Incap implements a comprehensive financing arrangement: directed share issue and restructuring of debt stabilise the company's financial position
Stock Exchange Release 22 July 2013 at 9 am
INCAP IMPLEMENTS A COMPREHENSIVE FINANCING ARRANGEMENT: DIRECTED SHARE ISSUE AND RESTRUCTURING OF DEBT STABILISE THE COMPANY'S FINANCIAL POSITION
Incap Corporation has negotiated a comprehensive financing arrangement that significantly improves the company's financial position in both the short and the long term. The arrangement involves raising additional capital through a directed share issue and reducing debt by rearranging loans and trade payables.
The negotiated financing arrangement permanently stabilises the company's financial position and improves its liquidity. This enables a return to normal business operations in areas such as materials purchasing. The company's financial position in both the short and the long term will be improved remarkably while the liabilities decline and the collateral arrangement connected with the sales price of the previously announced sale of property is released. The total impact of these amounts to EUR 9 million. The immediate cash effect of the comprehensive arrangement is approx. EUR 6 million.
After the directed share issue the company's largest shareholder will be Inission AB, an electronics contract manufacturer operating in the Nordic region and specialising in electronics production in small and medium-sized production volumes.
Incap Corporation's Board of Directors used for the directed share issue and for the restructuring of debt the authorisation given by the Annual General Meeting. In the directed share issue and in the conversion of debt connected with it, a total of 64,137,000 new shares were issued. Furthermore, in the conversion of the convertible loan 2012, a total of 22,430,769 new shares were subscribed. After the registration of all the new shares Incap has a total of 109,114,035 shares, each having one vote.
The shares issued and subscribed in the directed share issue represent 284% of all shares and votes in the company prior to the share issue and 59% of all shares and votes after the share issue. When besides the directed share issue also the shares issued in the conversion of the convertible loan 2012 are taken into consideration, all the new shares represent 384% of all shares and votes in the company prior to the share issue and conversion and 79% of all shares and votes after the share issue and conversion.
Directed share issue
The Board of Directors of Incap Corporation has on 17 July 2013 decided on a directed share issue under authorisation granted by the Annual General Meeting held on 10 April 2013. The directed share issue was conditional to the signing of an arrangement between Incap Corporation and Inission AB. The agreement was signed on 21 July 2013. A total of 64,137,000 new shares were issued. Deviating from shareholders' pre-emptive subscription rights, the share issue was directed at the company's major shareholders, an industrial investor, the company's Finnish financiers and the company's other creditors and senior management. The deviation from shareholders' pre-emptive subscription rights is justified by a weighty financial reason in accordance with Chapter 9, Section 4, Paragraph 1 of the Companies Act, as the purpose of the directed share issue was to carry out a financing arrangement for the company.
The shares were subscribed in full based on subscription commitments given in advance. Against cash payment, a total of 45,212,000 shares were subscribed, and thereby the largest subscribers were Inission AB (28,500,000 shares), Etra Invest (7,000,000 shares) and Onvest (3,500,000 shares). The rest of the directed share issue, i.e. 18,925,000 shares were subscribed as a conversion against loans.
The Board members and senior management of the company subscribed a total of 1,212,000 new shares.
The subscription price per share was EUR 0.10, based on the agreement between the company and the subscriber. The subscription price will be paid in cash or set off against a receivable from the company. The total subscription price paid in cash, i.e. approximately EUR 4.5 million will be recorded in full in the reserve for invested non-restricted equity.
Loan conditions were renegotiated and debt was converted to new shares
Incap Corporation has implemented a composition arrangement concerning its contracts and renegotiated the financing contracts of the company. In the composition arrangement, the holders of the company's convertible loan issued in 2012, the holders of capital loans as well as the Finnish banks and Finnvera agreed with the reduction of the debt. At the same time, the debt was converted to the company's new shares.
Concerning the convertible loan issued in 2012, the contracts were renewed in the way that the holders of the convertible loan can - after the composition arrangement - convert the remaining loan to a total of 22,430,769 new shares of the company. The subscription price of these shares was calculated to be approximately EUR 0.13 per share. All of the holders of the convertible loan confirmed that they will convert their share of loan to new shares.
The company has further reached an agreement with holders of the convertible loan issued in 2007 to have half of the loan paid immediately and the remaining half on 30 June 2014.
The holders of the company's capital loan will convert their loan to new shares in connection with the above mentioned directed share issue.
The company's Finnish financiers are also converting their loan receivables to new shares in the above mentioned directed share issue. At the same time, loan contracts and interest repayment schedules were renegotiated. In addition, a bank has agreed to release a collateral arrangement connected with the sales price of the company's property in Vuokatti.
In addition, the company's other creditors - suppliers of materials and services - supported the financing arrangement by participating in the composition arrangement, with a total effect of EUR 1.5 million.
On 31 March 2013, the company's interest-bearing liabilities amounted to EUR 18.3 million, and following the financing arrangement the amount of liabilities will be reduced by approx. EUR 6.0 million.
Table: Effect of the financing arrangement on interest-bearing liabilities
|(EUR 1,000)||31 March 2013||After the financing arrangement|
|Convertible loan 2012||2,916||0|
|Convertible loan 2007||960||480|
|Finance lease liabilities||80||80|
Application for admission of new shares to public trading will be filed
The shares subscribed in the share issue and in loan conversions will grant dividend rights and other shareholders' rights as of the date the new shares are entered in the Trade Register. The company's Board of Directors has initiated measures to register the shares in the Trade Register and the book-entry securities system and to apply to have the shares traded on the NASDAQ OMX Helsinki Ltd main list at equal value to the company's other shares. For this purpose, the company will prepare a prospectus, the financial information of which will be based on the company's results for the second quarter of 2013.
Lassi Noponen, Chairman of the Board of Directors of Incap Corporation:
"We have realised a very important and extensive financing arrangement for Incap, and I would like to thank all our stakeholders and key persons who contributed to the financing arrangement. The arrangement will ensure the continuity of Incap's industrial structure and the alliance with Inission AB will create a strong Nordic company to serve the customers globally and to develop the industry further."
Sami Mykkänen, President and CEO of Incap Group:
"This complete solution allows the company to resume normal operations especially in materials management and production control. We are now able to serve our customers better and ensure fluent and prompt deliveries from all our factories. Potential merger with a company with extensive experience and knowhow in the industry opens up entirely new opportunities also for operational business development."
Incap Group's interim report for January-June 2013 will be published on 31 July 2013 as previously announced by the company.
President and CEO
Lassi Noponen, Chairman of the Board, tel. +358 40 501 5127
Sami Mykkänen, President and CEO, tel. +358 40 559 9047 or +372 555 379 05
Kirsti Parvi, CFO, tel. +358 50 517 4569 or +372 555 620 35
Hannele Pöllä, Director, Communications and Investor Relations, tel. +358 40 504 8296
Conditions of the directed share issue
NASDAQ OMX Helsinki Ltd
The company's home page www.incap.fi
INCAP IN BRIEF
Incap Corporation is an internationally operating contract manufacturer whose comprehensive services cover the entire life cycle of electromechanical products from design and manufacture to repair and maintenance services. Incap's customers include leading equipment suppliers in energy-efficiency and well-being technologies, for which the company produces competitiveness as a strategic partner. Incap has operations in Finland, Estonia, India and China. The Group's revenue in 2012 amounted to approximately EUR 64.1 million, and the company currently employs approximately 600 people. Incap's share has been listed on the NASDAQ OMX Helsinki Ltd since 1997. Additional information: www.incap.fi.