STOCKHOLM, Sweden, May 27, 2002 (PRIMEZONE) -- Ledstiernan:
-- The acquisition of Speed Ventures will add ten or so promising companies to the existing portfolio in Ledstiernan's focus area, which will strengthen Ledstiernan's position as the leading venture capital company in the mobile communication sector. -- The acquisition will strengthen Ledstiernan's financial position, increasing its net cash from MSEK 205 to MSEK 341, or from SEK 1.88 per share to SEK 2.43. -- The Transaction will generate extensive cost synergies. It is estimated that the new, merged portfolio can be managed on an annual cost base that is no higher than Ledstiernan's current cost base. -- Ledstiernan is paying with a mixture of new shares and convertible loan stock, as a result of which Ledstiernan's equity could be diluted by a maximum of 23 per cent. -- The value of the Transaction is some MSEK 167, for which Ledstiernan will acquire a portfolio having a book value of MSEK 56, and net cash, after deduction of transaction costs, of MSEK 136, giving a total value of MSEK 192. This corresponds to a minimum of SEK 5.90-6.55 per newly issued Ledstiernan share, of which net cash will account for more than 70 per cent. -- The Board of Speed Ventures has unanimously recommended the Transaction to the company's shareholders. To date, 71 per cent of Speed Ventures' shareholders have entered into agreements with Ledstiernan accepting the Transaction. A further 15 per cent have, in preliminary contacts, expressed their approval of it.
Johan Wachtmeister, President of Ledstiernan AB: "The acquisition of Speed Ventures will provide an effective complement to our existing portfolio, as well as strengthening our financial position. We will be adding some ten companies, several of them in our focus area, to our portfolio. Liquid funds will increase, which will enable us to adopt a more aggressive policy now that the venture capital market is moving into an exciting, new phase. We view this acquisition as our first step in our active participation in the coming process of consolidation of the venture capital industry."
Jan Gapinski, President of Speed Ventures N.V.: "Ledstiernan's acquisition of Speed Ventures will benefit Speed's shareholders. The acquisition will create a strong company in a changing venture capital market. It will also generate significant cost synergies in administration and management."
The sole purpose of this press release is to provide information about a business transaction whereby Ledstiernan AB (publ) has recently entered into an agreement on a private basis with a number of shareholders in Speed Ventures N.V. The press release is not directed towards these or any other shareholders in Speed Ventures N.V. Consequently, this press release shall not be construed to be an offer or an invitation to shareholders in Speed Ventures N.V, to sell or acquire securities. Nor should this press release be forwarded to or accepted by shareholders in Speed Ventures N.V. in those countries where the press release could be deemed to be the equivalent of an offer or invitation to acquire or sell securities. Introductory definitions
All financial ratios in this press release relating to either Ledstiernan AB (publ) ("Ledstiernan") or Speed Ventures N.V. ("Speed Ventures") as well as the financial effects of the Transaction reflect the situation as it was on April 30, 2002.
Net cash is defined in this press release as liquid funds less interest- bearing liabilities. In the calculation of pro forma net cash for the merged company, this figure has been arrived at after deduction in full of transaction costs of MSEK 10. The estimate of Speed Ventures' net cash at April 30, 2002 has also been arrived at, in this text, after deduction of transaction costs of MSEK 10.
Description of the Transaction
The Board of Ledstiernan has, following a thorough due diligence of Speed Ventures, negotiated with the management and Supervisory Board of Speed Ventures a transaction which will involve it in acquiring shares in Speed Ventures ("the Transaction"). Shareholders controlling 71 per cent of the votes and capital of Speed Ventures have already entered into agreements with Ledstiernan on the Transaction. Ledstiernan intends during the coming weeks to take steps to enter into equivalent agreements with additional shareholders in order to reach 95 per cent.
Payment will take the form of a mixture of new shares in Ledstiernan and a convertible loan. The convertible loan may correspond to no more than 25 per cent of the total purchase price, which means that the maximum nominal value of the convertible loan would be MSEK 32, at an assumed acquisition of 100 per cent. Shareholders in Speed Ventures have the option to take full payment in shares ("Share alternative") or to take a mixture of shares and convertibles ("Mixture alternative").
In the event of maximum acceptance of the "Share alternative," Ledstiernan's payment for the assumed 100 per cent of Speed Ventures consist of 32.5 million new shares; in the event of maximum acceptance of the "Mixture alternative", it will consist of 24.4 million new shares and a MSEK 32 convertible loan. The convertible loan will have a duration of six months, a conversion price of SEK 6.00 per share and pay no interest.
In the event of the "Mixture alternative" being preferred, the final price paid by Ledstiernan will depend on whether the loan is converted or not. In the event of the "Mixture alternative" being preferred to the maximum, the final payment will consist of either 29.7 million new shares (in the event of full conversion) or 24.4 million new shares and MSEK 32 in cash (when the loan is repaid). Any combination between these limits is possible in the event of only a proportion of the holders of the convertible loan opting to convert it into shares.
As the Annual General Meeting of Ledstiernan held on April 25, 2002 mandated the Board to make decisions to issue up to 50 million new shares, convertibles or other equity-related instruments, this transaction can proceed without any further decision by a Meeting of the company being required.
Shareholders controlling 71 per cent of the votes and capital of Speed Ventures have already entered into agreements with Ledstiernan on the Transaction. The Supervisory Board of Speed Ventures has unanimously decided to recommend the Transaction to Speed Venture's shareholders.
The pro forma effects referred to in this press release, except for the ownership structure, reflect the situation in which 50 per cent of the shareholders in Speed Ventures opt for the Share alternative and 50 per cent for the Mixture alternative.
Value of the Transaction
Ledstiernan's shares are listed on Stockholmsborsen's "O" list. The average price during the past ten-day period was SEK 5.30 ("Reference price"). The value of the Transaction depends on the extent to which Speed Ventures' shareholders enter into agreements with Ledstiernan and opt for the Share alternative or the Mixture Alternative. Based on the Reference price, the total value of the Transaction will be between MSEK 161 (100% acceptance of the Mixture alternative) and MSEK 172 (100% acceptance of the Share alternative).
Ledstiernan is acquiring, to put it simply, a portfolio of equities having an acquisition value of MSEK 150 and a book value of MSEK 56, together with net cash, after deduction of transaction costs, of MSEK 136. For this Ledstiernan will pay, as explained above, between MSEK 161 and MSEK 172, in the form of a mixture of newly issued shares and a convertible loan.
Seen from a different angle, the net cash of MSEK 136 corresponds to SEK 4.18 per newly issued share, and the book value of the portfolio corresponds to SEK 1.72 per newly issued share. In other words, the total value of Speed Ventures corresponds to SEK 5.90 per newly issued Ledstiernan share in the event of full acceptance of the Share alternative. The corresponding figures for the Mixture alternative are SEK 6.55 per share.
Speed Ventures has invested a total of MSEK 150 in its eleven portfolio companies and has written down their acquisition value by a total of MSEK 94. Ledstiernan considers that the current book value of MSEK 56 is fully justifiable.
Conditions
According to the agreement, completion of the acquisition depends on the following main conditions being fulfilled:
-- Ledstiernan is not required to complete the acquisition with an acceptance level of less than 95 per cent of the total number of shares in Speed Ventures. At any lower acceptance level, Ledstiernan is nonetheless entitled to go ahead with the acquisition. -- Speed Ventures' net cash on the completion date shall amount to more than MEUR 15, and the other information provided concerning Speed Ventures shall be correct in all essentials. -- Ledstiernan's volume-weighted average share price during the ten day period prior to completion of the Transaction shall not fall below SEK 4.00. Should the price fall below this level, both Ledstiernan and shareholders in Speed Ventures are entitled to terminate the Transaction.
Brief description of Speed Ventures
Speed Ventures is a venture capital company that was founded in 1998. The company currently has four employees and offices in Stockholm and Helsinki. The office in Helsinki is in the process of being closed, and the office in Stockholm will be merged with Ledstiernan's office following completion of the Transaction. Speed's investments in its existing portfolio have been made since February 1999, largely in companies engaged in IT and telecommunications. Speed Ventures has made radical changes to its original portfolio during the past few years. An outline of Speed Ventures' portfolio as of April 30, 2002, which consisted on that date of a total of eleven companies, is provided in the table below:
As Speed Ventures has recently entered into an agreement to sell its holding in Delego for a small book profit the number of portfolio companies will in the near future be ten. Prior to this divestment, the book value of Speed Ventures' portfolio is MSEK 56.
Further information concerning the portfolio companies is provided in Appendix 1 in the form of a brief description of each company.
Speed Ventures has a strong financial position with net cash of MSEK 146 as of April 30, 2002 (transaction costs of MSEK 10 will soon be incurred, which has been charged against the pro forma net cash).
Background to and reasons for the Transaction
The Nordic venture capital market is currently fragmented with a large number of relatively small players. It is estimated that there are more than 100 venture capital companies active on the Swedish market alone. Ledstiernan believes that the number of players will eventually be reduced to as few as 20-30 more powerful companies. In acquiring Speed Ventures, Ledstiernan is assuming a leading role in this process of consolidation, and will position itself as one of the leading venture capital companies on the Nordic market.
In order to remain an attractive and competitive investor on the venture capital market in the long term, it is important to have a clearly defined investment strategy and a strong organisation /network. It is also important to have the size required to manage the business in a cost effective manner, and to have adequate financial strength, not only to play an active role in the financing of promising portfolio companies but also to be able to make regular new investments with the object of diversifying the risks associated with the portfolio and take advantage of worthwhile investment opportunities that arise on the market. The acquisition of Speed Ventures will significantly strengthen Ledstiernan's financial position.
As Speed Ventures has invested in companies in the IT and telecommunication sectors - a strategy that is similar to Ledstiernan's - portfolio companies will fit in well with Ledstiernan's existing portfolio. Moreover, since the enlarged portfolio will still be manageable with Ledstiernan's existing organisation, it will be possible to manage the total portfolio with a higher level of cost efficiency (see below).
Ledstiernan possesses considerable competence and extensive networks in both IT and telecommunications, and, with its strong industrial and financial networks, it is particularly well placed to add value to Speed Ventures' portfolio companies.
A more attractive company to investors
The new Ledstiernan will be significantly larger after the acquisition. The pro forma equity (after full conversion) as of April 30, 2002 will amount to MSEK 742 (575) 1) . The book value of investments in portfolio companies will amount to MSEK 430 (374) and net cash will amount to MSEK 341 (205). The size of the new Ledstiernan will also make possible further rationalisation of management costs (see below).
The acquisition of Speed Ventures is also the first step in the process of improving the investor appeal of Ledstiernan's shares, attracting more stock market investors, increasing its market capitalisation, and improving the liquidity of the shares. The Transaction will broaden Ledstiernan's institutional shareholder base to include several new international investors, including Charterhouse, Soros Private Equity Partners, Permira Funds and Bear Sterns, which will, in turn, strengthen Ledstiernan's network of international contacts.
Integration process
The group of which Speed Ventures N.V. is the parent company will be wound up after completion of the Transaction, after which the portfolio holdings will be transferred to Ledstiernan. Ledstiernan's existing corporate structure - one limited company through which all the business is conducted and which owns the portfolio companies, will thus be restored during the year.
At present, Speed Ventures has offices in Stockholm and Helsinki. The Helsinki office is being closed and subsequent to the Transaction the office in Stockholm will be merged with Ledstiernan's office.
As already observed, Speed Ventures' portfolio will consist, after the sale of Delego, of shares in ten companies. Ledstiernan does not exclude the possibility of one or two more companies being sold.
Speed Ventures' annual cost base amounts to just over MSEK 10 prior to the Transaction. Ledstiernan's assessment is that the new, merged portfolio can be managed on an annual cost base that is only marginally higher than Ledstiernan's current cost base of MSEK 25, which reflects the effect of significant cost synergies. As a consequence of the transaction, Ledstiernan's cost-efficiency, defined as the annual cost base in relation to equity, will improve from 4.3 per cent to 3.4 per cent. In comparison with venture capital businesses conducted through funds, which calculates cost-base on committed capital, this is a competitive level of costs by the standards of the industry. The long- term effect of the cost synergies is expected to generate substantial additional value for Ledstiernan's shareholders.
As a consequence of the Transaction Jan Gapinski terminates his employment as president for Speed Ventures. In order to ensure continuity in the development of Speed Ventures' portfolio, Ledstiernan has engaged Jan Gapinski on a project basis on behalf of some companies.
Financial effects
A summary pro forma balance sheet 2) and selected financial ratios 3) as of April 30, 2002 are provided below. These figures are based on 50 per cent of the shares of the various series in Speed Ventures being acquired on the basis of the Share alternative and 50 per cent on the basis of the Mixture alternative, and that the price of Ledstiernan's shares is SEK 5.30. The value of Ledstiernan's newly issued shares, and thus the increase in the equity shown in the table below, will probably be determined by the closing price of Ledstiernan's shares on the day the Transaction is completed, which is expected to be around the end of June 2002. The pro forma balance sheet below is therefore an estimate based on the Reference price of Ledstiernan's shares. In making up the pro forma balance sheet, closure costs and transaction costs have all been taken into account. The aggregate transaction costs are estimated at some MSEK 10 and these have been taken in full against net cash in the pro forma balance sheet, even though they will not be disbursed until a later stage in the process.
Net cash will improve, pro forma, from MSEK 205 to MSEK 341. In view of the degree of maturity of Speed Venture's portfolio and existing financial partners in the portfolio companies, Ledstiernan judges the second-phase investment needs of the portfolio to be limited, amounting to a maximum of 25 per cent of the net cash provided by the Transaction. There are, however, no legal commitments to make second-phase investments in the portfolio, as is also the case with Ledstiernan's own portfolio.
The above table also shows that Ledstiernan will improve its net cash per share and maintain its high equity ratio. Equity per share will increase marginally.
Some negative goodwill will arise as a result of the Transaction, which is a straightforward accounting consequence of the fact that the value of the newly issued Ledstiernan shares is lower than Speed Ventures' equity. It has not yet been decided how this negative goodwill is to be handled.
Ledstiernan's existing loss allowances of MSEK 255 will not be affected by the Transaction.
Major shareholders, pro forma
The pro forma list of major shareholders below has been drawn up on the assumption of 100 per cent acceptance on the basis of the Share alternative. In this event, Speed Ventures' current shareholders will together own 23 per cent of the votes and capital in Ledstiernan.
As can be seen from the table below, which lists the major shareholders (pro forma) in Ledstiernan after the Transaction, Ledstiernan will acquire new shareholders such as Charterhouse, Soros Private Equity Partners, Permira Funds and Bear Sterns, who will each own between 2.2 and 3.7 per cent of Ledstiernan after the Transaction.
Under the terms of the Transaction the vendors of shares in Speed Ventures undertake not to sell, directly or indirectly, the shares acquired in Ledstiernan for a period of six months from completion of the Transaction.
Board and Management
Neither the Board nor the Management of Ledstiernan will be changed as a consequence of the Transaction.
General time schedule
Shareholders representing 71 per cent of the shares in Speed Ventures have already entered into agreements on the Transaction. Ledstiernan intends to enter into corresponding agreements with additional shareholders during the coming weeks in order to reach 95 per cent. Provided that Ledstiernan proceeds with the acquisition, it should be possible to complete it by distributing the new shares in Ledstiernan in the second half of June. In connection thereto, the final number of shares and convertibles to be issued will also be made public. If a 95 per cent acceptance level is achieved, compulsory acquisition proceedings can commence in accordance with Dutch company law. However, Ledstiernan has not made a decision as to whether this action will be taken or whether Speed Ventures' corporate structure after the acquisition can be integrated and dissolved without prior compulsory acquisition.
Stockholm May 27, 2002 Ledstiernan AB (publ.) The Board
For further information: Ledstiernan AB Johan Wachtmeister, President,+46-8-545 03500, +46-708-784 120 Speed Ventures N.V. Jan Gapinski, President, +46-8-55543667, +46-708-425292
Appendix 1: Brief description of Speed Ventures' portfolio companies
Codefactory is a consulting company that develops and customises software on the basis of the "open source" method, which involves the recycling of standardised solutions. The company has six employees. WM-Data is also a shareholder. For more information, see www.codefactory.se.
Emic Networks is a Finnish company that develops software enabling high availability in internet based system components like routers, switches and servers. The company has five employees. For more information, see www.emicnetworks.com.
Goyada develops mobile services for mobile refill of cash cards, mobile transactions and mobile entertainment. The company has nine employees. For more information, see www.goyada.se.
HotSip develops SIP-based (Session Initiation Protocol) communication solutions for broadband and mobile communication systems. The company has 33 employees. 3i and Argnor are also shareholders. For more information see www.hotsip.se.
Indycon is a consulting company within change management that focuses on business control, from strategy to operational control, for large and medium-sized industrial companies. The company has seven employees. For more information, see www.indycon.com.
Insite is active in the e-learning sector. It has 58 employees. For more information, see www.insite.se
It's Alive develops interactive position based games based on the active participation of the player. The company has eight employees. For more information, see www.itsalive.com.
Lifix is a Finnish company that develops software that makes possible "seamless roaming" and mobility between different networks. The company has ten employees. For more information, see www.lifix.fi.
SourceByNet offers a global, part-online procurement function for home interior products and decorative construction material. The company has 50 employees. For more information, see www.sourcebynet.com
Spreadskill is an e-learning company that offers a range of skills assessment tests for companies working with computers/IT, language and finance. The company has nine employees. For more information, see www.spreadskill.com.
Appendix 2: Brief description of Ledstiernan (before the Transaction)
Ledstiernan is building the leading seed and venture capital company in mobile communication.
Experience since 1994
Ledstiernan, which was founded in 1994, is one of the Nordic region's oldest and most experienced venture capital companies. The partners in Ledstiernan earned an annual return of more than 100 per cent on their personal investments in the IT sector between 1994 and 1999. With its team of eleven employees (combining entrepreneurs, technicians and people with an investment banking background) and its partners, the Stockholm-based Ledstiernan has a very strong network in the Nordic region and internationally.
Business focus
Ledstiernan has investments in around 30 portfolio companies, of which more than half are in the mobile communication focus area. Ledstiernan manages about 80 per cent of the investments together with other Nordic and international venture capital providers. Ledstiernan is an active owner, and as a rule has an interest of between 20 and 50 per cent in each company. Ledstiernan's goal is to earn a return that is well in excess of the average in the venture capital industry.
Main shareholders
Skandia and the Swedish Metalworkers' Union have been major shareholders since 1999, together with the partners. Ledstiernan's shares are listed on Stockholmsborsen's "O" list. The company has a total invested capital of some MSEK 1,000. The President of Ledstiernan is Johan Wachtmeister. Among the members of the board are Jan Carlzon, Olof Stenhammar, Lars Berg and Thomas Isaksson.
For more detailed information, see www.ledstiernan.se.
1) The figures in brackets relate to the situation at Ledstiernan alone as of April 30, 2002. 2) Speed Ventures' accounts are kept in Euro. In this press release they have been translated using an exchange rate of SEK/EUR 9.14. 3) All financial ratios are stated after full conversion.
This information was brought to you by Waymaker http://www.waymaker.net
The following files are available for download:
www.waymaker.net/bitonline/2002/05/27/20020527BIT00250/wkr0001.doc The Full Report www.waymaker.net/bitonline/2002/05/27/20020527BIT00250/wkr0002.pdf The Full Report