3) subscription rights. One (1) subscription right entitles to subscription for one (1) new ordinary share
Subscription price SEK 1.50 per ordinary shareRecord date for participation in the Rights Issue March 12, 2015Subscription period March 16 – March 30, 2015Trading in subscription rights March 16 – March 26, 2015
3 subscriptions rights
You have a securities account (i.e. are directly registered) and are resident in Sweden
If you are exercising all the subscription rights, use the pre-printed payment form from Euroclear.
If you have bought, sold or transferred any subscription rights to or from your securities account, use the special subscription form that is distributed with the issue statement. The subscription form can also be obtained from SEB, telephone +46 8-639 27 50. Payment is made according to the instructions on the subscription form.
You have a securities account (i.e. are directly registered) and are not resident in Sweden
Contact SEB for information about subscription and payment and about the restrictions that apply in certain jurisdictions.
You have a custody account (i.e. you have a nominee)
If you have your shares in Eniro in one or more custody accounts with a bank or securities institution, you can obtain information from your nominee(s) about the number of subscrip-tion rights you have received. Follow the instructions from your nominee(s)
You are a directly registered shareholder Use the special subscription form. The subscription form can be ordered from SEB, telephone +46 8-639 27 50.
You have a depository (i.e. you have a nominee)
Subscription and payment must be through the manager. Follow the instructions from your nominee(s).3)
1 ordinary share in Eniro
1 subscriptions rights 1 new ordinary share
+ SEK 1,50
9Information to ordinary shareholders in Eniro AB (Publ)
Preferential- and Subscription rightThe Rights Issue comprises a maximum of 305,642,220 new ordinary shares. Those who on the record date, March 12, 2015, are registered as holders of ordinary shares in Eniro have preferential rights to subscribe for new ordinary shares in the Rights Issue. Those who on the record date are registered as holders of ordinary shares in Eniro receive three (3) subscription rights for every existing ordinary share in Eniro. One (1) subscription right entitles to one (1) new ordinary share.
Provided that all new ordinary shares are subscribed for in the Rights Issue, the number of ordinary shares in the Company will increase from 101,880,740 shares to 407,522,960 ordinary shares, corresponding to an increase of 300 per cent. For existing holders of shares who do not participate in the Rights Issue there will be a dilution effect corresponding to approximately 75 per cent of the total number of ordinary shares and votes in the Company after the Rights Issue. Holders of ordinary shares who choose not to participate in the Offering may be compensated financially for the dilution effect by selling their subscription rights.
Subscription priceThe new ordinary shares in Eniro are issued at a subscription price of SEK 1.50 per new ordinary share. No commission is charged.
Record dateThe record date at Euroclear for determining who is entitled to receive subscription rights in the Rights Issue is March 12, 2015. Ordinary shares in Eniro were traded exclusive of the right to participate in the Rights Issue from and including March 11, 2015. The last day of trading in ordinary shares in Eniro including the right to participate in the Rights Issue was March 10, 2015.
Subscription periodSubscription for new ordinary shares takes place during the period from and including 16 March 2015 up to including 30 March 2015. Eniro’s Board of Directors is entitled to extend the subscription period which – when applicable – will be announced through a press release as soon as possible after such a decision has been made. A subscription for new ordinary shares on the basis of subscription rights is irrevocable and shareholders cannot cancel or modify such a subscription for new ordinary shares.
The issue statement sets forth the number ofA pre-printed issue statement with an attached payment form has been sent together with this Brochure to directly registered holders of ordinary shares and representatives of holders of ordinary share who on the record date are registered in the share register kept by Euroclear on Eniro’s behalf. The issue
statement sets forth the number of subscription rights received and the total number of new ordinary shares that can be subscribed for by virtue of the subscription rights. No securities notification will be sent out regarding the registration of subscription rights on securities accounts.
Those who in connection with the share register are included in the specific list of pledge holders and trustees will not receive the issue statement but are informed separately.
Shareholders whose holding is nominee-registered with a bank or other nominee do not receive the issue statement or Brochure. Subscription and payment for new ordinary shares that are subscribed for with subscription rights (subscription with preferential right) should instead be made through the respective nominee and in accordance with instructions from the nominee in question or, if the holding is registered with more than one nominee, through each of these.
Trading in subscription rightsTrading in subscription rights takes place on Nasdaq Stockholm during the period from and including March 16, 2015 up to and including March 26, 2015 under the symbol ”ENRO TR”. SEB and other securities institutions with the required licenses are available for brokerage services in connection with the buying and selling of subscription rights. When subscription rights are sold, both the primary and the subsidiary preferential rights are transferred to the acquirer of the subscription rights. The ISIN code for subscription rights is SE0006881314.
Subscribing for new ordinary shares with subscription rightsSubscription of new ordinary shares with subscription rights will take place during the period from and including March 16, 2015 up to and including March 30, 2015. Upon expiry of the subscription period, unexercised subscription rights will become invalid and will therefore have no value. After March 30, 2015, unexercised subscription rights will be removed from the holder’s securities account, without notice from Euroclear.
In order for the value of subscription rights not to be lost, the holder must either:
• Exercise the subscription rights to subscribe for new ordinary shares no later than March 30, 2015, or in accordance with instructions from the subscriber’s nominee, or
• Sell the subscription rights that are not to be exercised no later than March 26, 2015.
Subscription supported by subscription rights is effected by means of simultaneous cash payment, either using the pre-printed payment form provided or by the use of a special subscription form in accordance with one of the following alternatives:• The payment form shall be used if all subscription rights
10Information to ordinary shareholders in Eniro AB (Publ)
according to the issue statement from Euroclear are to be exercised. No additions or changes may be made to the payment form.
• The subscription form named “Subscription for shares with subscription rights” shall be used if the subscription rights have been bought, sold or transferred from another securities account, or if for any other reason the number of subscription rights differs from what is stated on the pre-printed issue statement. When the duly filled in subscription form is submitted, payment shall be made for the new ordinary shares being subscribed for; this may be done in accordance with other payments using bank giro, for example by way of internet bank, giro transfer or through a bank branch office.
Subscription forms in accordance with above may be ordered from SEB during office hours on telephone: +46 8 639 27 50. Subscription forms must be received by SEB no later than March 30, 2015.
Directly registered shareholders who are not resident in Sweden and are entitled to subscribe for new ordinary shares with subscription rights and who are not subject to the restrictions described under the heading “Shareholders registered in certain unauthorised jurisdictions” in the Prospectus, but who are unable to use the pre-printed payment form, may pay in SEK through a foreign bank in accordance with the instructions below:
The subscriber’s name, address, securities account number and payment identity stated on the issue statement must be quoted. The last date for payment is March 30, 2015. Payment shall be made in accordance with the above instructions, however, the payment identity from the subscription form shall be stated. The subscription form must be received by SEB at the address above no later than March 30, 2015.
Nominee-registered holders of ordinary shares who wish to subscribe for new ordinary shares supported by subscription rights must apply for subscription in accordance with the instructions from their nominee.
Paid subscribed shares After payment and subscription, Euroclear will distribute a securities notification to confirm that paid subscribed shares have been registered on the securities account. The newly subscribed ordinary shares are entered as paid subscribed shared on the securities account until the new ordinary shares have been registered with the Swedish Companies Registration Office. It is expected that new ordinary shares subscribed for with subscription rights will be registered with the Swedish Companies Registration Office on or about April 20, 2015. The paid subscribed shared will then be re-registered as ordinary shares. No securities notification will be issued in connection with this re-classification, which is expected to occur on or about April 30, 2015.
Trading in paid subscribed shared is expected to take place on Nasdaq Stockholm during the period from and including March 16, 2015 up to and including April 24, 2015
under the symbol ”ENRO BTA”. SEB and other securities institutions with the required licenses will provide brokerage services in connection with the buying and selling of paid subscribed shares. The ISIN code for the paid subscribed shares is SE0006881322.
Right to dividendThe new ordinary shares entitle the holder to dividend for the first time on the first record date for dividend that occurs immediately following the registration of new ordinary shares with the Swedish Companies Registration Office.
Announcement of the outcome of the Rights Issue The preliminary subscription results from the Rights Issue are expected to be announced on or about April 2, 2015 through a press release from Eniro. The final subscription results are expected to be announced on or about April 10, 2015 through a press release from Eniro.
Subscription undertakings and guarantee commitmentsThe Company’s shareholders Nortal Capital AB (a company controlled by Staffan Persson, a member of the Board of Directors), Danske Capital AB, M2 Capital Management AB and Lars-Johan Jarnheimer who jointly represent around 18 per cent of the shares and votes, have pledged to Eniro and ABG to subscribe and pay for their respective pro rata shares (proportionally compared to their shareholding) in the Rights Issue. The subscription undertakings were entered into on February 5, 2015. Nortal Capital AB and Danske Capital AB will be paid the same commission as the other guarantors. The question regarding compensation has, upon the Company’s request, been examined by the Swedish Securities Council in the statement AMN 2015:02 and the Board of Directors has carefully considered the council’s statement prior to deciding to approve the compensations.
The Company has received guarantee commitments from Bure Equity AB, Catella Fondförvaltning AB, Tedde Jeansson, SSE Capital, MGA Holding AB, Carl Rosvall, Schött & Tour Capital AB, Kristian Kierkegaard Holding AB, LMK Ventures AB, Myacom Investment AB, Göran Källebo and Shaps Capital AB (“the Guarantors”), under which the Guarantors have pledged, on certain conditions and if all new ordinary shares in the Rights Issue have not been subscribed for or subscribed for but not paid in due time, to subscribe and pay for new ordinary shares up to an aggregated amount corresponding to approximately 82 per cent of the total issue amount. The guarantee commitments were entered into between February 4 and February 6, 2015. As compensation for their commitments, the Guarantors will receive a commission corresponding to 5 per cent of the guaranteed amount. In total, the compensation to the Guarantors, Nortal Capital AB and Danske Capital AB amounts to approximately SEK 23 million.
11Information to ordinary shareholders in Eniro AB (Publ)
The overview regarding the financial years 2012, 2013 and 2014 is derived from Eniro’s annual reports. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) and IFRIC interpretations as endorsed by the EU, as well as with applicable stipulations in the Swedish Annual Accounts Act and Swedish Financial Reporting Board Recommendation RFR 1 – Supplementary Accounting Policies for Groups.
The annual reports and consolidated financial statements for 2012, 2013 and 2014 have been audited by the Company’s auditors. In August 2014, the Board of Directors commis-sioned an investigation to validate the Group’s accounts as of the fourth quarter of 2013. The investigation showed primarily accrual inaccuracies, entailing that revenues have been recognized earlier than they should have. The accrual inaccuracies pertained to Desktop Search and Mobile Search revenue categories within the Local Search operating
segment and stem from discounts offered to customers. These discounts were incorrectly allocated only to revenue accrued over time (subscription fees). The discounts were not allocated to the portion of revenue recognized immediately (the services provided at the time of sale). As a result the amount recognized at the point of sale was too high.
The incorrect accounting of discounts affected the financial statements for the fourth quarter of 2013 through the second quarter of 2014. Consequently, the 2013 figures have been recalculated and do not agree with what was stated in the 2013 annual report. In terms of the figures for 2013, reference is made to the figures as presented in the 2014 annual report.
The accounts for 2012 were not affected by the aforemen-tioned accrual inaccuracies but have been recalculated due to changes in accounting principles with regards to pensions. All reports are available on Eniro’s webpage www.enirogroup.com.
12Information to ordinary shareholders in Eniro AB (Publ)
Condensed cash flow statementSEKm 2014 2013 2012
Cash flow from operating activities 288 481 420Cash flow from investing activities -75 -119 -51Cash flow from financing activities -271 -440 -730Cash flow for the period -58 -78 -361
Cash and cash equivalents at start of the period 113 198 557Exchange rate differences in cash and cash equivalents 3 -7 2Cash and cash equivalents at end of the period 58 113 198
EBITDAOperating income before depreciation, amortization and impairment losses.
ADJUSTED EBITDAEBITDA excluding restructuring costs and other items affecting comparability.
OPERATING MARGIN - EBITDAEBITDA divided by operating revenue.
OPERATING MARGIN - EBITEBIT divided by operating revenue.
AVERAGE SHAREHOLDERS’ EQUITY, SEK millionCalculated as average shareholders’ equity attributable to owners of the Parent company per quarter, based on the opening and closing balance for each quarter.
RETURN ON SHAREHOLDERS’ EQUITYNet income for the period divided by average shareholders’ equity attributa-ble to owners of the Parent company,.
INTEREST-BEARING NET DEBTBorrowings excluding interest rate deri-vatives less cash and cash equivalents and interest-bearing assets.
DEBT/EQUITY RATIOInterest-bearing net debt divided by shareholders’ equity, including holdings with a controlling influence.
EQUITY/ASSETS RATIOShareholders’ equity including non- controlling interests divided by total assets.
INTEREST-BEARING NET DEBT/ ADJUSTED EBITDAInterest-bearing net debt divided by adjusted EBITDA.
13Information to ordinary shareholders in Eniro AB (Publ)
FinancingEniro’s operations are mainly financed by equity and interest-bearing liabilities. On December 31, 2014, Shareholders’ equity amounted to SEK 1,797 million, of which the share capital amounted to SEK 309 million, additional paid in capital amounted to SEK 5,125 million, reserves to SEK -277 million and retained earnings to SEK -3,420 million.
On 31 December 2014, total borrowings amounted to SEK 2,392 million (SEK 1,767 million in long-term borrowings and SEK 625 million in short-term borrowings). The Company’s net debt amounted to SEK 2,208 million.
Loan agreementOn November 30, 2010, Eniro entered into a loan agreement with, among others, Danske Bank A/S, Denmark, Sweden Branch, DNB Bank ASA, Sweden Branch, Handelsbanken Capital Markets, Svenska Handelsbanken AB (publ), Merchant Banking, Skandinaviska Enskilda Banken AB (publ), Nordea Bank AB (publ) and Swedbank AB (publ). The loan agreement has since been amended on a number of occasions. Prior to the Rights Issue, the Company has agreed with the lenders on certain amendments in the loan agreement. The amendments in the loan agreement will enter into effect only after the Rights Issue and the convertible bond issue of a principal amount of SEK 500 million have been carried out and certain other conditions as stated in the amended agreement are met.
The loan agreement contains conditions regarding compulsory repayment in advance regarding revenue from divestments, insurance cases and capital market transactions. In the amended agreement, it has been specifically agreed that the higher of (i) the total proceeds from the Rights Issue and the convertible bond issue less reasonable transaction costs and SEK 200 million and (ii) SEK 650 million, shall be used for repayment of the loan. In addition it has been agreed that proceeds from potential future capital market transactions that shall be used to repay the Company’s preference shares shall be excluded from mandatory repayment when the amended loan agreement enters into force.
If the amended loan agreement enters into effect, the margin for Tranche A1-3 and the revolving credit facility is initially 4.00 per cent. If the ratio between the total net debt and EBITDA drops below 1.5, the margin is decreased to 3.50 per cent. For Tranche B, the margin is initially 5.00 per cent. The margin will after one year be increased gradually on three occasions to amount to 7.50 per cent after 1.5 years.
Shares in Group companies that are directly owned by Eniro, all relevant Group companies (i.e. each Group company with an EBITDA corresponding to 5 per cent or more of EBITDA at a Group level, have gross assets or a turnover corresponding to 5 per cent or more of the Group’s gross assets or turnover) and all Group companies that own or hold rights to search engines, databases or other assets that are significant to the Group’s operations have been pledged as collateral for obligations under the loan agreement and associated financing documentation. Eniro and the relevant Group
companies also guarantee the other Group companies’ obligations under the loan agreement and associated financing documentation. See also in Prospectus and in note 15 in the 2014 annual report.
Working capitalThe Company does not have sufficient working capital to cover the current needs during the next 12 months from the time of the publication of the Prospectus.
ACTION PLAN AND CONSEQUENCESThe Extraordinary General Meeting on March 9, 2015 resolved to approve the underwritten Rights Issue of ordinary shares amounting to approximately SEK 458 million in accordance with the terms described in the Prospectus as well as to approve a placed and directed convertible issue of a nominal SEK 500 million. These issues are expected to raise a maximum of SEK 200 million in working capital for the Company after issue costs and agreed repayments on the bank loans. The Company assesses that the working capital injected through the issues and the amendments to the loan agreement together meet the Company’s working capital needs for the upcoming 12-month period.
It should be noted that no collateral has been pledged for the subscription and guarantee undertakings which have been provided regarding the Rights Issue. Nor has collateral been pledged by the subscribers of the convertibles. In addition, the subscription and guarantee undertakings regarding the Rights Issue are conditional on the loan under the bank loan agreement not being terminated for repayment and the amendment agreement regarding the bank loan not being terminated. The subscriptions of the convertible issue are conditional on the Rights Issue being carried out, the bank loan agreement not being terminated for repayment and the amendment agreement regarding the bank loan not being terminated.
The banks have the right to demand immediate repayment of the loan agreement if, inter alia, a material adverse effect occurs regarding the Company. In addition, the amended loan agreement does not enter into effect if a material adverse effect regarding the Company occurs or if the Rights Issue or convertible issue are not fully carried out.
If the amended loan agreement does not enter into effect, the Company is at risk of lacking necessary working capital to meet the required repayments that apply according to the existing loan agreement. In such a situation, the Company will need to reach a new agreement with the Company’s lenders. If such renegotiation were not to succeed or if Eniro does not succeed in obtaining new financing in another manner, Eniro will be in breach of the existing loan agreement. Such breach would in such case arise on June 30, 2015, when Eniro shall make an agreed amortisation and would entitle the lending banks to demand immediate repayment of the outstanding bank loan.
The outstanding loan amounted to SEK 2,392 million as per December 31, 2014 (at which date the Company’s cash
14Information to ordinary shareholders in Eniro AB (Publ)
and cash equivalents amounted to SEK 58million), and since Eniro lacks the possibility to make a repayment of that magnitude, Eniro would be forced to apply for bankruptcy if immediate repayment was demanded.
Financial resources and cash flowOver the years, Eniro has primarily funded liquidity- and capital requirements for operational activities through cash flow from operations and, to a lesser extent, through borrowings. Even after receiving the net proceeds from the Rights Issue and the convertible bond issue, the financing of liquidity and capital requirements will still primarily consist of cash flow from operations and external borrowing. As of December 31, 2014, Eniro’s cash and cash equivalents
amounted to SEK 58m. In addition, Eniro had unutilized credit facilities of SEK 53m on the same date. Cash and cash equivalents and unutilized credit facilities totalled SEK 111m at December 31, 2014.
Ownership structureOn Februrary 28, 2015, the ten largest shareholders’ holdings amounted to 41.0. per cent of the votes in the Company, corresponding to 40.9 per cent of the share capital, according to the share register kept by Euroclear. At the same date, Eniro’s holdings of treasury shares amounted to 1,703,266. The table below provides an overview of Eniro’s largest shareholders as of 28 February 2015 including changes known to the Company thereafter.
Shareholders Ordinary shares Preference shares Share capital (%) Votes (%)
Danske Capital Sverige AB 10,195,518 80,735 10.0 % 10.0 %Zimbrine Holding BV (Staffan Persson) 7,800,000 - 7.6 % 7.7 %Odey Capital 5,618,000 90,000 5.6 % 5.5 %Deutsche Bank AG 3,488,892 - 3.4 % 3.4 %Morgan Stanley kundkonto 3,208,958 - 3.1 % 3.2 %Försäkringsaktiebolaget Avanza Pension 3,088,100 93,265 3.1 % 3.0 %Skandinaviska Enskilda Banken S.A. 2,257,308 5,498 2.2 % 2.2 %Länsförsäkringar fondförvaltning AB 2,226,000 - 2.2 % 2.2 %Banque Öhman S. A. 2,221,322 - 2.2 % 2.2 %Eniro AB 1,703,266 - 1.7 % 1.7 %
Total, 10 largest shareholders 41,807,364 269,498 40.9 % 41.0 %
15Information to ordinary shareholders in Eniro AB (Publ)
Risk factors
The summary of certain risk factors provided below is only a limited and brief list of certain risk factors and does not comprise a statement of all the risk factors that could be of importance for Eniro’s shares, operations as well as the Rights Issue. The Prospectus covers a more detailed number of risk factors, which a potential investor should carefully consider together with the other information in the Prospectus before a decision is made about subscribing for ordinary shares in Eniro. Eniro’s shares, operations as well as the Rights Issue are affected, inter alia, by the following risk factors:
Risks related to Eniro or the industry • The Company’s loan agreement includes conditions that
might limit Eniro’s financial and operational flexibility and thereby Eniro’s possibility of operating its activities. The loan agreement also contains financial undertakings (covenants). In the event that Eniro did not fulfil the defined loan conditions under the loan agreement, this might result in a breach of agreement that, if not relieved or the lender’s rights thereby are not subject to a waiver by the lender, might result in all outstanding loans immediately falling due for payment and mortgaged assets having to be subject to realisation.
• The changed loan agreement is conditional, among other things, on the completion of the Rights Issue and convertible issue and if this condition is not fulfilled and the changes do not come into force, Eniro risks not being able to meet its undertakings with respect to the existing loan agreement, which, according to the existing loan agreement, could result in all outstanding loans immediately falling due for payment and mortgaged assets having to be subject to realisation.
• The convertible issue is not secured and if subscribers do not pay for the convertibles in the convertible issue and the changed loan agreement thereby does not come into force, which would mean that Eniro would probably not be able to meet its undertakings with respect to the existing loan agreement, which could result in all outstanding loans immediately falling due for payment and mortgaged assets having to be subject to realisation.
• When the Company’s liabilities mature, Eniro may need to refinance its existing liabilities on less advantageous terms for the Company than presently and there is a risk that new capital cannot be acquired when the need arises.
• Increasing competition on the Scandinavian, Finnish and Polish markets might lead to a reduction in the number of customers and users, reduced sales income and increased costs for Eniro.
• There is a risk that Eniro is unable to change or adapt its existing, or develop new products and services to perform correct and adequate investments which may lead to lost customers and users, or that Eniro is forced to change the pricing of its products and offer terms which are less favourable for the Company in order to keep or attract customers or users.
• Eniro’s business operations are dependent on that IT-based support systems including data security systems work effectively and without disruption. Eniro is also dependent
on specific individual consultants with certain specific and materail knowledge of Eniro’s IT and communication systems. If any of these consultants cease to provide Eniro with their services such consultant could be difficult to replace, which could lead to interruptions in Eniro’s IT and communication systems. Each interruption, damage, breach, or disturbance regarding Eniro’s IT and communi-cation systems could have a material adverse effect on the Company’s activities, results and financial position.
• Eniro is dependent on the Company being associated with positive values. Any deterioration in reputation might lead to a reduced number of customers and users, increased staff turnover and difficulty in attracting new personnel.
• Disruptions, defects or inefficiency in the Company’s internal control may lead to that the Company’s operations are not conducted in accordance with applicable laws and regulations, that the Company’s reporting systems do not operate or that the operations cannot be adequately controlled, which may have a material adverse effect on the Company’s activities, results and financial position.
• Eniro’s authorisation to publish for www.eniro.se and www.proff.se could be withdrawn by the Swedish Broadcasting Authority. Should such authorisation be withdrawn, the Swedish Data Protection Authority would have the right to take measures against certain services offered on www.eniro.se and www. Proff.se. If the authori-sation to publish relating to the latter website is withdrawn, it could result in Proff requiring a permit from the Swedish Data Protection Authority in order to publish financial and credit information without doing so unlawfully.
• According to IFRS, the need for impairment of Eniro’s goodwill and other intangible assets with indefinite useful life must be tested annually. If global economic conditions continue to worsen and affect Eniro’s activities more than is presently envisaged, or if Eniro’s business deteriorates more quickly than the Company presently judges likely, there may be a need for further impairment.
• Eniro may be subject to serious infringement of the Company’s intellectual property rights and Eniro’s possibility of protecting its intellectual property rights in the future may deteriorate. It may also be the case that Eniro’s databases are not considered to have intellectual property right protection.
• New laws, directives or regulations, or amendments to
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or new interpretations of existing ones, which affect the Company’s activities, may lead to increased costs or other disadvantageous consequences for the Company.
Risks related to securities in Eniro• Prices of the new ordinary shares, paid subscription shares
and subscription rights may develop in an unfortunate direction.
• If a shareholder does not sell his or her subscription rights by 26 March 2015 or does not utilise his or her subscription rights by paying by 30 March 2015, the shareholder’s subscription rights will be lost without value or compensation. If a shareholder does not utilise his or her subscription rights, his or her proportionate holding and voting rights in the Company will also be correspondingly reduced.
• There is a risk that active trading in the subscription rights will not develop or that trading will be insufficiently liquid during the period. The price of the subscription rights will depend on many different factors, including the
development of the Company’s share price, but may be subject to significantly more volatility than the shares.
• Neither subscription nor guarantee undertakings are secured. If shareholders or guarantors should for any reason not meet their undertakings to subscribe for new shares in the Rights Issue in accordance with their undertaking or because certain conditions are not fulfilled, such undertakings may not be fulfilled. This could have a considerable negative effect on the Company’s possibility of successfully completing the Rights Issue.
• Neither subscription nor guarantee undertakings are secured. The agreement contain conditions for fulfillent and provisions on expiration. If shareholders or guarantors should for any reason not meet their undertakings to subscribe for new shares in the Rights Issue or if the undertakings due to certain conditions are not fulfilled or due to any other reason would default, it could have a considerable negative effect on the Company’s possibility of successfully completing the Rights Issue.
Questions and answersWhat is a Rights Issue?A Rights Issue is made by a company to raise more capital by issuing new shares. The new shares can be issued to both exis-ting and/or new shareholders. In Eniro’s Rights Issue, Eniro’s existing ordinary shareholders have preferential rights to sub-scribe for new ordinary shares in Eniro in relation to the num-ber of ordinary shares they already own.
Do I as a shareholder receive any subscription rights?Those who on the record date are registered as ordinary share-holders in Eniro will receive three (3) subscription rights for each ordinary share. One (1) subscription right entitles the holder to subscribe for one (1) new ordinary share.
What type of shares is issued in the Offering?The Rights Issue comprises subscription for ordinary shares.
When can I subscribe for new ordinary shares in the Rights Issue?The subscription period for new ordinary shares range from and including 16 March 2015 up to and including 30 March 2015. Eniro’s Board of Directors has the right to extend the subscription period, which - if applicable - will be announced through a press release as soon as possible after such decision has been taken.
What is the subscription price?The new ordinary shares in Eniro are issued at a subscription price of SEK 1.50 per new ordinary share.
May I change my mind?You cannot change your mind. The subscription is binding.
What is paid subscribed shares?During the time from subscription to formal registration with the Swedish Companies Registration Office, the subscribed share is called paid subscribed share or BTA (Sw: Betald Tecknad Aktie).
Do I as a shareholder need to do anything to receive paid subscribed shares or new ordinary shares? You as shareholders do not need to do anything more than to submit the pre-printed issue statement or the special subscrip-tion form where you specify the number of subscription rights to use. Following payment and subscription, Euroclear will send out a notice confirming that paid subscribed shares have been registered on your securities account. The newly issued ordinary shares will be recorded as paid subscribed shares on the securities account until the new shares have been registe-red with the Swedish Companies Registration Office. This registration is expected to occur on or about 20 April 2015. Thereafter, the paid subscribed shares will re-registered as ordinary shares. No securities notification will be issued in connection with this re-classification expected to occur on or about April 30, 2015.
Where can I find further information and application forms?For further information and full terms and conditions please refer to the Prospectus which is available on www.enirogroup.com and www.sebgroup.com/prospectuses. Subscription forms for subscription of new ordinary shares with subscription rights (to be used if the subscription rights have been bought, sold or transferred from another securities account, or if for any other reason the number of subscription rights differs from what is stated on the pre-printed issue statement) may be orde-red from SEB during office hours on telephone: +46 8 639 27 50. Subscription forms for subscribing for ordinary shares without subscription rights can be downloaded from www.enirogroup.com and www.sebgroup.com/prospectuses.
