Catena AB (publ) (“Catena”) has entered into a conditional agreement with
Brinova Fastigheter AB (“Brinova”) for the acquisition of Brinova Logistik AB,
which owns 43 logistics and warehouse properties comprising a lettable area of
655,000 square meters (“The Real Estate Portfolio”).
Summary of the transaction and preliminary financial effects
· Catena will gain a new business area through the acquisition of logistics
and warehouse properties with a property value of SEK 3.8 BN. Rental income
totals approximately
SEK 346 M, with a remaining average lease term of approximately five years.
· The transaction will strengthen Catena’s opportunities to engage in
proprietary development of the development property in Solna and will facilitate
an attractive dividend policy.
· The net value of the acquisition, less existing liabilities, amounts to SEK
1,145 M. The acquisition will be financed through a directed share issue to
Brinova of 13.6 million shares at a price of SEK 84 each, which is based on the
average share price for the Catena share over a period of fifteen (15) trading
days up to August 20, 2013. Following completion of the share issue, the number
of Catena shares will total 25.2 million.
· The newly issued shares correspond to 54 percent of the number of shares in
Catena following the completed share issue. Brinova has obtained exemption by
the Swedish Securities Council from the obligation to make an offer for all of
the Catena shares.
· As a result of the transaction, shareholders’ equity in Catena will increase
from SEK 0.5 BN at June 30, 2013 to SEK 1.6 BN and Catena will gain access to a
pretax earnings base of approximately SEK 150 M on an annual basis. Equity per
share will rise from SEK 43 at June 30, 2013 to SEK 63.
· It is proposed that Brinova’s CEO, Gustaf Hermelin, will become the new CEO
of Catena on completion of the transaction, with the intention that Gustaf
Hermelin will exchange his current ownership in Brinova for direct ownership in
Catena.
· Catena’s current CEO, Andreas Philipson, will switch to a new position
focusing on Catena’s development projects in Solna.
· As a result of the transaction, Catena will gain a new organization with
longstanding experience of the logistics sector and of operating and developing
property companies.
· Shareholders of Catena corresponding to 72 percent of the share capital and
voting rights have stated that they are positive to the transaction and that
they will vote for implementation of the share issue.
· The agreement is subject to completion of due diligence, consent from
external creditors and a resolution from an Extraordinary General Meeting in
Catena approving a share issue to Brinova.
“In terms of size and complexity, Catena’s projects in Solna are such that
Catena requires a larger capital and competency base to be able to fully
capitalize on the project’s value potential. Through the transaction with
Brinova, Catena will gain these resources, while an interesting segment of the
real estate market will be added to the Company.”
Henry Klotz, Chairman of the Board, Catena.
“From Brinova’s standpoint, the transaction with Catena is a step in the
streamlining process towards the ownership of shareholdings in publicly traded
Swedish property companies. We will be a long-term owner of Catena, a company I
view as having considerable potential.”
Erik Paulsson, principal owner of Brinova.
“Brinova has a strong property business, with a focus on competitive logistics
properties in strategic locations. This position has been achieved thanks to an
organization characterized by expertise and the ability to satisfy meticulous
customer requirements. I intend to continue the development of the new Catena,
growing through acquisitions and property development.”
Gustaf Hermelin, CEO of Brinova, proposed as the new CEO of Catena.
Background and rationale
Catena evolved from Volvo and Bilia and has undergone structural change on a
number of occasions when deemed motivated by the best interests of creating
shareholder value. The last occasion was during 2010-2011 when the bulk of the
property portfolio was sold and an extraordinary dividend of SEK 53 per share
paid. Subsequently, Catena’s sole asset has comprised a major development
property located in Solna.
The detailed development plan for Catena’s development property in Solna is
expected to become effective in the latter part of 2013, whereby Catena will
hold development rights equivalent to about 70,000 square meters of commercial
space and about 800 apartments. Full implementation of the project is estimated
to cost slightly more than SEK 4 BN with an implementation period of about 10
years.
Catena is now faced with a decision regarding how to implement a granted
detailed development plan. There are two main alternatives: to carry out
proprietary development of the development property or to sell the project as a
whole or in parts. Given the market conditions, Catena’s assessment is that
proprietary development will provide a better financial result.
In parallel, Catena’s current capital base is insufficient for implementation of
the project funded solely by its own balance sheet. Accordingly, Catena needs to
strengthen its capital base with the aim of maximizing the financial gain from
the detailed development plan. One method of accomplishing this is for Catena to
make an issue-in-kind acquisition of a complementary and cash-flow generating
real estate portfolio.
The transaction injects about SEK 1.1 BN in shareholder’s equity to Catena and
an annual pretax earnings base of approximately SEK 150 M, thereby improving
Catena’s earnings capacity and financial base. Equity per share will rise from
SEK 43 at June 30, 2013 to SEK 63. A Catena with an increased earnings capacity
facilitates an attractive dividend policy.
Catena will also obtain an experienced organization with favorable customer
relations in the logistics sector and experience of development projects
together with a wide contact network in the capital and real estate markets. It
is proposed that Brinova’s CEO, Gustaf Hermelin, will become the new CEO of
Catena and step down from his current role at Brinova. Gustaf Hermelin has
extensive experience of running listed property companies from his time as CEO
of Klövern AB during 2002-2011 and from serving on the boards of several listed
property companies.
The proposed transaction will strengthen Catena and create the necessary
preconditions for Catena to shoulder a larger proprietary role in the continued
development of Solna. Viewed together, this will all create shareholder value.
Presentation of the Real Estate Portfolio
The Real Estate Portfolio being acquired comprises 43 logistics and warehouse
properties with a lettable area of 655,000 square meters. The rental value
amounts to about SEK 393 M, corresponding to approximately SEK 600 per square
meter.
The Real Estate Portfolio is concentrated to attractive logistics locations.
Properties in the Stockholm area, Gothenburg, Örebro, Helsingborg and Jönköping
account for 86% of the rental value.
Rental income totals approximately SEK 346 M, with a remaining average lease
term of approximately five years. Major tenants include DHL, the Axel Johnson
Group and Green Cargo.
Financial effects of the transaction
The following preliminary pro forma balance sheet as of June 30, 2013 includes
figures for Catena should the transaction be completed. The transaction will be
consolidated in the accounts as a reverse acquisition.
Balance sheet summary Pro forma
SEK M Dec 31, 2012 June 30, 2013 after transaction
Properties 850 885 4,713
Other assets 74 64 169
Total assets 924 949 4,882
Shareholders’ equity 481 501 1,599
Deferred tax liabilities 107 114 231
Interest-bearing liabilities 306 306 2,963
Non-interest-bearing liabilities 30 28 88
Total equity and liabilities 924 949 4,882
Pro forma
Key data Dec 31, 2012 June 30, 2013 after transaction
Number of shares, millions 11.6 11.6 25.2
Equity per share, SEK 41.6 43.3 63.2
Equity/assets ratio, % 52.0 52.9 32.8
As a result of the transaction, Catena will gain access to a pretax earnings
base of approximately SEK 150 M on an annual basis, notwithstanding changes in
value. In the period January to June 2013, Catena reported pretax profit of SEK
39.6 M, of which unrealized changes in value accounted for SEK 34.3 M.
The pro forma financial statements and information pertaining to earnings have
not been examined or reviewed in any way by either of the companies’ auditors.
Ownership structure following the transaction
The following table shows the five major shareholders in Catena as of July 31,
2013 after adjustments for the proposed share issue.
Catena’s shareholders after Number of shares Capital/votes
the share issue
millions %
Brinova Fastigheter AB 13.6 54.1
Endicott Sweden AB (CLS Holdings plc) 3.5 13.8
Fabege AB 3.5 13.8
Catella Fonder 1.4 5.6
Livförsäkrings AB Skandia (Publ) 0.3 1.1
Other shareholders 3.0 11.7
Total 25.2 100.0
After completion of the transaction, Brinova will account for 54% of the share
capital and voting rights in Catena. Brinova has applied for, and obtained,
exemption from the Swedish Securities Council from the obligation to make an
offer for all of the Catena shares. A condition for the exemption is that the
transaction is approved by shareholders representing two thirds of the shares
represented and the votes cast at the Extraordinary General Meeting, at which
shares represented by Brinova are not to be taken into account. The exemption
will lapse if Brinova subsequently increases its share of the voting rights
through additional acquisitions. (Refer to AMN 2013:33).
The intention is that in conjunction with Gustaf Hermelin becoming the new CEO
of Catena, he will exchange his current ownership in the Brinova Group for
direct ownership in Catena.
Key elements of the transaction
Acquisition and payment
On August 20, 2013, Catena signed an agreement with Brinova for the acquisition
of all shares in Brinova Logistik AB. The purchase consideration payable for the
shares amounts to
SEK 1,145 M, corresponding to adjusted shareholders’ equity, which will be paid
in the form of a promissory note followed by an offset issue comprising
13,630,952 shares. The valuation of the shares in Brinova Logistik AB has been
based on external property valuations.
Terms and conditions for the transaction
The transaction is subject to the completion of due diligence, the consent of
external creditors and a resolution from an Extraordinary General Meeting in
Catena approving an issue of shares offsetting debt whereby Brinova receives
shares in Catena in exchange for the promissory note payment.
Shareholder support
CLS Holdings plc, Fabege AB (publ) and Catella Fonder, which jointly hold 72% of
the capital and voting rights in Catena, have expressed their support for the
transaction and will vote in favor of the offset share issue at the
Extraordinary General Meeting.
Preliminary schedule
Indicative dates for the completion of the transaction:
September 2, 2013 Notice of the Extraordinary General Meeting in
Catena
September 23, 2013 Extraordinary General Meeting in Catena
September 30, 2013 Transfer of ownership of the shares in Brinova
Logistik AB
Further information regarding the transaction will be provided ahead of the
Extraordinary General Meeting. In addition, an admission-to-trading prospectus
will be published in October.
Advisors
Catella Corporate Finance is acting as financial advisor and Nord & Co
Advokatbyrå as the legal advisor to Catena in conjunction with the transaction.
For further information, please contact:
Henry Klotz, Chairman of the Board
Tel. +44 (0)7766 205 145
The information contained in this press release is such that Catena AB (publ) is
legally obliged to publish under the Securities Market Act. The information was
released for publication on August 20, 2013 at 7:30 pm (CET).
Translation Accuracy Disclaimer: If any questions arise related to the accuracy
of the information contained in this press release, please refer to the Swedish
version of the document which is the official version of the document.
CATENA ACQUIRES LOGISTICS PROPERTIES FOR SEK 3.8 BN; GUSTAF HERMELIN PROPOSED AS NEW CEO
| Source: Catena AB
Attachments
