This statement has been prepared in Danish and subsequently been translated into
English. In case of inconsistencies between the two versions, the Danish version
prevails.
Statement
by
the board of directors of Mols-Linien A/S
concerning the mandatory public offer
made on 24 August 2015
submitted by
Holding af 29. juni 2015 A/S
(CVR No 36 94 06 70)
a 100 % owned and fully
controlled
subsidiary of
Polaris Private Equity IV K/S
(CVR No 36 48 65 97)
Malmøgade 3, 2100 Copenhagen Ø
The offer is made in the form of an offer document with related acceptance form prepared
by the Offeror (as defined below) and the offer document contains the terms governing the
Offer as well as the procedure for accepting it. Any decision to accept the Offer should be
made only following a careful review of the Offer and this report, which has been prepared
pursuant to the Takeover Order.
The below forward-looking statements, in particular those that relate to future sales and operating profit, are subject to risks and uncertainties as various factors, many of which are outside
Mols-Linien’s control, may cause the actual development to differ materially from the expectations contained in this statement. Factors that might affect such expectations include, among
others, major changes in the market environment, the competitive situation, legislation and other regulations, development in oil prices or acquisitions/divestments or chartering in/out of vessels.
1
Table of contents
1.
Introduction ........................................................................................... 3
2.
Background ............................................................................................ 4
3.
The Board’s assessment of factors pertaining to the offer ............................... 10
4.
Disclosure of certain interests ................................................................... 12
5.
Additional remarks ................................................................................. 13
6.
Conclusion ............................................................................................ 14
Schedule 1: 15
holding of shares for members of the board of directors and the management
board of Mols-Linien A/S .................................................................................. 15
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Statement from the Board of Directors of Mols-Linien A/S (”The Board”) pursuant to
Section 23(1) of The Danish Financial Supervisory Authority’s executive order no.
562/2014 dated 2 June 2014 on takeover bids (”The Take Over Order”) regarding the
mandatory public offer (”Offer”) that has been submitted on 24 August 2015 by Holding af 29. juni 2015 A/S (”Offeror”), a 100% owned subsidiary of Polaris Private Equity
IV K/S (“Polaris").
1.
INTRODUCTION
1.1
The Offer
The Offer is submitted on the terms and conditions set forth in the offer document dated 24 August 2015 (the ”Offer Document”) prepared by the Offeror.
Pursuant to the Offer the Offeror offers the shareholders of Mols-Linien A/S (the
"Shareholders") to acquire all issued shares in Mols-Linien A/S (”Mols-Linien” or “Company”) (the "Shares") at a price of DKK 40 in cash per Share of nominally DKK 20 each
(the "Offer Price").
The Offeror is a 100 % owned and fully controlled subsidiary of Polaris. According to
the Offer Document Polaris represents and warrants that the Offeror will have sufficient
cash funds to purchase and pay for any and all Shares tendered in the Offer in accordance with the terms set out in the Offer Document.
Attention is made to the fact that the Offeror in connection with its wish to acquire
control over Mols-Linien in addition to a mandatory public offer of 24 August 2015 has
made a voluntary public offer on 10 July 2015 at a price of DKK 34 in cash per Share,
which price was increased to DKK 40 in cash per Share in a separate addendum to the
offer document on 10 August 2015. Reference is made to the statements by the board
made in connection with the voluntary public offer and the addendum thereto dated 10
July 2015 (company announcement no 253) and 14 August 2015 (company announcement no 262), respectively. The board of directors directs the attention to the fact that
pursuant to applicable rules the voluntary public offer was automatically cancelled as a
direct consequence of the submission by Polaris of its mandatory public offer.
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1.2
The purpose of this Statement
According to Section 23(1) of the Take Over Order, the board of directors of a listed
company which is made subject to a public takeover offer shall draw up a statement
setting out the board of directors' opinion of the offer and the reasons on which such
opinion is based, including its views on the effects of the offer on all the company's
interests, and on the Offeror's strategic plans for the offeree company and their likely
consequences for employment and the locations of the company's places of business as
set out in the offer document.
This Statement is governed by Danish law.
2.
BACKGROUND
2.1
Mols-Linien’s operations and activities
Mols-Linien was established in 1966 and is a Danish high speed ferry operator connecting Sealand and Jutland with up to 24 daily departures via the services Aarhus-Odden
and Ebeltoft-Odden.
Mols-Linien’s fleet consists of 3 modern high speed ferries which ensure a quick, effective and convenient short cut between Sealand and Jutland for passengers, cars, buses,
trucks and motor cycles.
The journey between Aarhus-Odden takes approximately 75 minutes and the journey
between Ebeltoft-Odden takes approximately 55 minutes.
The current board of directors and management board launched in 2011 a comprehensive turn-around process, following which the Company today appears as a modern and
well operated enterprise with a modern fleet of high speed ferries, motivated and loyal
employees, and improved profitability and a strong cash flow. The Company is thus
well positioned to maintain and manifest its position as a strong and competitive alternative to the traffic over the Great Belt Bridge and Tunnel.
4
2.2
Mols-Linien’s expectations to the financial year 2015
Mols-Liniens expectations for the financial year 2015 was originally announced in connection with the release of the annual report 2014 in company announcement no 241
of 3 March 2015, where – based on certain assumptions on the development in the
traffic – it was announced that Mols-Linien expected a positive result for 2015 in the
range of 25 – 35 mil. DKK compared to a result in 2014 of 21,4 mil. DKK after tax but
before inclusion of receipt of an insurance sum in connection with an insurance matter.
By company announcement no 246 of 22 April 2015 with the interim accounts for the
first quarter of 2015, Mols-Linien adjusted its profit forecast from an expected result in
the range of 25 – 35 mil. DKK to a result in the range of 35 – 45 mil. DKK after tax
based on a strong development in the traffic in the first calendar months of 2015 .
By company announcement no 248 of 18 June 2015 Mols-Linien adjusted on the basis of
continued strong traffic developments its expected results from a range between 35 – 45
mil. DKK to a range between 50 – 60 mil. DKK after tax.
By company announcement no 257 of 5 August 2015 Mols-Linien informed about the traffic
developments in the period from 1 January through 31 July 2015 which comprises a very
substantial part of the Company’s high-season- the summer traffic. The Board maintained
on the basis thereof the profit forecast for 2015 as contained in company announcement no
248 of 18 June 2015.
By company announcement no 264 of 20 August 2015 Mols-Linien published its interim accounts for the first and second quarter of 2015, where the Company based on certain specified assumptions maintained its profit forecast for a positive result in the range of 50 – 60
mil. DKK after tax.
2.3
Mols-Linien’s forecast for 2016
The Board has not yet discussed and approved the budget for 2016, but the Company
has in company announcement no 264 of 20 August 2015 stated the following in regard
to the forecast for 2016:
The Company has secured a fixed fuel price in DKK for the full year 2016. Consequently, changes in fuel prices and/or the exchange rate between Danish kroner and US dollars will have no impact on the expected results for 2016.
5
The Company has projected the forecast for 2016 on the basis of the forecast for 2015,
an expected increase in the traffic volumes of 5 %, the fixed fuel prices and on the
further assumption that the average fare remains unchanged. Based on these assumptions Mols-Linien expects an EBIT result of approximately 146 mil. DKK and a result in
2016 of approximately 92 mil. DKK.
The Company expects that a cash-flow will be generated in the range of 90 – 100 mil.
DKK, which does not include any extraordinary payments.
In relation to sensitivity, the Company is able to advice that a change in the number of
passenger cars carried of +/- 5 % for the entire 2016 will result in an impact on the
expected result and liquidity position of +/- 34 mil. DKK.
2.4
Mols-Liniens shareholder base
Mols-Linien has a total share capital of DKK 283,333,400 divided into 14,166,670
Shares of nominally DKK 20.
Mols-Linien's shareholder base consists of 2,237 Shareholders recorded by name as per
31 December 2014, representing 13,564,387 shares corresponding to approximately 96
% of the total share capital.
The Company has as of today been notified that each of the following holds more than
5 % of the Shares and the voting rights:
•
Holding af 29. juni 2015 A/S
c/o Polaris Private Equity IV K/S
76.18 %
As per 31 December 2014 and as per today Mols-Linien held 207,450 treasury Shares
of nominally DKK 20 each, corresponding to 1.46 %.
2.5
The process leading to the submission of the Offer
Representatives for three shareholders holding approximately 46 % have on a continuous basis supported the board of directors and the management board in relation to
the turn-around process following the completion of which they were aiming for a disposal of their shareholdings.
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A purchase of a shareholding of such a size in a listed company triggers an obligation
for the purchaser to make a mandatory public offer to all Shareholders in the company
which limits the group of potential purchasers to those who has the financial strength
to fulfil such an obligation. I some articles in the media this legal aspect has been presented as if the Board wanted only to sell the entire Company. This is an incorrect
presentation.
After the financial year 2014, when the Company for the first time in several years
achieved a positive result, the Board initiated examinations with the purpose of determining the possibilities for making a private placement of these shareholdings thereby
creating a more stable and lasting Shareholder structure which could support the commercial developments of the Company in a way that would benefit the Company, its
employees, the Shareholders and the interests of other stakeholders, possibly by acquiring the entire Company.
This process has included establishing contacts to a number of potential industrial and
financial investors in Denmark and internationally. The Board, nevertheless, had to
acknowledge in May that none of these approaches had resulted in any indication of
interest from any industrial or financial investor for the acquisition of the entire Company. Prompted by the recent press coverage the Board wishes to direct the attention
to the fact that as part of this process the Board has had discussions with Lind Invest
ApS during the Spring 2015 and that this dialogue has been closer than with anyone
else that the Board has been in contact with.
In May 2015, the Board was approached by representatives of a number of the larger
Shareholders, representing in total approximately 76 % of the Shares. These Shareholders announced that they had entered into a process agreement with Polaris on selling their shares, subject to fulfillment of certain terms and conditions in the agreement, including inter alia a price of DKK 34 per Share, (the ”Process Agreement”).
The Process Agreement assumed that the Board of Mols-Linien would allow Polaris as
well as Polaris' advisors to conduct a limited due diligence exercise covering legal, financial and technical matters (”Due Diligence”), that Mols-Linien would grant Polaris
exclusivity and that Polaris on the basis thereof would make a voluntary public offer to
all Shareholders in Mols-Linien on the purchase of their Shares on the same terms and
conditions as having been offered to the large Shareholders comprised by the Process
Agreement.
In light of the wish by the Board to secure a more stable Shareholder structure combined with the obligations of the large Shareholders comprised by the Process Agree-
7
ment, the Board engaged in May 2015 in discussions with Polaris on the terms for the
Due Diligence. At the end of May 2015 and before the Board signed an exclusivity
agreement with Polaris the chairman approached again Henrik Lind/Lind Invest ApS
with an aim to involve Lind Invest ApS in the forthcoming public offer process. Henrik
Lind, nevertheless, announced that he would only be interested in acquiring a 30 %
shareholding, and that he wanted to avoid submitting a public offer to all Shareholders
in Mols-Linien. At no point in time, any indication was made at what price Lind Invest
ApS’ interest was based.
In June 2015 Polaris was thus the only party potentially interested in acquiring all of
the Shares in Mols-Linien and the only potential investor having disclosed a specific
price for the Shares. Taking that into account and the Process Agreement and the large
Shareholders’ wishes to dispose of their Shares in any event the Board signed an exclusivity agreement with Polaris.
After Polaris had completed its Due Diligence certain negotiations took place during
which Polaris made it clear to the Board that Polaris’ willingness to make a public offer
was subject to the Board extending the exclusivity agreement until the end of the offer
period. It was emphasized that this condition was non-negotiable. Due to this and taking into consideration also that the Shareholders being party to the Process Agreement
wanting to sell their Shares in any event, and that – at this point in time – there were
no other potential buyers – also not Lind Invest ApS - who were willing to make a public offer to all Shareholders, the Board considered that it would serve the best interests
of the remaining Shareholders in Mols-Linien if the Board accommodated Polaris’ exclusivity request as all Shareholders would be given the possibility to consider and decide
whether they wanted to dispose of their Shares.
Polaris’ resolution to make a voluntary public offer was then publicly announced on 3
July 2015 under company announcement no 250, while the actual offer document was
made public on 10 July 2015 under company announcement no 252. The statement by
the Board of Mols-Linien was made public on the same day under company announcement no 253.
On 27 July 2015, Lind Invest ApS approached the Board and expressed that it was considering to submitting a competing offer (at a price of DKK 40 per Share) and requested that it be given the opportunity to conduct a limited due diligence investigation. On
28 July 2015, it was conveyed to Lind Invest ApS that it was not possible until after 12
August 2015 due to the restrictions in the exclusivity agreement with Polaris. However,
at the same time it was communicated to Lind Invest ApS that nothing prevented Lind
8
Invest ApS from submitting a competing offer, and if necessary, to make it subject to
certain conditions.
By company announcement no 258 dated 7 August 2015 it was announced that Polaris
had made a decision to increase the Offer Price from DKK 34 to DKK 40 per Share, corresponding to an increase by 17.6 %. The decision was inter alia made on the basis of
certain discussions with the larger Shareholders being parties to the Process Agreement and certain discussions with the Board in Mols-Linien.
On 19 August 2015 (cf. company announcement no 263) Lind Invest ApS announced
that it would make a voluntary public offer to all shareholders of Mols-Linien at a price
of at least 41 DKK per Share, which offer – however – was conditional upon Lind Invest
ApS being granted access to conduct a limited due diligence, and which offer furthermore did not specify which conditions completion of the offer would be made subject
to. On several occasions before and after this announcement Mols-Linien has conveyed
to Lind Invest ApS that the board of directors would assist competing bidders in getting
access to conduct a limited due diligence, provided that such bidders would extend an
offer to all Shareholders with the purpose of obtaining control over the Company, and
on the basis of a genuine offering material demonstrating transaction certainty, and
with an offer on clearly defined terms, with a specific price, information on possible
price adjustment mechanisms and the entailing consequences. Furthermore, Lind Invest ApS was requested to present a business plan. Lind Invest ApS has at no point
accommodated these requirements.
On 21 August 2015, Polaris notified the Company that it had now purchased all of the
Shares comprised by the Process Agreement and that Polaris now held at least 76.18 %
of the Shares in Mols-Linien. Consequently, Polaris has on 24 August 2015 submitted
the mandatory public offer to all Shareholders in Mols-Linien.
As Polaris stated no intention to dispose of its shares in Mols-Linien that it previously
had secured and on 21 August 2015 had definitively purchased, neither to Lind Invest
ApS nor to any other potential buyer, Mols-Linien has concluded that Lind Invest ApS
was and would continue to remain a minority shareholder and thus also for that reason,
and consistent with common practice for listed companies, the board of directors on 24
August 2015 rejected the request from Lind Invest ApS to conduct a limited due diligence.
There have been discussions in the press why the board of directors of Mols-Linien has
not conducted a controlled auction process for the sale of the Shares in Mols-Linien.
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The board of directors of a listed company cannot independently complete a controlled
auction process but can only encourage it. The board of directors has had to realize
that a substantial majority of the Company’s shareholders has chosen a sales method
for their shares in the form of the Process Agreement described above.
2.6
Agreements with provisions on change of control in Mols-Linien
Mols-Linien has not entered into any material agreements that contain provisions which
are triggered or may be triggered in the event of a change of control situation occurring, including with customers, suppliers or members of the board of directors or the
management board.
Reference is furthermore made to Section 4.1 below.
2.7
Fairness opinion
For the purpose of its assessment of the voluntary public offer originally made by Polaris on 3 July 2015 for a price of 34 DKK per Share, the Board has obtained a fairness
opinion from its financial advisor, Handelsbanken Capital Markets, dated 3 July 2015.
In its fairness opinion Handelsbanken Capital Markets is of the opinion, that the original Offer Price of DKK 34 was fair to the Shareholders, and the fairness opinion has the
following conclusion:
"On the basis of the background and the assumptions set out above together with other matters which in Handelsbanken’s view are relevant, it is our opinion that the Offer
Price from a financial perspective is fair to the Shareholders in Mols-Linien as of the
date of this Fairness Opinion”.
3.
THE BOARD’S ASSESSMENT OF FACTORS PERTAINING TO THE OFFER
The Board has considered a number of factors pertaining to the Offer:
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3.1
Offer Price
The Offer Price in the amount of DKK 40 per Share provides the Shareholders with a
premium compared to the official trading price immediately prior to the publication of
the Offeror’s decision to submit a voluntary public offer on 3 July 2015.
The board of directors directs the attention to the fact that the offer price pursuant to
the mandatory public offer dated 24 August 2015 in the amount of 40 DKK per Share is
lower than the prices currently quoted for the shares in Mols-Linien on NASDAQ OMX
Copenhagen.
3.2
Advantages to the Shareholders
The Board finds that the Offer provides the following advantages to the Shareholders:
• The consideration offered to the Shareholders is in cash payment.
• All Shareholders are offered the opportunity to dispose of their entire shareholding.
• The completion of the Offer is not subject to any conditions.
• The Shareholders have under certain conditions the option to withdraw their acceptances in the event that a competing offer may be made which for the
Shareholders is more attractive.
3.3
Disadvantages to the Shareholders
The Board finds that the Offer provides the following disadvantages to the Shareholders:
•
•
•
After completion of the Offer and a possible delisting of the Shares, continuing
Shareholders will face more difficulties if they wish to dispose of their Shares.
Shareholders either selling their Shares or might become squeezed out following a possible redemption of Shares following a completion of the Offer will not
be offered the opportunity to participate in a possible future value creation in
Mols-Linien.
If the Shareholders choose to dispose of their Shares they will as a starting
point be subject to tax of the profits achieved and this may advance tax liabilities. The tax consequences of an acceptance of the Offer will depend on the individual factors of each individual Shareholders and the Board recommends
consequently that each of the Shareholders makes the necessary assessment of
the personal tax implications and that they obtain tax advice from their own tax
advisors.
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3.4
The Offeror and the Effects of the Offer on the Company’s interests and
the employment
Reference is made to the Offer Document for a description of Polaris and the Offeror.
The Board refers to the description of the intentions of the Offeror in regard to MolsLinien and has duly noted that the Offeror expresses an intent to continue the current
strategy of the Company and strengthen, if necessary, with financial assistance in order to secure the best future possible for the Company and its employees.
4.
DISCLOSURE OF CERTAIN INTERESTS
4.1
Shareholdings of the Board of directors and the management board.
Neither the members of the board nor the member of the management board holds any
direct or indirect ownership interest in Polaris or the Offeror.
Members of the board of directors and of the management board have the shareholdings listed in Schedule 1.
Pursuant to provisions on change of control in the service agreement for the CEO, the
CEO is entitled to an allowance corresponding to up to one year salary, to the extent
that these provisions are invoked.
4.2
Bonus
In the contract with the management board there is a provision which if triggered entitles the
management board to
an extraordinary bonus
for
an amount
up
to
DKK 700,000 in the event of a transaction. Completion of the Offer will constitute such
a transaction and will thus trigger the extraordinary bonus.
The board of directors receives no bonus in connection with the Offer.
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5.
ADDITIONAL REMARKS
5.1
Liquidity and price sensitivity
The Board draws the attention to the fact that there is normally very limited trading in
the securities of the Company.
This means that even small trades will be able to cause large movements in the listing
price in upwards as well as downwards direction. This results in that the listing price
quoted on Nasdaq OMX Copenhagen is not necessarily expressing the true value of the
Company. It should in this context be emphasized that trades have been made in the
market at trading prices which have been higher than the Offer Price both during the
original offer period and after the time for the publication of the Offeror’s decision to
increase the Offer Price.
5.2
Compulsory redemption and delisting
The Board finds it appropriate to stress that the Offeror has expressed that it wants to
apply to Nasdaq OMX Copenhagen A/S for a delisting of Mols-Linien, even if the Offeror
following completion of the Offer does not obtain control of more than 90 % of the
Shares. If the Offeror obtains control of more than 90 % of the Shares, the Offeror will
be able to make a compulsory redemption of the remaining Shareholders, who on the
other hand will be able to demand that the Offeror redeem their Shares. If, however,
the Offeror does not achieve control of more than 90 % of the Shares, then the Offeror
cannot make a compulsory redemption of the remaining Shareholders, just as the remaining Shareholders are unable to demand that the Offeror redeems their Shares. If
in the latter situation Nasdaq OMX Copenhagen A/S accommodates an application for a
delisting from the Offeror, which the Board cannot rule out, the remaining Shareholders will be exposed to the risk of ending up with holding Shares in an un-listed company, which may be impossible or difficult to sell, as there will be no regulated market for
such shares following the delisting. In addition, it will be difficult for the remaining
Shareholders following a delisting to monitor the affairs and developments of MolsLinien as the Company will not be subject to the ongoing disclosure rules and financial
reporting requirements that apply to listed companies.
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6.
CONCLUSION
Considering all of the above and when considering Polaris and the Offeror’s expressed
intentions concerning a delisting of Mols-Linien, the Board recommends that the Shareholders accept the Offer, except if the Shareholders can otherwise obtain a higher
price, or except if Shareholders wish to speculate in the possibility of a possible higher
future yield and at the same time accepting the risks associated with a possible delisting of the Company.
The members of the management board and the board of directors respectively, who
hold Shares in Mols-Linien, cf. Schedule 1, intend to accept the Offer and tender all of
their Shares to the Offeror.
Århus, 31 August 2015
The Board of Directors of Mols-Linien A/S
Frantz Palludan
Kaare Vagner
Bo Jagd
Jens Peter Toft
Lars Christensen
Georg Schuster
Thomas Bisgaard Jensen
Allan Holm Corneliussen
(Chairman)
Management Board of Mols-Linien A/S
Søren Jespersen
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SCHEDULE 1:
HOLDING OF SHARES FOR MEMBERS OF THE BOARD OF DIRECTORS AND THE
MANAGEMENT BOARD OF MOLS-LINIEN A/S
Board of Directors
Position
Holding
Frantz Palludan
Chairman
21,000
Kaare Vagner
Deputy Chairman
3,882
Bo Jagd
Deputy Chairman
0
Lars Christensen
Board member
0
Jens Peter Toft
Board member
3,000
Georg Schuster
Board member
0
Thomas Bisgaard Jensen
Board member
180
Allan Holm Corneliussen
Board member
0
CEO
23,620
Management Board
Søren Jespersen
15