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HMS Networks explores the conditions to carry out a directed share issue of approximately SEK 1,400 million

17/04/2024

HMS Networks explores the conditions to carry out a directed share issue of approximately SEK 1,400 million 17 Apr 2024 at 15:31

Regulatory press release

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA, OR ANY OTHER JURISDICTION IN WHICH THE RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL OR REQUIRE REGISTRATION OR ANY OTHER MEASURES.

THIS ANNOUNCEMENT IS NOT A PROSPECTUS AND DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO PURCHASE THE SECURITIES DESCRIBED HEREIN, NOR SHALL THERE BE ANY SALE OF THE SECURITIES REFERRED TO HEREIN, IN OR INTO ANY JURISDICTION WHERE SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH JURISDICTION.

In accordance with previous communication from HMS Networks AB (publ) ( HMS or the Company), the Board of Directors of HMS has mandated Skandinaviska Enskilda Banken AB ( SEB ) to evaluate the conditions for carrying out a directed share issue (the Share Issue ). The Share Issue is expected to amount to approximately SEK 1,400 million and will be directed towards Swedish and international institutional investors by way of a book building procedure. The accelerated book building procedure will be initiated immediately after the publication of this press release. HMS intends to use the proceeds from the Share Issue to repay the bridge loan facility of approximately USD 120 million used as part of the financing of the acquisition of 100 percent of the shares in Red Lion Controls Inc. and Red Lion Europe GmbH as well as certain assets in other jurisdictions ( Red Lion Controls ), and to secure an efficient capital structure. Investment AB Latour has committed to, and AMF Fonder has declared its intention to, invest in the Share Issue up to an amount corresponding to their respective ownership levels. Investment AB Latour and AMF Fonder together represent 33.5 percent of the shares and votes in HMS.

The Board of Directors of HMS intends to resolve on the Share Issue with deviation from the shareholders' preferential rights, based on the authorisation from the extraordinary general meeting held on January 26, 2024. The subscription price and the number of newly issued shares in the Share Issue will be determined through an accelerated book building procedure. The completion of the accelerated book building procedure, pricing and allotment of new shares are expected to take place before the commencement of trading on Nasdaq Stockholm on April 18, 2024. The bookbuilding procedure may, at the discretion of the Company, be shortened or extended and may be cancelled at any time. HMS will communicate the result of the Share Issue in a press release following the completion of the bookbuilding procedure.

As previously communicated, the purpose of the Share Issue is to repay the bridge loan facility of approximately USD 120 million used as part of the financing of the acquisition of Red Lion Controls and to secure an efficient capital structure. The Board of Directors of HMS has carefully considered the option to raise capital through a rights issue and makes the assessment that it is more beneficial for the shareholders to raise capital through a directed issue which enables HMS to execute on its successful acquisition strategy in a timely and cost-effective manner, in combination with limiting market exposure. Considering (i) the Share Issue's close connection with the closing of the Red Lion Controls acquisition, (ii) the limited size of the Share Issue in relation to the market capitalisation of HMS, (iii) the cost savings associated with a prompt repayment of the bridge loan facility, (iv) that a directed share issue can be carried out at a lower cost and with less complexity than a rights issue, and (v) HMS' desire to diversify its shareholder base with institutional investors in order to enhance the liquidity of HMS' share, the Board of Directors of HMS overall assessment is that the reasons for carrying out the Share issue in this manner are in the best interest of the Company and all shareholders, and thereby the most suitable alternative. Since the subscription price in the Share Issue will be determined through a bookbuilding procedure, the Board of Directors assess that the subscription price will reflect current market conditions and demand.

HMS' largest shareholder, Investment AB Latour, has committed to, and the third largest shareholder, AMF Fonder, has declared its intention to invest in the above-mentioned share issue up to an amount corresponding to their respective ownership levels. This support has provided important conditions for enabling a successful completion of the acquisition of Red Lion Controls and the Share Issue.

In connection with the Share Issue, the Company has agreed to a so called lock-up undertaking, subject to customary exceptions and under the condition that the Share Issue is carried out, whereby the Company's Board of Directors may not propose or resolve on any new share issuances for a period of 90 calendar days from the settlement date of the Share Issue. In addition, CEO Staffan Dahlstr m, CFO Joakim Nideborn, and all members of the Board of Directors of HMS1, have undertaken, with certain exceptions and under the condition that the Share Issue is carried out, not to sell or otherwise dispose of their shares in HMS for a period of 90 calendar days after the settlement date of the Share Issue.

Advisors

SEB acts as Sole Global Coordinator and Bookrunner and Mannheimer Swartling Advokatbyr acts as legal counsel to HMS in connection with the Share Issue. Roschier Advokatbyr acts a
LINK: http://www.hms-networks.com/news-and-insights/news-from-hms/2024/04/17...
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