Trelleborg Opens Rights Issue
“The significant downturn in the global economy since the fall of 2008 has however resulted in an increased uncertain outlook and has substantially changed the short-term market conditions for the group,” states the April 28 released Trelleborg share prospectus. “During the first quarter of 2009, Trelleborg’s sales declined by 15 per cent compared to the same period last year, even though the weak Swedish Krona affected sales positively.”
To strengthen the company’s financial position and increase the Trelleborg Group’s ability to take advantage of “opportunities occurring in the current economic climate” in order to strengthen its market positions, the Trelleborg Board of Directors proposed a rights issue to increase the group’s share capital. This proposal was approved at the company’s Annual General Meeting on April 23. The rights issue, if fully subscribed, will increase the company’s share capital by SEK 361,429,044, (US$44.7 million) through a rights issue of 180,714,522 shares, of which 19,000,000 are ‘series A’ shares and 161,714,522 ‘series B’ shares.
The proceeds of the rights issue will be primarily used to strengthen the group’s financial position, specifically to lower the group’s indebtedness and decrease the liquidity risk. Trelleborg has a financial target of maintaining a net debt corresponding to 75–125 per cent of shareholders’ equity. On March 31, 2009 the net debt to equity ratio was 122 per cent. Given the current market conditions, the company’s Board of Directors believes that a strengthening of the capital base substantially improves the ability to maintain the net debt to equity ratio within the stated range and ensures the group will have satisfactory financial flexibility going forward. The rights issue will strengthen the balance sheet so that the net debt to equity ratio would, all other things equal, have been 86 per cent, had the rights issue been completed on March 31, 2009 (given full subscription in the rights issue and after issue costs).
The full rights issue prospectus can be downloaded from Trelleborg at http://www.trelleborg.com/en/Investors/Rights-issue2/Rights-issue/IMPORTANT-INFORMATION/