The accelerated closure of HQ's trading portfolio has been completed

The accelerated closure of HQ's trading portfolio has been completed

-         Total cost of closure SEK 1,230 million
-         Advance payment for rights issue and perpetual subordinated
debenture to strengthen the strong capital base
-         Extraordinary general meeting to address election of board
-         External audit of the Trading operations has been appointed

Closure completed 

HQ AB (”HQ”) has completed the accelerated closure of its trading
portfolio. In total the cost is SEK 1,230 million during the second
quarter of 2010, including the SEK 297 million announced on June 8,
2010.

Following the closure of the trading portfolio, HQ has a limited stock
and derivatives portfolio. The holdings comprise liquid standardised
instruments with short durations. The purpose is to be able to provide
prices for Swedish stock options and HQ Fonder Sverige AB's ("HQ
Fonder") ETFs, and to act as market maker for certain companies.

Advance payments and subordinated debentures strengthen capital base

HQ has received an advance of SEK 235 million from Investment AB Öresund
(”Öresund”) and from Johan Qviberg, Anna Qviberg and Jacob Qviberg for
the forthcoming new rights issue that is intended to be conducted during
the autumn of 2010. This advance has been provided to subsidiary HQ Bank
AB (”HQ Bank”) in order to strengthen tthe capital base and capital
adequacy until the planned new rights issue has been completed. Also,
Öresund has converted a subordinated debenture to HQ Bank of SEK 150
million into a perpetual subordinated debenture. In addition, HQ Bank
has received a perpetual subordinated debenture of SEK 21 million from
Mats Qviberg and Eva Qviberg.

Following the closure of the trading portfolio and the capital
injections by principal shareholders, HQ's Tier-1 capital ratio pro
forma per May 31, 2010 is 8.7 percent and its capital adequacy pro forma
is 16.2 percent.[1] (https://connect.ne.cision.com/#_ftn1)

”The closure of the trading portfolio was very costly. It was, however,
of the utmost importance to quickly be able to put the uncertainty and
worries behind us. Based on a stable financial position and a low level
of risk we will now be able to place all resources on strengthening HQ's
value proposition and thereby creating added value for our clients,
employees and shareholders,” says Stefan Dahlbo, Acting President and
CEO HQ.  

Through the issue of preference shares in HQ Bank an advance of SEK 235
million has been provided, that is later intended for non-cash payment
in HQ's planned new rights issue. HQ has a call option with expiration
June 30, 2015 for all preference shares. The preference shares can be
redeemed for cash against the amount paid plus return upon request of
both the holder and HQ Bank, and are upon request of the holder
convertible into common stock corresponding to 9.9 percent of capital
and votes in HQ Bank. In other respects the preference stock is governed
by customary terms and conditions. The perpetual subordinated debenture
of SEK 21 million that has been received from Mats Qviberg and Eva
Qviberg is also intended to be later used as payment in HQ's planned new
rights issue. HQ's option to buy back HQ Fonder has been transferred
from HQ to HQ Bank.

Planned rights issue to enable buyback of HQ Fonder

To enable a buyback of HQ Fonder, which was divested to Öresund on June
8, 2010, the board intends, as previously announced, to decide - on
condition of endorsement by the extraordinary general meeting - on a
rights issue of common shares of up to SEK 1,000 million. The rights
issue is assured at an amount up to SEK 715 million through subscription
obligations and guarantee undertakings from Öresund, Mats Qviberg
(including family) and Sten Dybeck (including family), of which SEK 256
million has been paid in advance as above. HQ intends to hold the
extraordinary general meeting in September 2010. The current board will
prepare an issue prospectus ahead of the meeting.

HQ's board will vacate their positions

At the request of Öresund there will be an election of the board of HQ
by extraordinary general meeting. All directors will in conjunction with
the meeting vacate their positions. HQ's nomination committee has
commenced its work.

External audit

HQ has engaged lawyer Anders Malm of Oreum Advokatbyrå to conduct a
thorough audit of HQ Bank's Trading operations. This audit will be
completed before the extraordinary general meeting.

Miscellaneous

Lenner & Partners and HQ Bank Corporate Finance are financial advisors,
and Setterwalls Advokatbyrå and Bergh & Co Advokatbyrå are legal
advisors to HQ.

”HQ's troubled trading portfolio has finally been closed and we can now
turn the page and at the same time learn lessons from these events. We
will be thorough. Once we have completed our review there should be no
doubt that HQ's routines, procedures and controls are among the best in
the industry. Given HQ's historically proven focus on its business and
its clients, we are convinced that we will therefore be able to restore
confidence,” says Mikael Nachemson, Chairman HQ Bank.

 

For further information:
Stefan Dahlbo, Acting President and CEO HQ AB, Tel: +46 (0)8 696 17 00

Mikael Nachemson, Chairman HQ Bank AB, Tel: +46 (0)8 696 17 00

Media enquiries:
Erik Amcoff, Head of Corporate Communications HQ, Tel +46 (0)730 891 761

 

The above information is information that HQ AB (publ) is obliged to
publish in accordance with the Swedish Securities Market Act and/or the
Swedish Financial Instruments Trading Act. This information was
disclosed to the market for publication at 08.15 on June 29, 2010.

 

[1] (https://connect.ne.cision.com/#_ftnref1) Pro forma is calculated
from the capital base per May 31, 2010 (which was charged with losses in
the Trading operations of SEK 231 million during April-May 2010)
adjusted for the sale of HQ Fonder, advances of SEK 235 million, the
provision of perpetual subordinated debentures of SEK 171 million and
losses in the Trading operations of SEK 999 million during June 2010.
The capital requirement is based on the outcome per March 31, 2010
adjusted for the sale of HQ Fonder.