SCHMOLZ + BICKENBACH plans capital increase

by Hans Diederichs

SCHMOLZ + BICKENBACH (“Company”), a global leader in special long steel, has informed yesterday about its plans for a capital increase. The transaction is subject to the approval of an Extraordinary General Meeting ("EGM") to be held on December 2, 2019.

The weakness in the most important end markets, such as the automotive industry, which went beyond the usual cyclicality, led to a crisis in the steel industry that SCHMOLZ + BICKENBACH was unable to escape. The rapid development as well as the depth and duration of this weak demand require measures to strengthen equity. After examining all feasible options, the Board of Directors decided to propose to the shareholders an increase of the share capital. Martin Haefner is prepared to contribute up to CHF 325 million through BigPoint Holding AG, a company he controls, if this will enable him to acquire a stake of at least 37.5 % in the Company's new total capital as a result of the capital increase. Further conditions are sufficient security for the debt financing and a restructuring exemption to be granted by the Swiss Takeover Board from the obligation to submit a mandatory takeover offer, and the election of two persons nominated by BigPoint Holding AG as additional members of the Board of Directors by the EGM.

The capital increase to be approved by the EGM should reach a total amount of at least CHF 189 million and not more than CHF 350 million. The issue price of the new shares is at least CHF 0.15 and not more than CHF 0.30 per share. As the planned issue price is lower than the current nominal value of the shares of CHF 0.50 per share, a concurrent reduction in nominal value to a minimum of CHF 0.15 per share and a maximum of CHF 0.30 per share will be implemented. The total amount of the capital increase must be at least as high as the total amount of the nominal value reduction.

The shareholders of SCHMOLZ + BICKENBACH at the record date will receive non-tradable and non-transferable subscription rights following the EGM, which may subsequently be exercised. At the same time as the subscription right period starts, an international share offering will begin which will end three trading days after the end of the subscription right period. In this international share offering, those shares will be offered on the open market for which the subscription rights have not been exercised by the shareholders.

The issue price of the new shares will be determined by the Board of Directors after completion of the international share offering. The most important criteria for determining the price will be the maximization of the amount raised for the company and the prices offered in the international share offering.

As the issue price will only be determined after the offer period has expired, existing shareholders can indicate how many new shares they wish to purchase in certain price ranges.

As part of the international share offering, BigPoint Holding AG has committed to submit an offer to purchase shares for a total amount of up to CHF 325 million as described above.

With regard to debt financing, SCHMOLZ + BICKENBACH has agreed with its syndicate banks to temporarily suspend the contractually agreed financial covenants for the third and fourth quarter of 2019. The Company is in further negotiations with the syndicate banks to secure the long-term financing of the Group together with the proposed capital increase.

Source: Schmolz + Bickenbach Group

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