Background and motives
Net Insight AB (publ) ("Net Insight") has during the last years, in tough competition, achieved several economically and strategically important deals, mainly within the media sector. Examples that can be mentioned on the European market are deliveries of the pan-European media-network to the Eurovision and to Germany's largest TV-company, Westdeutscher Rundfunk, and now in April an order for delivery of equipment to Denmark's digital TV-network from Broadcast Service Denmark. An example from the American market is the delivery to Broadwing Communications, which expands its media network, initially including 20 cities in the United States. Net Insight now registers an increased demand within the market segment Professional Media Networks, which will result in an increased turnover during the year.
Net Insight has completed the development of the Nimbra 340, which is an access product that enables Net Insight to reach further out in the networks. Net Insight already has received orders for shipment of the Nimbra 340, which is extremely well suited for professional media networks and in Digital Terrestrial TV networks (DTT). Net Insight has also continued the development of the new platform Nimbra 680, which enhances the Company's possibility to reach a significantly wider market both geographically as regards to segments and customers. Nimbra 680 is also well suited for high capacity networks in current segments and can also increase the sales potential in the segment for core networks. Nimbra 680 will be ready for delivery at the end of 2005.
The prospects for the rest of the year are very good and the Company expects demand to continue to develop in a positive way, mainly due to the competitiveness in the Company's products and due to increasing investments among most of its target customers. The first quarter of 2005 was a record quarter and the second quarter will, at minimum, show sales of the same level. The outlook for the Company with substantially increased sales and significantly improved result for the year remains unchanged. With the new share issue the Company will be able to increase growth and strengthen its position further.
Net Insights present financing will, however, not be sufficient until the point where the company is expected to become cash flow positive. Based on sales growth, the financial result to date, as well as selective investments in R&D and sales, the Board has decided in favor of a fully secured share issue with preference for all of Net Insight's current shareholders that will bring SEK 98.5 million to the Company under conditions expected to be approved by the extra general meeting on June 7, 2005. A good financial strength is furthermore also important in order to answer to customary industrial requirements for being a long-term counterpart. Strengthening of the liquidity through an increase of the equity is therefore justified.
Terms of issuance[1]
The Board of Directors of Net Insight has decided on an issue of shares to the shareholders of the Company. The amount of the preferential share issue is to be at a maximum of 98,5 MSEK, where every four (4) existing shares, irrespective of series, shall entitle to subscription for one (1) new share of series B. Additionally, subscription without subscription rights will occur. The subscription price has been set to 1.35 SEK per share. The decision by the Board of Directors of the share issue has been made subject to approval of the general meeting of shareholders, which will be held on the 7th of June 2005.
If the share issue in Net Insight is fully subscribed for, Net Insight will issue 72,927,315 new shares of series B. After a fully subscribed new share issue Net Insight will have a total of 364,636,578 shares (distributed on 3,600,000 shares of series A and 361,036,578 shares of series B).
For time schedule for the share issue, see below under "Time schedule for the share issue".
Commitments to subscribe and guarantee commitments
Constellation Ventures Fund, board members and some other private shareholders, who together own approximately 15.7 per cent of the number of shares in Net Insight, have committed to subscribe for their respective pro-rata shares in the share issue.
Institutional shareholders, who together represent slightly more than 11.0 per cent, have declared their intention of subscribing for their respective parts in the share issue under the conditions decided by the Board of Directors - subject to the approval of the general meeting of shareholders.
A guarantee consortium under the lead of Danske Markets and Bankirfirman Lage Jonason AB has taken on guarantee commitments. The guarantors, who will be described in more detail in the prospectus, have committed to subscribe for the part of the share issue that is not subscribed for by Net Insight's shareholders, or by other party without subscription rights, up to an amount of approximately 75 MSEK.
The share issue is thereby fully secured.
Time schedule for the share issue
*General meeting of shareholders, 7 June, 2005
*The share is traded without right to participate in the share issue, 8 June 2005.
*Record date for right to participate in the new share issue, ie the shareholders who are registered as shareholders in Net Insight's shareholders register this day will receive subscription rights for participation in the share issue, 10 June, 2005.
*The prospectus is made public around 14 June 2005.
*Subscription period around 15-29 June 2005.
*Trading in subscription rights around 15-24 June 2005.
Trade in provisional shares, BTA, will be provided during the period from around the 15th of June 2005 to around week 30, in 2005.
Net Insight will, during the coming days, call for general meeting of shareholders 2005.
Furthermore Net Insight refers to the prospectus of the rights issue, which is to be made public around June 14th 2005.
Danske Markets acts as financial adviser and Sole Lead Manager to Net Insight in the rights issue.
Bankirfirman Lage Jonason AB acts as financial adviser to the Board of Directors and to the Management in the rights issue.
For more information, please contact:
Tomas Duffy, CEO, Net Insight AB.
Phone: +46 8 685 04 00, e-mail: tomas.duffy@netinsight.net
Fredrik Trägårdh, CFO, Net Insight AB
Phone: +46 8 685 06 01, e-mail: fredrik.tragardh@netinsight.net
[1] The share issue also requires a change of Net Insight's articles of association regarding stated limits for equity (from the present "minimum 4 million SEK and maximum 16 million SEK" to "minimum 10 million SEK and maximum 40 million SEK") and stated, maximum number of shares of series B, which can be issued (From present "maximum 400 000 000 shares of series B" to "maximum 1 000 000 000 shares of series B")