D. Carnegie & Co completes merger with HSB II today

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| Source: D. Carnegie & Co
D. Carnegie & Co AB (publ) (“D. Carnegie & Co” or the “Company”) has, as
previously announced on 2 June 2014 entered into an agreement with the owners of
Hyresbostäder i Sverige II AB (“HBS II”), to merge their respective property
portfolios. The closing conditions have been met and D. Carnegie & Co is today
pleased to announce that closing has taken place. Following the transaction D.
Carnegie & Co becomes the largest listed residential property company in Sweden
with a property portfolio valued at close to SEK 10 billion consisting of
approximately 13,000 residential apartments, in and around Stockholm and the
Mälardalen area.
The extraordinary general meeting held on 2 July 2014 resolved in accordance
with the Board’s proposal to amend the Articles of Association and to authorise
the Board to issue shares and convertible bonds, which were one of the closing
conditions for the transaction. All other closing conditions, including approval
from the Swedish Competition Authority, have been met and the closing took place
today, 4 July 2014.

The key aspects of the transaction are as follows:

  · As part of the payment, the Board will, with support from the authorisation
from the general meeting, resolve on an issue in kind of not more than 26
million new class B shares to HBS II. Through the issue, HBS II will become a
major shareholder of the Company with a holding corresponding to approximately
35 per cent of the total capital of the Company.
  · As previously announced, HBS II has committed not to, for a period of six
month after closing, sell shares in D. Carnegie & Co over NASDAQ OMX First
North. HBS II’s commitment means that the Company receives a strong and long
-term investor.
  · Further, with support from the authorisation from the general meeting, the
Board will resolve on an issue of three convertible loans, each of SEK 340
million, of totally SEK 1,020 million. The loan principals expire on 30 June
2016, 2018 and 2019, respectively, and carry an annual interest of 5 percent.
Convertible bond holders have the right to demand early repayment of up to a
third of the principal amounts.
  · The rest of the payment consists of a vendor note of SEK 200 million and a
cash payment of SEK 1,321,898.
  · HBS II has under the agreement of the transaction committed to vote in favor
of the proposals of new directors of the Board and new issues made by the
Company’s major shareholder, Kvalitena AB (publ) (“Kvalitena”) on general
meetings of the Company, for as long as Kvalitena owns or controls more than 35
per cent of the shares in the Company (in capital or votes) and HBS II owns or
controls more than 25 per cent of the shares in the Company (in capital or
votes).
  · Kvalitena has also committed to acquire shares in the Company at a value of
SEK 100 million per quarter until 31 December 2016, starting the first quarter
of 2015. The commitment is limited to a total maximum of SEK 600 million during
the period.

Now, the intention is to coordinate D. Carnegie & Co’s property manager
Stendörren and HBS II’s organisation for property management Graflunds into one
of Sweden’s most experienced and professional property management teams.

Further information in respect of the acquisition of HBS II

For further information in respect of the terms and conditions governing the
Company’s acquisition of HBS II, please refer to the press releases dated 2
June, 13 June and 2 July 2014, which are available on the Company’s website,
www.dcarnegie.se.

Ulf Nilsson, CEO, comments:

“Following approval by general meetings in the selling companies and D. Carnegie
& Co, we can now complete a transaction whereby a fantastic platform for
continued growth in the company established. In addition to a growth that has
surpassed all our expectations, we create a uniquely coherent property
management team with an extremely experienced and competent property management
organisation.”

For further information, please contact:

Ulf Nilsson, CEO, D. Carnegie & Co

+46 (0)8 121 317 00

Knut Pousette, Chairman of the Board of Directors, D. Carnegie & Co

+46 (0)8 121 317 00

About D. Carnegie & Co

D. Carnegie & Co is a real estate company focusing on residential properties
within the Stockholm region and other growth areas. The Company’s business
concept is to own and manage its real estate portfolio and to gradually
refurbish apartments in connection with the natural turnover of tenants. This
can take place quickly and cost-efficiently due to the Company’s established
refurbishment method, BosystemTM. The refurbishment model is popular with both
tenants and the Swedish Union of Tenants (Sw. Hyresgästsföreningen) as the
apartments are attractively refurbished without any tenants being forced to
vacate the premises against their will.

At the beginning of 2014, Stendörren transferred its residential properties to
D. Carnegie & Co and thereby became the owner of a real estate portfolio
consisting of residential properties in Stockholm’s growth areas. As of 31
December 2013, the market value amounted to SEK 2,929 million and the total
rental value was estimated to amount to SEK 287 million per year. The financial
leasing rate is high and none of the properties are vacant. D. Carnegie & Co’s
real estate portfolio is situated in the Stockholm region. D. Carnegie & Co is
listed on NASDAQ OMX First North since 9 April 2014. The Company’s Certified
Adviser is G&W Fondkommission.

About Hyresbostäder i Sverige II AB
HBS II has since 2004 been a sizeable participant in the Swedish residential
property market with a portfolio of over 700,000 sqm of residential area. The
properties are located in Eskilstuna, Strängnäs, Södertälje, Huddinge, Haninge,
Bro, Märsta, Uppsala och Göteborg. HBS II has an own property management
organisation, Graflunds AB, which manages all HBS II’s properties and also
external properties.  HBS II is owned by Norwegian and Swedish investors through
Boligutleie Holding II AB and Hyresfastigheter Holding II Blå AB. According to
the investment mandate, the property portfolio will be disposed of between 2013
and 2016, depending on most optimal market conditions.