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Message: 416303
Date/time 19.12.2016 07:30
Issuer RenoNorden ASA
IssuerID RENO
Instrument RENO
Market OB
Category OTHER ANNOUNCEMENTS
Subject to information requirements   Mandatory notifications   OAM announcement
Attachment
Title RenoNorden ASA: Operational and financial update and announcement of fully underwritten rights issue
Text
This announcement is not for release, publication or 
distribution (directly or indirectly) in or to the 
United States, Canada, Australia or Japan. It is not an 
offer of securities for sale in or into the United 
States, Canada, Australia, the Hong Kong Special 
Administrative Region of the People's Republic of 
China, South Africa or Japan.

This announcement is not an offer of securities for 
sale in the United States. The new shares to which this 
announcement relates have not been and will not be 
registered under the United States Securities Act of 
1933, as amended (the "Securities Act"), and may not be 
offered or sold in the United States absent 
registration or an exemption from registration under 
the Securities Act. There will not be a public offering 
of shares in the United States.


RENO - Operational and financial update and 
announcement of fully underwritten rights issue

As a consequence of the operational issues announced by 
RenoNorden ASA (the "Company") in recent quarters, in 
combination with increased competition and price 
pressure observed in the market, the Board of Directors 
and the new management of the Company have taken 
significant measures to improve the operations of the 
Company: 

- New routines implemented to reduce risks in tender 
calculations.
- Cost reduction and efficiency programs initiated 
across all business units and departments.
- Truck delivery issues in Denmark solved, and 
procurement function improved with more stringent 
routines and extended management involvement.
- Successful start-up of new customer contracts 
demonstrated, but at somewhat higher cost than expected.

Although significant improvement measures have been 
taken, the operational issues continue to put pressure 
on the Company's results, financial position and 
covenants. 

The Company expects revenue in Q4 2016 slightly below 
the level of Q4 2015 and a weaker seasonal development 
in EBITDA margin in Q4 2016 compared to the previous 
year, and total capex in Q4 2016 slightly above the 
level in Q3 2016. Going forward, the Company expects 
stabilizing group EBITDA margins in the short term and 
thereafter slightly improving in the medium term, and 
management will apply a disciplined approach to new 
contracts. At the same time, large expected starts-ups 
in 2017, mainly related to already committed contracts, 
are expected to lead to capital expenditures in 2017 
above the 2016 level.

The Board of Directors has resolved to restate the 
Company's interim financial statements for Q2 and Q3 
2016. As a result of this, the Company will be required 
to make further goodwill impairments in Norway and 
Denmark as of 30 June 2016, mainly due to higher 
weighted average cost of capital (WACC) requirements. 
In addition, changed technological requirements have 
reduced the useful life for the vehicles. This requires 
the Group to reduce the depreciation period for the 
vehicles from 12 to 10 years. The effect of this will 
be a combination of write-downs to the expected 
recoverable amount and increased yearly depreciation 
going forward.

The Company has previously announced recognized 
provisions in the period ended 30 June 2016 for 
lossmaking contracts in Norway and Denmark of NOK 159 
million in total. This has also triggered a goodwill 
impairment of NOK 90.9 million in Norway. The total 
combined additional impairments, write-downs and 
increased depreciation, mainly to be recognized in the 
three months period ended on 30 June 2016, and which 
will be reflected in the restated interim financial 
statements for Q2 2016, amounts to NOK 242 million, of 
which NOK 23 million relates to the effect of shortened 
depreciation periods for the vehicles. Going forward, 
the effect of these increased depreciations is expected 
to be approximately NOK 6 to 8 million in Q4 2016, 
while in 2017 and over the next 10 years, the total 
effect is expected to be approximately NOK 50 million, 
of which approximately NOK 15 million will be effective 
in 2017 and thereafter deceasing.

As a consequence of the increased investments mainly 
related to already committed contracts, in combination 
with the margin development, the Company expects a 
further increase in the NIBD/EBITDA ratio and that 
continued compliance with the Company's maximum 
NIBD/EBITDA covenant of 5.0x under the Company's 
financing agreements will be challenging over the 
coming quarters unless a share capital increase is 
conducted.

To strengthen the Company's balance sheet and create 
headroom with respect to its maximum NIBD/EBITDA 
covenant, thus providing a better platform for the 
business going forward and increased refinancing 
flexibility, the Board of Directors has decided to 
propose a rights issue of new ordinary shares in the 
Company with gross proceeds of NOK 350 million 
(the "Rights Issue"). The Company has appointed 
Carnegie as manager (the "Manager") for the Rights 
Issue.

The Rights Issue is fully underwritten by a syndicate 
consisting of existing shareholders and new investors. 
Three members of the Company's group management have 
agreed to underwrite for the following amounts:
- Harald Rafdal (CEO): NOK 1,000,000
- Øystein Disch Olsrød (CFO): NOK 500,000
- Ingrid Therese Tjøsvold (COO and Country Manager of 
Norway): NOK 500,000 

CapVest, the Company's largest shareholder, which is 
represented on the Board of Directors, has agreed to 
underwrite for an amount equal to NOK 21 million.

The underwriting is subject to customary conditions, 
including the Company's continued compliance with its 
disclosure obligations as a company listed on Oslo Børs 
and that no change occur which, in the good faith 
opinion of the Manager is so material and adverse as to 
make it impracticable or inadvisable to proceed with 
the Rights Issue or the delivery of the new shares.

The Rights Issue is subject to being resolved by an 
extraordinary general meeting of the Company, which is 
expected to be held in late January or early February 
2017 (the "EGM"). A notice of the EGM is expected to be 
distributed in the beginning of January 2017.

The subscription price in the Rights Issue will be 
determined by the Company in consultation with the 
Manager and will imply a minimum discount of 25% to the 
theoretical ex-rights price for the shares (i.e. the 
calculated price for the Company's shares after issuing 
the new shares in the Rights Issue, assuming that the 
Rights Issue is subscribed for the full amount and 
based on a pre-transaction share price equal to the 
volume weighted share price for the Company's shares 
quoted on Oslo Børs in the period from and including 20 
December 2016 to and including the last trading day 
prior to the date of the EGM notice) and maximum NOK 4 
per new share.

The number of new shares to be issued in the Rights 
Issue will be determined on the basis of the 
subscription price and the gross proceeds of NOK 350 
million.

Shareholders in the Company as of the date of the EGM 
(as recorded in VPS at the end of the second trading 
date thereafter (the "Record Date")), other than 
shareholders who are excluded from participating in the 
Rights Issue due to applicable securities laws, will 
receive subscription rights in proportion to their 
shareholding in the Company at such time. The 
subscription rights will be tradable and listed on Oslo 
Børs in the subscription period, and will give the 
holders preferential right to subscribe for and be 
allotted new shares in the Rights Issue. 
Oversubscription and subscription without subscription 
rights will be permitted.

The subscription period in the Rights Issue will be two 
weeks. The subscription period is expected to commence 
in the first half of February 2017 (following the EGM 
and the approval by the Financial Supervisory Authority 
of Norway of a prospectus to be prepared in connection 
with the Rights Issue). 

Attached hereto is an updated Investor Presentation as 
of December 2016. 

The restated interim financial statements for Q2 and Q3 
2016 are expected to be published later today.

For further queries, please contact: 
Øystein Disch Olsrød 
Group CFO of RenoNorden ASA 
Email: oo@renonorden.com 
Tel: +47 91602226

This information is subject to the disclosure 
requirements pursuant to section 5-12 of the Norwegian 
Securities Trading Act.

About RenoNorden:
RenoNorden is the market leader in waste management and 
transportation in the Nordic countries, serving more 
than 300 municipalities. The group has about 2,000 
employees and 2015 revenues of NOK 1.8 billion. The 
company is listed on the Oslo Stock Exchange with the 
ticker RENO. More information at www.renonorden.com.

IMORTANT INFORMATION:
This announcement is not an offer to sell or a 
solicitation of offers to purchase or subscribe for 
securities of RenoNorden ASA. This announcement is not 
a prospectus for the purposes of Directive 2003/71/EC 
(as amended, together with any applicable implementing 
measures in any Member State, the "Prospectus 
Directive"). Copies of this announcement may not be 
sent to jurisdictions, or distributed in or sent from 
jurisdictions, in which this is barred or prohibited by 
law. The information contained herein shall not 
constitute an offer to sell or the solicitation of an 
offer to buy, in any jurisdiction in which such offer 
or solicitation would be unlawful prior to 
registration, exemption from registration or 
qualification under the securities laws of any 
jurisdiction. A decision to invest in securities of 
RenoNorden ASA referred to in this announcement should 
be based exclusively on the prospectus published by 
RenoNorden ASA for such purpose.

This announcement and the information contained herein 
is not for publication or distribution into the United 
States of America and should not be distributed or 
otherwise transmitted into the United States or 
publications with a general circulation in the United 
States. This announcement does not constitute an offer 
or invitation to subscribe for or to purchase any 
securities in the United States of America. The new 
shares referred to herein have not been and will not be 
registered under the Securities Act or the laws of any 
state and may not be offered or sold in the United 
States of America absent registration or an exemption 
from registration under the U.S. Securities Act of 
1933, as amended (the "Securities Act"). There will be 
no public offering of the new shares in the United 
States of America.

The information contained herein does not constitute an 
offer of securities to the public in the United 
Kingdom. No prospectus offering securities to the 
public will be published in the United Kingdom. This 
announcement is only being distributed to and is only 
directed at (i) persons who are outside the United 
Kingdom or (ii) to investment professionals falling 
within article 19(5) of the Financial Services and 
Markets Act 2000 (Financial Promotion) Order 2005 (as 
amended, the "Order") or (iii) high net worth entities, 
and other persons to whom it may lawfully be 
communicated, falling within article 49(2)(a) to (d) of 
the Order (all such persons together being referred to 
as "relevant persons").

The new shares are only available to, and any 
invitation, offer or agreement to subscribe, purchase 
or otherwise acquire such Shares will be engaged in 
only with, relevant persons. Any person who is not a 
relevant person should not act or rely on this 
announcement or any of its contents.

Any offer of securities to the public that may be 
deemed to be made pursuant to this communication in any 
EEA Member State that has implemented Prospectus 
Directive is only addressed to qualified investors in 
that Member State within the meaning of the Prospectus 
Directive.

This publication may contain specific forward-looking 
statements, e.g. statements including terms 
like "believe," "assume," "expect," "forecast," "project
," "may," "could," "might," "will" or similar 
expressions. Such forward-looking statements are 
subject to known and unknown risks, uncertainties and 
other factors which may result in a substantial 
divergence between the actual results, financial 
situation, development or performance of RenoNorden ASA 
and those explicitly or implicitly presumed in these 
statements. Against the background of these 
uncertainties, readers should not rely on forward- 
looking statements. RenoNorden ASA assumes no 
responsibility to up-date forward-looking statements or 
to adapt them to future events or developments.

Read our disclaimer and copyright notice.