PROSPECTUS
RENONORDEN ASA
(A public limited liability company incorporated under the laws of Norway)
Rights issue of 350,000,000 Offer Shares at a subscription price of NOK 1.00 per Offer Share with Subscription Rights for Existing
Shareholders
Subscription Period for the Rights Issue: From 09:00 hours (CET) on 2 February 2017 to 16:30 hours (CET) on 16 February 2017
Trading in Subscription Rights: From 09:00 hours (CET) on 2 February 2017 to 16:30 hours (CET) on 16 February 2017
The information in this prospectus (the "Prospectus") relates to an underwritten rights issue (the "Rights Issue") by RenoNorden ASA (the "Company",
and together with its subsidiaries, "RenoNorden" or the "Group"), a public limited company incorporated under the laws of Norway, and the listing on Oslo
Børs, a stock exchange operated by Oslo Børs ASA (the "Oslo Stock Exchange"), of 350,000,000 new shares in the Company with a par value of NOK 1.00
each (the "Offer Shares") issued at a subscription price of NOK 1.00 per Offer Share (the "Subscription Price").
The shareholders of the Company as of 30 January 2017 (and being registered as such in the Norwegian Central Securities Depository (Nw.:
Verdipapirsentralen) (the "VPS") on 1 February 2017 pursuant to the two days' settlement procedure (the "Record Date") (the "Existing Shareholders"),
will be granted transferable subscription rights (the "Subscription Rights") in the Rights Issue that, subject to applicable law, provide preferential rights to
subscribe for, and be allocated, Offer Shares at the Subscription Price. The Subscription Rights will be registered on each Existing Shareholder's VPS account.
Subscription Rights will not be issued in respect of any existing shares held in treasury by the Company. The Subscription Rights will be listed and tradable on
the Oslo Stock Exchange from 09:00 hours Central European Time ("CET") on 2 February 2017 to 16:30 hours (CET) on 16 February 2017 under the ticker
code "RENO T".
Each Existing Shareholder will be granted 12.845 Subscription Rights for every existing share registered as held by such Existing Shareholder as of the Record
Date, rounded down to the nearest whole Subscription Right. Subscription Rights acquired during the Subscription Period carry the same right to subscription
as the Subscription Rights held by Existing Shareholders. Each Subscription Right will, subject to applicable law, give the right to subscribe for, and be
allocated, one Offer Share. Over-subscription and subscription without Subscription Rights is permitted. The subscription period will commence at 09:00 hours
(CET) on 2 February 2017 and expire at 16:30 hours (CET) on 16 February 2017 (the "Subscription Period").
Subscription Rights that are not used to subscribe for Offer Shares or sold before the expiry of the Subscription Period will have no value and will lapse
without compensation to the holder.
Following expiry of the Subscription Period, any Offer Shares that have not been subscribed for, and allocated, in the Rights Issue will be subscribed and paid
for at the Subscription Price by an underwriting syndicate consisting of existing shareholders of the Company and new investors (collectively, the
"Underwriters"), subject to the terms and conditions of the underwriting agreement entered into between the Company and the Underwriters on 18
December 2016 (the "Underwriting Agreement").
The Company's existing shares are, and the Offer Shares will be, listed on the Oslo Stock Exchange under the ticker code "RENO". Except where the context
requires otherwise, references in this Prospectus to "Shares" will be deemed to include the existing Shares and the Offer Shares. All of the existing Shares
are, and the Offer Shares will be, registered in the VPS in book-entry form. All of the issued Shares rank pari passu with one another and each carries one
vote.
Investing in the Shares, including the Offer Shares, involves a high degree of risk. Prospective investors should read the entire document and,
in particular, consider Section 2 "Risk factors" beginning on page 11 when considering an investment in the Company.
The Subscription Rights and the Offer Shares are being offered only in those jurisdictions in which, and only to those persons to whom, offers
and sales of the Offer Shares and Subscription Rights may lawfully be made and, for jurisdictions other than Norway, would not require any
filing, registration or similar action.
The Subscription Rights and the Offer Shares have not been, and will not be, registered under the United States Securities Act of 1933, as
amended (the "U.S. Securities Act") or with any securities regulatory authority of any state or other jurisdiction in the United States, and are
being offered and sold: (i) in the United States only to "qualified institutional buyers" ("QIBs") as defined in Rule 144A under the U.S.
Securities Act ("Rule 144A") or in other transactions exempt from registration requirements under the U.S. Securities Act; and (ii) outside the
United States in compliance with Regulation S under the U.S. Securities Act ("Regulation S"). The distribution of this Prospectus and the offer
and sale of the Subscription Rights and the Offer Shares in certain jurisdictions may be restricted by law.
For more information regarding restrictions in relation to the Rights Issue, see Section 16 "Selling and transfer restrictions".
The due date for the payment of the Offer Shares is 23 February 2017. Delivery of the Offer Shares is expected to take place on or about 27 February 2017
through the facilities of the VPS. Trading in the Offer Shares on the Oslo Stock Exchange is expected to commence on or about 27 February 2017.
Sole Manager and Bookrunner
Carnegie AS
The date of this Prospectus is 30 January 2017
RenoNorden ASA - Prospectus
IMPORTANT INFORMATION
This Prospectus has been prepared in connection with the Rights Issue and the listing of the Offer Shares on the Oslo Stock Exchange. As this Rights
Issue is addressed to the Company's existing shareholders, the level of disclosure in this Prospectus is proportionate to this type of issue, cf. EC
Commission Regulation EC/809/2004 article 26a (3).
This Prospectus has been prepared to comply with the Norwegian Securities Trading Act of 29 June 2007 no. 75 (the "Norwegian Securities
Trading Act") and related secondary legislation, including the Commission Regulation (EC) no. 809/2004 implementing Directive 2003/71/EC of the
European Parliament and of the Council of 4 November 2003 regarding information contained in prospectuses, as amended, and as implemented in
Norway (the "EU Prospectus Directive"). This Prospectus has been prepared solely in the English language. The Financial Supervisory Authority of
Norway (Nw.: Finanstilsynet) (the "Norwegian FSA") has reviewed and approved this Prospectus in accordance with Sections 7-7 and 7-8 of the
Norwegian Securities Trading Act. The Norwegian FSA has not controlled or approved the accuracy or completeness of the information included in
this Prospectus. The approval by the Norwegian FSA is dated 30 January 2017 and only relates to the information included in accordance with predefined disclosure requirements. The Norwegian FSA has not made any form of control or approval relating to corporate matters described in or
referred to in this Prospectus.
For definitions of certain other terms used throughout this Prospectus, see Section 18 "Definitions and glossary".
The Company has engaged Carnegie AS ("Carnegie") as sole manager and bookrunner (referred to as the "Manager").
The information contained herein is current as at the date hereof and subject to change, completion and amendment without notice. In accordance
with Section 7-15 of the Norwegian Securities Trading Act, significant new factors, material mistakes or inaccuracies relating to the information
included in this Prospectus, which are capable of affecting the assessment by investors of the Offer Shares between the time of approval of this
Prospectus by the Norwegian FSA and the listing of the Offer Shares on the Oslo Stock Exchange, will be included in a supplement to this Prospectus.
Neither the publication nor distribution of this Prospectus, nor the sale of any Offer Share, shall under any circumstances imply that there has been
no change in the Group's affairs or that the information herein is correct as at any date subsequent to the date of this Prospectus.
No person is authorised to give information or to make any representation concerning the Group or in connection with the Rights Issue or the sale of
the Offer Shares or the Subscription Rights other than as contained in this Prospectus. If any such information is given or made, it must not be relied
upon as having been authorised by the Company or the Manager or by any of the affiliates, representatives, advisors or selling agents of any of the
foregoing.
The distribution of this Prospectus and the offer and sale of the Offer Shares and the granting or use of the Subscription Rights in
certain jurisdictions may be restricted by law. This Prospectus does not constitute an offer of, or an invitation to purchase, any of the
Offer Shares or use the Subscription Rights to subscribe for Offer Shares in any jurisdiction in which such offer, sale or subscription
would be unlawful. Neither this Prospectus nor any advertisement or any other offering material may be distributed or published in
any jurisdiction except under circumstances that will result in compliance with applicable laws and regulations. Persons in possession
of this Prospectus are required to inform themselves about and to observe any such restrictions. In addition, the Shares and the
Subscription Rights are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted
under applicable securities laws and regulations. Investors should be aware that they may be required to bear the financial risks of
this investment for an indefinite period of time. Any failure to comply with these restrictions may constitute a violation of applicable
securities laws. See Section 16 "Selling and transfer restrictions".
This Prospectus and the terms and conditions of the Rights Issue as set out herein and any sale and purchase of Offer Shares and the granting and
use of the Subscription Rights hereunder shall be governed by and construed in accordance with Norwegian law. The courts of Norway, with Oslo as
legal venue, shall have exclusive jurisdiction to settle any dispute which may arise out of or in connection with the Rights Issue or this Prospectus.
In making an investment decision, prospective investors must rely on their own examination, and analysis of, and enquiry into the
Group and the terms of the Rights Issue, including the merits and risks involved. None of the Company or the Manager, or any of their
respective representatives or advisers, is making any representation to any offeree or purchaser of the Offer Shares or holder of Subscription Rights
regarding the legality of an investment in the Offer Shares or the Subscription Rights by such offeree or purchaser under the laws applicable to such
offeree or purchaser. Each investor should consult with his or her own advisors as to the legal, tax, business, financial and related aspects of a
purchase of the Offer Shares or the use of the Subscription Rights to subscribe for Offer Shares.
All Sections of the Prospectus should be read in context with the information included in Section 4 "General information".
NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER CHAPTER 421-B
OF THE NEW HAMPSHIRE REVISED STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE
SECRETARY OF STATE OF NEW HAMPSHIRE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT
MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A
TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR
RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE
MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF
THIS PARAGRAPH.
NOTICE TO INVESTORS IN THE UNITED STATES
Because of the following restrictions, prospective investors are advised to consult legal counsel prior to making any offer, resale,
pledge or other transfer of the Offer Shares or the Subscription Rights. The Offer Shares and the Subscription Rights have not been
and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any state or other jurisdiction in
the United States and may not be offered, sold, pledged or otherwise transferred within the United States except pursuant to an
exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in compliance with any
applicable state securities laws. All offers and sales in the United States will be made only to QIBs in reliance on Rule 144A or
pursuant to another exemption from, on in transactions not subject to, the registration requirements of the U.S. Securities Act. All
offers and sales outside the United States will be made in "offshore transactions" as defined in, and in reliance on, Regulation S.
Prospective purchasers are hereby notified that sellers of Offer Shares or Subscription Rights may be relying on the exemption from
the provisions of Section 5 of the U.S. Securities Act provided by Rule 144A. See Section 16.2 "United States".
I
RenoNorden ASA - Prospectus
Any Offer Shares or Subscription Rights offered or sold in the United States will be subject to certain transfer restrictions and each purchaser will be
deemed to have made acknowledgements, representations and agreements, as set forth under Section 16.2 "United States".
Neither the Offer Shares nor the Subscription Rights have been recommended by any United States federal or state securities commission or
regulatory authority. Further, the foregoing authorities have not passed upon the merits of the Rights Issue or confirmed the accuracy or determined
the adequacy of this Prospectus. Any representation to the contrary is a criminal offense under the laws of the United States.
In the United States, this Prospectus is being furnished on a confidential basis solely for the purposes of enabling a prospective investor to consider
purchasing the Offer Shares or the Subscription Rights. The information contained in this Prospectus has been provided by the Company and other
sources identified herein. Distribution of this Prospectus to any person other than the offeree specified by the Manager or its representatives, and
those persons, if any, retained to advise such offeree with respect thereto, is unauthorised and any disclosure of its contents, without prior written
consent of the Company, is prohibited. This Prospectus is personal to each offeree and does not constitute an offer to any other person or to the
public generally to purchase Offer Shares or Subscription Rights or subscribe for or otherwise acquire the Offer Shares or Subscription Rights.
NOTICE TO INVESTORS IN THE UNITED KINGDOM
This Prospectus is only being distributed to and is only directed at (i) persons who are outside the United Kingdom (the "UK") or (ii) investment
professionals falling within Article 19(5) of the UK 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 Subscription Rights and the Offer Shares are only available to, and
any invitation, offer or agreement to subscribe, purchase or otherwise acquire such will be engaged in only with, Relevant Persons. Any person who
is not a Relevant Person should not act or rely on this Prospectus or any of its contents.
The Manager has represented, warranted and agreed (i) that it has only communicated or caused to be communicated and will only communicate or
cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services
and Markets Act 2000 (the "FSMA")) received by it in connection with the issue or sale of the Offer Shares and Subscription Rights in circumstances
in which section 21(1) of the FSMA does not apply to the Company and (ii) that it has complied and will comply with all applicable provisions of the
FSMA with respect to anything done by it in relation to the Offer Shares and the Subscription Rights in, from or otherwise involving the UK.
NOTICE TO INVESTORS IN THE EUROPEAN ECONOMIC AREA
In any member state of the European Economic Area (the "EEA") that has implemented the EU Prospectus Directive, other than Norway (each, a
"Relevant Member State"), this communication is only addressed to and is only directed at qualified investors in that Member State within the
meaning of the EU Prospectus Directive. The Prospectus has been prepared on the basis that all offers of Subscription Rights and Offer Shares
outside Norway will be made pursuant to an exemption under the EU Prospectus Directive from the requirement to produce a prospectus for offer of
securities. Accordingly, any person making or intending to make any offer within the EEA of Offer Shares or Subscription Rights which is the subject
of the Rights Issue contemplated in this Prospectus within any EEA member state (other than Norway) should only do so in circumstances in which
no obligation arises for the Company or the Manager to publish a prospectus or a supplement to a prospectus under the EU Prospectus Directive for
such offer. Neither the Company nor the Manager has authorised, nor do they authorise, the making of any offer of Shares or Subscription Rights
through any financial intermediary.
Each person in a Relevant Member State other than, in the case of paragraph (a), persons receiving offers contemplated in this Prospectus in
Norway, who receives any communication in respect of, or who acquires any Offer Shares or Subscription Rights under, the offers contemplated in
this Prospectus will be deemed to have represented, warranted and agreed to and with the Manager and the Company that:
a)
it is a qualified investor as defined in the EU Prospectus Directive; and
b)
in the case of any Offer Shares or Subscription Rights acquired by it as a financial intermediary, as that term is used in Article 3(2) of
the EU Prospectus Directive, (i) such Offer Shares or Subscription Rights acquired by it in the Rights Issue have not been acquired on
behalf of, nor have they been acquired with a view to their offer or resale to, persons in any Relevant Member State other than
qualified investors, as that term is defined in the EU Prospectus Directive, or in circumstances in which the prior consent of the
Manager has been given to the offer or resale; or (ii) where such Offer Shares or Subscription Rights have been acquired by it on
behalf of persons in any Relevant Member State other than qualified investors, the offer of those Offer Shares or Subscription Rights to
it is not treated under the EU Prospectus Directive as having been made to such persons.
For the purposes of this provision, the expression an "offer to the public" in relation to any of the Offer Shares and the Subscription Rights in any
Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any
securities to be offered so as to enable an investor to decide to purchase any of the Offer Shares or Subscription Rights, as the same may be varied
in that Relevant Member State by any measure implementing the EU Prospectus Directive in that Relevant Member State, and the expression "EU
Prospectus Directive" means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented
in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member State and the expression "2010 PD
Amending Directive" means Directive 2010/73/EU amending the EU Prospectus Directive.
See Section 16 "Selling and transfer restrictions" for certain other notices to investors.
ENFORCEMENT OF CIVIL LIABILITIES
The Company is a public limited company incorporated under the laws of Norway. As a result, the rights of holders of the Shares will be governed by
Norwegian law and the Company's articles of association (the "Articles of Association"). The rights of shareholders under Norwegian law may
differ from the rights of shareholders of companies incorporated in other jurisdictions. The members of the Company's board of directors (the
"Board Members" and the "Board of Directors", respectively) and the members of the Group's senior management (the "Management") are not
residents of the United States, and a substantial portion of the Company's assets are located outside the United States. As a result, it may be difficult
for investors in the United States to effect service of process on the Company or its Board Members and members of Management in the United
States or to enforce in the United States judgments obtained in U.S. courts against the Company or those persons, including judgments based on the
civil liability provisions of the securities laws of the United States or any State or territory within the United States. Uncertainty exists as to whether
courts in Norway will enforce judgments obtained in other jurisdictions, including the United States, against the Company or its Board Members or
members of Management under the securities laws of those jurisdictions or entertain actions in Norway against the Company or its Board Members
or members of Management under the securities laws of other jurisdictions. In addition, awards of punitive damages in actions brought in the United
States or elsewhere may not be enforceable in Norway. The United States does not currently have a treaty providing for reciprocal recognition and
enforcement of judgements (other than arbitral awards) in civil and commercial matters with Norway.
II
RenoNorden ASA - Prospectus
AVAILABLE INFORMATION
The Company has agreed that, for so long as any of the Offer Shares are "restricted securities" within the meaning of Rule 144(a)(3) under the U.S.
Securities Act, it will during any period in which it is neither subject to Sections 13 or 15(d) of the U.S. Securities Exchange Act of 1934, as amended
(the "U.S. Exchange Act"), nor exempt from reporting pursuant to Rule 12g3-2(b) under the U.S. Exchange Act, provide to any holder or beneficial
owners of Shares, or to any prospective purchaser designated by any such registered holder, upon the request of such holder, beneficial owner or
prospective owner, the information required to be delivered pursuant to Rule 144A(d)(4) of the U.S. Securities Act.
III
RenoNorden ASA - Prospectus
TABLE OF CONTENTS
1
SUMMARY ....................................................................................................................................... 2
2
RISK FACTORS .............................................................................................................................. 11
3
RESPONSIBILITY FOR THE PROSPECTUS ........................................................................................... 28
4
GENERAL INFORMATION ................................................................................................................. 29
5
DIVIDENDS AND DIVIDEND POLICY ................................................................................................. 33
6
REASONS FOR THE RIGHTS ISSUE ................................................................................................... 35
7
INDUSTRY AND MARKET OVERVIEW ................................................................................................. 36
8
BUSINESS OF THE GROUP............................................................................................................... 47
9
CAPITALISATION AND INDEBTEDNESS ............................................................................................. 67
10
FINANCIAL AND OTHER INFORMATION ............................................................................................. 69
11
BOARD OF DIRECTORS, MANAGEMENT AND CORPORATE GOVERNANCE ............................................... 75
12
CORPORATE INFORMATION AND DESCRIPTION OF THE SHARE CAPITAL............................................... 82
13
SECURITIES TRADING IN NORWAY .................................................................................................. 89
14
TAXATION ..................................................................................................................................... 94
15
THE TERMS OF THE RIGHTS ISSUE .................................................................................................. 98
16
SELLING AND TRANSFER RESTRICTIONS ........................................................................................ 110
17
ADDITIONAL INFORMATION .......................................................................................................... 115
18
DEFINITIONS AND GLOSSARY ....................................................................................................... 116
APPENDICES
APPENDIX A
ARTICLES OF ASSOCIATION OF RENONORDEN ASA ......................................................
A1
APPENDIX B
SUBSCRIPTION FORM FOR THE RIGHTS ISSUE .............................................................
B1
1
RenoNorden ASA - Prospectus
1
SUMMARY
Summaries are made up of disclosure requirements known as "Elements". These Elements are numbered in
Sections A – E (A.1 – E.7) below. This summary contains all the Elements required to be included in a summary
for these types of securities and the Company. Because some Elements are not required to be addressed, there
may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be
inserted in the summary because of the type of securities and issuer, it is possible that no relevant information
can be given regarding the Element. In this case, a short description of the Element is included in the summary
with the mention of "not applicable".
Section A – Introduction and Warnings
A.1
Warning
This summary should be read as an introduction to the Prospectus;
any decision to invest in the securities should be based on
consideration of the Prospectus as a whole by the investor;
where a claim relating to the information contained in the Prospectus
is brought before a court, the plaintiff investor might, under the
national legislation of the Member States, have to bear the costs of
translating the Prospectus before the legal proceedings are initiated;
civil liability attaches only to those persons who have tabled the
summary including any translation thereof, but only if the summary is
misleading, inaccurate or inconsistent when read together with the
other parts of the Prospectus or it does not provide, when read
together with the other parts of the Prospectus, key information in
order to aid investors when considering whether to invest in such
securities.
A.2
Consent for
Not applicable. No consent is granted by the Company for the use of
intermediaries
the Prospectus for subsequent resale or final placement of the Shares
or the Subscription Rights.
Section B – Issuer
B.1
Legal and commercial
RenoNorden ASA.
name
B.2
Domicile and legal form,
The Company is a public limited company organised and existing under
legislation and country of
the laws of Norway, pursuant to the Norwegian Public Limited Liability
incorporation
Companies Act. The Company was incorporated in Norway on 17
March 2011, and the Company's registration number in the Norwegian
Register of Business Enterprises is 996 755 215.
B.3
Current operations,
The Group is a leading domestic waste collection services provider, and
principal activities and
the only operator in its segment with coverage in four Nordic
markets
countries. The headquarter of this cross-Nordic group is located in
Eastern Norway, in Frogner in Sørum. Within each country, the Group
operates a network of local branches that manage the day-to-day
operations of the Group's business and customer contracts.
The core business activity of the Group is the collection and
transportation for household waste from households to designated
waste separation facilities and treatment facilities. In general, the
Group
tenders
waste
collection
contracts
awarded
by
the
municipalities, which are typically entered on a five to seven year basis
with a renewal option of two or more years for the municipalities. To
generate additional revenue the Group also provides additional
services to its customers, such as leafleting to residents, cleaning or
replacement of bins or tagging of bins. In Finland, the business also
operates in the commercial waste collection segment.
Since its establishment, the Group has experienced strong revenue
2
RenoNorden ASA - Prospectus
growth, both organically and through acquisitions. In 2015, the Group
generated revenues of NOK 1.808 million and EBITDA of NOK 291
million (EBITDA margin 16.1%). For the same period the operating
profit was NOK 158 million. The revenue as of 30 September 2016 is
slightly higher at NOK 1.934 million while the EBITDA is 255 million
(EBITDA margin 13.2%) and the operating loss was NOK 405 million.
The decrease in margins is driven by a combination of replacement of
high margin contracts with lower margin contracts, loss making
contracts and operational issues, as well as increasing competition and
price pressure within the Group's business segment.
As of 30 September 2016, the Group had an order reserve of
approximately NOK 5.0 billion, excluding customer extension options,
and NOK 7.5 billion including such extension. Non-extension of the
contracts is a rare occurrence. The Group operates in strong growing
economies with increasing waste volumes and increasing waste
fractions. With long-term contracts and strong and order reserves, the
Group has a good revenue visibility. The majority of the Group's
customers are municipalities, whereas Nordic municipalities in general
have strong credit ratings, limiting the counter-party credit risk.
B.4a
Significant recent trends
The market demand for services such as the ones the Group offer
fluctuates, depending on several different factors. Waste and economic
growth are correlated, meaning that the Group's business is affected
by macroeconomic trends and development. The level of domestic
waste collection defines the amount of the addressable market the
Group can target in order to grow, but also highlights the level of
market share the Group needs to defend through renewal or re-win of
current contracts.
Since 31 December 2015 and until the date of the Prospectus, the
Group has experienced operational issues, delivering results below the
Group’s expectations. The current Management of the Group has taken
significant measures to improve the operations of the Group.
Below is an overview of the material developments in the Group's
business since 31 December 2015:
•
The Group has experienced a decrease in EBITDA and operating
profit
driven
by
expired
high
margin
contracts,
continued
operational challenges related to new contracts and investments
into strengthening the organisation;
•
Provisions made for onerous contracts. The Group identified six
onerous contracts in Norway and two onerous contracts in
Denmark, which according to IAS 37, totalled NOK 166 million in
losses;
•
The goodwill for all segments were tested for impairment and
goodwill for the Norwegian and Danish segment was accordingly
written off by NOK 239 million as of 30 June 2016.
•
•
Reduced depreciation time and write down of the Group's vehicles.
Financing: The Group has invested NOK 263 million in Vehicles as
of 30 September 2016, financed by lease arrangements. See
Section
10.1
"Financial
Statements
and
Interim
Financial
Statements" for more information.
Except for the above, there have been no other significant changes in
the financial or trading position of the Group since the date of the
Interim Financial Statements.
B.5
Description of the Group
The Company, which is the parent company of the Group, is a holding
company and the operations of the Group are carried out through the
operating subsidiaries of the Company. The Company owns 100% of
3
RenoNorden ASA - Prospectus
the shares in the subsidiaries (i) RenoNorden AB (Sweden), (ii)
RenoNorden AS (Norway), (iii) RenoNorden A/S (Denmark) and (iv)
RenoNorden OY (Finland).
B.6
Interests in the Company
As of 27 January 2017, the Company had 1438 shareholders. The
and voting rights
Company's 20 largest shareholders as of the same date are shown in
the table below.
#
Shareholders
Number of Shares
Percent
1
Asta Netherlands B.V.
3,284,724
12.06%
2
Folketrygdfondet
2,500,000
9.18%
3
Accentfourteen Holding Limited
2,078,607
7.63%
4
Danske Bank A/S (nominee)
1,479,102
5.43%
5
SEB Nordenfond
1,457,896
5.35%
6
Nordnet Bank AB (nominee)
1,388,579
5.10%
7
Skandinaviska Enskilda Banken AB (nominee)
1,100,252
4.04%
8
Carnegie AS Egenhandelskonto
682,824
2.51%
9
UBS Switzerland AG (nominee)
624,786
2.29%
10
Canaccord Genuity Non US RESA
595,000
2.18%
11
ALM. Brand Bank A/S (nominee)
550,083
2.02%
12
Waage Johan Petter
400,000
1.47%
13
Avanza Bank AB (nominee)
366,891
1.35%
14
Skandinaviska Enskilda Banken S.A. (nominee)
362,162
1.33%
15
The Bank of New York Mellon N.V. (nominee)
277,418
1.02%
16
UBS AG, London Branch
264,973
0.97%
17
UBS Switzerland AG (nominee)
260,877
0.96%
18
Bergen Kommunale Pensjonskasse
250,000
0.92%
19
Danske Invest Norge Vekst
205,000
0.75%
20
JPMorgan Chase Bank, N.A., London (nominee)
185,700
0.68%
Others .................................................................
8,933,056
32.78%
Total ..................................................................
27,247,948
100.00%
Shareholders owning 5% or more of the Shares have an interest in the
Company's share capital which is noticeable pursuant to the Norwegian
Securities Trading Act. As of the date of this Prospectus, no
shareholder, other than Asta Netherlands B.V. (approximately 12%),
Folketrygdfondet (approximately 9.2%), Accenturefourteen Holding
Limited (approximately 7.6%), Danske Bank A/S (approximately
5.4%), SEB Nordenfond (approximately 5.4%) and Nordnet Bank AB
(approximately 5.1%) holds 5% or more of the issued Shares.
Each of the Shares carries one vote. There are no differences in voting
rights between the Shares.
The Company is not aware of any arrangements the operation of which
may at a subsequent date result in a change of control of the
Company.
B.7
Selected historical key
financial information
The following selected financial information has been derived from the
Company's
unaudited
condensed
consolidated
Interim
Financial
Statements as of, and for the three and nine month periods ended,
30 September 2016 (the Interim Financial Statements) and the
Group's audited consolidated Financial Statements as of, and for the
year ended, 31 December 2015 (the Financial Statements). It should
be noted that the Interim Financial Statements have been restated to
reflect the correction of an error in the interim financial statements
previously issued by the Company. The Financial Statements have
been prepared in accordance with IFRS, while the Interim Financial
Statements have been prepared in accordance with IAS 34. The
selected financial information included herein should be read in
4
RenoNorden ASA - Prospectus
connection with, and is qualified in its entirety by reference to the
Financial Information incorporated by reference hereto.
Year
In NOK 1,000
ended
Three months ended
Nine months ended
31
30 September
30 September
December
20161
Income statement
2015
20161
2015
2015
Total operating revenue ..........................
528,627
481,343
1,463,251
1,338,213
1,808,359
Operating profit (loss) .............................
44,015
57,871
(405,755)
133,351
158,428
Profit(loss) for period ..............................
32,951
34,019
(373,956)
76,595
83,422
Total non-current assets..........................
1,604,591
1,789,733
1,604,591
1,789,733
1,847,195
Total current assets ................................
492,946
459,320
492,946
459,320
497,336
Total assets ...........................................
2,097,537
2,249,053
2,097,537
2,249,053
2,344,530
Balance sheet
Total equity ...........................................
274,144
669,902
274,144
669,902
710,998
Total non-current liabilities ......................
1,418,907
1,188,752
1,418,907
1,188,752
1,238,263
Total current liabilities .............................
404,487
360,399
404,487
360,399
395,269
Total liabilities ........................................
1,823,393
1,549,151
1,823,393
1,549,151
1,633,532
Total equity and liabilities ........................
2,097,537
2,249,053
2,097,537
2,249,053
2,344,530
Cash flow
Net cash flows from operating activities ....
71,790
60,574
109,254
146,788
201,752
Net cash flow from investing activities ......
(13,399)
(2,306)
(22,164)
(20,782)
(20,914)
Net cash flows from financing activities .....
(25,041)
(25,320)
(124,649)
(192,726)
(208,483)
Net change in cash and cash equivalents ...
29,145
34,858
(46,867)
(64,255)
(24,065)
148,710
155,387
148,710
155,387
195,577
Cash and cash equivalents at end of
period ...................................................
1
The figures presented for the three and nine months ended 30 September 2016, are restated, as described in note 5 to the
Interim Financial Statements incorporated by reference hereto. The Company published the restated Interim Financial
Statement on 19 December 2016. Prior to this, the Group had published interim financial statements for the three and nine
months ended 30 September 2016, on 8 November 2016 and published on 9 November 2016.
B.8
Selected key pro forma
Not applicable. There is no pro forma financial information.
financial information
B.9
Profit forecast or estimate
Not applicable. No profit forecasts or estimates are made.
B.10
Audit report qualifications
Not applicable. There are no qualifications in the audit report.
B.11
Insufficient working
Not applicable. The Company is of the opinion that the working capital
capital
available
to
the
Group
is
sufficient
for
the
Group's
present
requirements, for the period covering at least 12 months from the date
of this Prospectus.
Section C – Securities
C.1
Type and class of
The Company has one class of Shares, and all Shares in that class
securities admitted to
have equal rights in the Company. Each of the Shares will carry one
trading and identification
vote. The Shares have been created under the Norwegian Public
number
Limited Liability Companies Act and are registered in book-entry form
with the VPS under ISIN NO0010723141.
C.2
Currency of issue
The Shares are issued in NOK.
C.3
Number of shares in issue
As of the date of this Prospectus, the Company's share capital is
and par value
NOK 27,247,948 divided into 27,247,948 Shares, each having a par
value of NOK 1.
C.4
Rights attaching to the
The Company has one class of Shares in issue, and in accordance with
securities
the Norwegian Public Limited Liability Companies Act, all Shares in that
class provide equal rights in the Company. Each of the Shares carries
one vote.
5
RenoNorden ASA - Prospectus
C.5
Restrictions on transfer
The Articles of Association do not provide for any restrictions on the
transfer of Shares, or a right of first refusal for the Company. Share
transfers are not subject to approval by the Board of Directors.
C.6
Admission to trading
The Shares are, and the Offer Shares will be, admitted to trading on
the
Oslo
Stock
Exchange.
The
Company
currently
expects
commencement of trading in the Offer Shares on the Oslo Stock
Exchange on or around 27 February 2017. The Company has not
applied for admission to trading of the Shares on any other stock
exchange or regulated market.
C.7
Dividend policy
In 2014 the Company paid NOK 50,000,000 in dividends which equals
NOK 1.835 dividend per share, and in 2015 the dividends were
NOK 50,136,224 which equals NOK 1.84 dividend per share. The Board
of Directors will not propose dividend distribution for the year ended
31 December 2016 due to the Group's current financial situation.
The Company will aim to pay dividends in the future. However, there
can be no assurance that a dividend will be proposed or declared in
any given year as this, and the amount of any dividend, will be
determined by the prevailing circumstances at the time. If a dividend
is proposed or declared, there can be no assurance what the dividend
amount will be.
Section D – Risks
D.1
Key risks specific to the
The following is a summary of key risks that relate to the Group's
Company or its industry
business and industry, laws, regulations and litigation and financing
and market risks. Investors should read, understand and consider all
risk factors in this Prospectus, which should be read in their entirety,
before making a decision to invest in the Offer Shares.
Risks related to the business of the Group and the industry in which
the Group operates, including:
•
The Group operates in a highly competitive industry, which is
subject to competitive tender processes where there is no
guarantee that the Group can renew existing contracts nor win
new or existing contracts
•
The market is subject to a fierce price competition, whereas the
price is an important component in the tender process. If the
Group has to lower its prices in order to be the successful bidder,
its profitability and cash flow will be affected
•
Some
of
the
Group's
competitors,
such
as
the
vertically
integrated waste management companies, may have competitive
advantages not available to the Group, allowing the competitors
to reduce their prices at levels that are not profitable for the
Group
•
Waste
collection
demand
and
consumer
consumption
are
correlated, meaning that the Group's business will be affected by
changes in national, regional and general economic factors
•
The Group may be adversely affected by exposure under current,
as well as future, inflexible, long-term contracts with fixed unit
prices
Risks related to laws, regulations and litigation, including:
•
Waste contracts with municipalities, inter-municipal companies
and other associations and companies are subject to competitive
tender processes, where the law requires the fixed term contracts
entered into to be re-tendered at the end of their terms
6
RenoNorden ASA - Prospectus
•
The tender processes for municipal waste collection contracts are
highly regulated, rigid and transparent. The Group cannot enter
into bilateral discussions with its potential customers. All tenders
submitted, and the respective unit prices, are made public to all
other bidders once the contract is awarded, giving all bidders full
transparency of competitor bids. This enhances the importance of
tactics in the tenders processes, and exposes the Group to
competitive challenge
•
The Group may lose contracts by early termination due to
material breach or failure to meet contractual requirements. In
addition, and subject to the sole discretion of its customers, the
contracts may not be extended past the original expiration date
•
The Group is subject to strict environmental and occupational
health and safety laws and regulations. Compliance with existing
regulatory requirements is costly, and changes in the applicable
laws and regulations could increase the Group's compliance costs
and reduce the Group's profitability
•
Substantially all of the Group's employees are parties to collective
bargaining agreements and trade unions, and increases in cost of
labour may reduce the Group's profitability
Risks related to financing and market risk, including:
•
The Group operates in a capital intensive industry that requires a
substantial amount of capital expenditure and other long-term
committed expenditures, e.g. expenditure relating to the leasing
of vehicles. The Group faces risks beyond its control, such as
financial
institutions
ceasing
to
provide
loans
or
require
guarantors to guarantee the Group's performance under loan
arrangements
•
The Group is financed by equity and debt, and there are no
guarantees that it will obtain the financing it requires in the
future. There is also a risk of higher financing costs related to
future debt financing, such as higher interest rates
D.3
Key risks specific to the
The following is a summary of key risks that relate to the Shares and
securities
the Rights Issue. Investors should read, understand and consider all
risk factors in this Prospectus, which should be read in their entirety,
before making a decision to invest in the Offer Shares.
Risks related to the Shares, including:
•
The price of the Shares could fluctuate significantly in the future
•
Future issuances of Shares or other securities could dilute the
holdings of shareholders and could materially affect the price of
the Shares
•
Pre-emptive rights to secure and pay for Shares in additional
issuance could be unavailable to U.S. or other shareholders
•
Investors could be unable to exercise their voting rights for
Shares registered in a nominee account
•
The transfer of Shares and Subscription Rights is subject to
restrictions under the securities laws of the United States and
other jurisdictions
•
The Company’s ability to pay dividends is dependent on the
availability of distributable reserves, as well as sufficient liquidity,
and the Company may be unable or unwilling to pay any
dividends in the future
•
Exchange rate fluctuations could adversely affect the value of the
7
RenoNorden ASA - Prospectus
Shares and any dividends paid on the Shares for an investor
whose principal currency is not NOK
Risks related to the Rights Issue, including:
•
Existing Shareholders who do not participate in the Rights Issue
may experience significant dilution in their shareholding
•
An active trading market in Subscription Rights may not develop
on the Oslo Stock Exchange and/or the market value of the
Subscription Rights may fluctuate
•
The sale of Subscription Rights by or on behalf of Existing
Shareholders may result in a reduction in the market price of the
Subscription Rights and increased volatility in the Shares
•
If the Rights Issue is withdrawn, the Subscription Rights will no
longer be of value
Section E – Offer
E.1
Net proceeds and
The net proceeds from the Rights Issue are expected to be
estimated expenses
approximately NOK 330 million. The total costs and expenses related
to the Rights Issue are estimated to amount to NOK 20 million
(excluding VAT).
E.2
Reasons for the Rights
The Group has in 2016 struggled with operational issues combined
Issue and use of Proceeds
with a challenging competitive environment with observable increased
competition and price pressure, leading to delivered operating results
below the Group’s expectations.
In the restated Interim Financial Statements as of 30 September 2016,
the Group recognized provisions at 30 June 2016 for onerous contracts
in Denmark and Norway of NOK 166 million in total and goodwill
impairment of NOK 239 million in Norway and Denmark and
impairment of equipment of NOK 71 million. This has contributed to a
decrease in the Group's equity ratio which was reported at 13% as of
30 September 2016.
The combination of increased investments and decreased EBITDA has
also
lead
net
interest
bearing
debt
(NIBD)
over
EBITDA
(NIBD/EBITDA) approaching the maximum covenant level of 5.0x
(4.85x as of 30 September 2016).Although significant improvement
measures have been taken and new Management has been onboarded, the above issues continue to put pressure on the statement
of financial position and covenants of the Group.
The Company expects revenue for and as of the period ended 31
December 2016 to be slightly below the level for the same period
ended 31 December 2015 and a weaker seasonal development in
EBITDA margin in the period ended 31 December 2016 compared to
the previous year. Furthermore, the Company expects the total capital
expenditure for the period ended 31 December 2016 to be slightly
higher compared to the level as of the period ended 30 September
2016. Going forward, the Company expects the Group EBITDA margins
to stabilize in the short term and thereafter slightly improve in the
medium term, and Management will apply a disciplined approach to
new contracts. At the same time, starts-ups of large contracts are
expected in 2017, mainly related to already committed contracts, are
expected to lead to capital expenditures in 2017 which are above the
capital expenditure level of 2016.
In addition, the following changes in technological requirements in
contracts, we have during the second quarter seen that the value at
8
RenoNorden ASA - Prospectus
the end of the contract period is limited for certain older vehicle
groups. This has led to a write down of book value for these groups to
expected recoverable amount. Furthermore, the review revealed that
some of the trucks were already taken out of use in the second quarter
and had a carrying value higher than expected sales price less cost to
sell at that time, which required that an immediate impairment is
recognized. These two effects lead to impairment of equipment in the
second quarter of 2016 with NOK 71 million. In addition, estimated
useful life of newer vehicle groups is reduced to 10 years, also due to
the
increased
technological change. This
has
led
to increased
depreciation costs by approximately NOK 15 million in total for the
second and third quarter of 2016 and increased annual depreciation
going forward.
Going forward, the effect of these increased depreciations is expected
to be approximately NOK 6 to NOK 8 million in the three month period
ended 31 December 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 decreasing.
As a consequence of the increased investments mainly related to
already
committed
development,
the
contracts,
Company
in
combination
expects
a
with
further
the
increase
margin
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. A covenant breach is
expected to result in a significant increase in financing cost and
disruption of Management's focus on operational improvements.
Given the current situation, the Board of Directors, has decided to
execute the Rights Issue of NOK 350 million to strengthen the Group's
statement of financial position and create headroom with respect to its
NIBD/EBITDA covenant, thus providing a better platform for the
business going forward and increased refinancing flexibility.
E.3
Terms and conditions of
The Rights Issue consists of an offer by the Company to issue
the Rights Issue
350,000,000 Offer Shares at a Subscription Price of NOK 1.00 per
Offer Share, thereby raising gross proceeds of NOK 350 million.
Existing Shareholders will be granted tradable Subscription Rights that,
subject to certain limitations based on applicable laws and regulations,
provide preferential right to subscribe for, and be allocated, Offer
Shares at the Subscription Price in the Rights Issue. Over-subscription
and subscription without Subscription Rights is permitted; however,
there can be no assurance that Offer Shares will be allocated for such
subscriptions.
The Rights Issue is underwritten by the Underwriters pursuant to, and
subject to the limitations in, the Underwriting Agreement, as further
described in Section 15.21 "The Underwriting" below.
The Subscription Period will commence at 09:00 hours (CET) on 2
February 2017 and end at 16:30 hours (CET) on 16 February 2017.
The Subscription Period may not be extended or shortened.
The Subscription Rights will be fully tradable and listed on the Oslo
Stock Exchange with ticker code "RENO T" during the Subscription
Period.
The payment for Offer Shares allocated to a subscriber falls due on the
Payment Date (23 February 2017).
Subject to timely payment of the entire subscription amount in the
9
RenoNorden ASA - Prospectus
Rights Issue, the Company expects that the share capital increase
pertaining to the Rights Issue will be registered with the Norwegian
Register of Business Enterprises on or about 24 February 2017 and
that the Offer Shares will be delivered to the VPS accounts of the
subscribers to whom they are allocated on or about the same day.
The Offer Shares allocated in the Rights Issue are expected to be
traded on the Oslo Stock Exchange from and including 27 February
2017.
Completion of the Rights Issue is subject to certain conditions, see
Section 15.4 "Conditions for completion of the Rights Issue".
E.4
Material and conflicting
The Manager or its affiliates have provided from time to time, and may
interests
provide in the future, investment and commercial banking services to
the Company and its affiliates in the ordinary course of business, for
which they may have received and may continue to receive customary
fees and commissions. The Manager, its employees and any affiliate
may currently own Shares in the Company. Furthermore, in connection
with the Rights Issue, the Manager, its employees and any affiliate
acting as an investor for its own account may receive Subscription
Rights (if they are Existing Shareholders) and may exercise its right to
take up such Subscription Rights and acquire Offer Shares, and, in that
capacity, may retain, purchase or sell Subscription Rights or Offer
Shares and any other securities of the Company or other investments
for its own account and may offer or sell such securities (or other
investments) otherwise than in connection with the Rights Issue. The
Manager does not intend to disclose the extent of any such
investments or transactions otherwise than in accordance with any
legal or regulatory obligation to do so.
Furthermore, the Manager will receive fees in connection with the
Rights Issue and, as such, have an interest in the Rights Issue.
E.5
E.6
Selling shareholders and
There
lock-up agreements
agreements related to the Shares.
Dilution resulting from
The Rights Issue will result in an immediate dilution of approximately
the Offering
93% for Existing Shareholders who do not participate in the Rights
are
no
selling
shareholders,
and
there
are
no
lock-up
Issue.
E.7
Estimated expenses
Not applicable. The expenses related to the Rights Issue will be paid by
charged to investor
the Company.
10
RenoNorden ASA - Prospectus
2
RISK FACTORS
An investment in the Offer Shares and/or the Subscription Rights involves inherent risk. Before making an
investment decision, investors should carefully consider the risk factors and all information contained in this
Prospectus, including the Financial Information and related notes. The risks and uncertainties described in this
Section 2 are the principal known risks and uncertainties faced by the Group as of the date hereof that the
Company believes are the material risks relevant to an investment in the Offer Shares and/or the Subscription
Rights. An investment in the Offer Shares and/or the Subscription Rights is suitable only for investors who
understand the risks associated with this type of investment and who can afford to lose all or part of their
investment. The absence of negative past experience associated with a given risk factor does not mean that the
risks and uncertainties described herein should not be considered prior to making an investment decision in
respect of the Offer Shares and/or the Subscription Rights. If any of the following risks were to materialise,
individually or together with other circumstances, they could have a material adverse effect on the Group
and/or its business, results of operations, cash flows, financial condition and/or prospects, which may cause a
decline in the value and trading price of the Offer Shares and/or the Subscription Rights, resulting in the loss of
all or part of an investment in the same.
The order in which the risks are presented does not reflect the likelihood of their occurrence or the magnitude
of their potential impact on the Group's business, results of operations, cash flows, financial condition and/or
prospects. The risks mentioned herein could materialise individually or cumulatively. The information in this
Section 2 is as of the date of this Prospectus.
2.1
Risks related to the business of the Group and the industry in which the Group operates
The Group operates in a highly competitive industry which is reflected in pricing pressure for the
market participants and there is no guarantee that the Group can renew, or renew at favourable
terms or win contracts in the future.
The domestic and commercial waste collection industry is highly competitive. Substantially all waste collection
contracts with municipalities, inter-municipal companies and other associations and companies are subject to
competitive tender processes. As these contracts generally are fixed term contracts, the law requires that they
are re-tendered at the end of their terms (which include extension options). Because the contract terms are
between five and seven years, it is expected that between 14-20% of all contracts come up for re-tender each
year, although this can be higher and lower depending on when the original contracts were awarded. Price
competition is fierce, and price is an important component in determining who will ultimately win and be
awarded the contract. Municipality focus on price may increase. While the Group does not expect to renew all
existing contracts and win all new contracts, the prospects of the Group are dependent on its ability to continue
to retain and win its fair share of contract tenders.
The Group competes with large and medium-sized vertically integrated waste management companies in each
of its geographies that may have competitive advantages not available to private companies or niche providers.
Some of these competitors may have greater financial and/or operational resources, such as lower
administrative costs or larger fleets of unutilized vehicles, which may put them at a competitive advantage
relative to the Group. The industry also includes numerous regional and local companies, of varying sizes and
financial resources. Some of these competitors may have lower financial return expectations, allowing them to
reduce their prices to win contracts at levels that are not profitable for the Group.
Competition levels may also increase further in the future due to various reasons. For example Norwegian,
Swedish and Danish municipalities’ processing capacity may in the future be privatised thereby allowing vertical
integration throughout the waste management supply chain. This could favour vertically integrated operators,
which would negatively impact the position and prospects of the Group. Also a change in legislation could result
in the removal of the monopoly position the municipalities currently hold on the domestic waste collection
routes, thereby turning the markets into unregulated or "free" markets, such as is the case in parts of Finland.
While this would not impact existing contracts, this could affect the profitability and prospects of the Group as
existing contracts end. Furthermore, there is a risk that the Group may experience a decrease in overall
EBITDA-margin, if there is a reallocation to countries with lower margin.
11
RenoNorden ASA - Prospectus
If the Group is unable to successfully compete against its competitors, the Group's ability to retain existing
customers and obtain future business could be adversely affected. The Group's failure to renew and win
contracts, or the Group renewing and winning contracts at levels below what it expects or has been able to do
historically, would adversely impact the Group's business, results of operations, financial position and
prospects. Importantly, the Group may have to substantially lower prices in order to be the successful bidder,
thereby negatively affecting its profitability and cash-flow.
General economic and other factors can affect the Group's revenues and profitability.
The Group's business is affected by changes in national, regional and general economic factors that are outside
of the Group's control. Although waste needs to be collected regardless of economic conditions, a weak
economy generally results in decreased levels of consumer spending which may reduce the volumes of waste
generated. Where the Group is paid on the basis of kilogram/tonnes collected, this could directly negatively
impact the Group's revenues and profit. In situations where the volume of waste to be collected falls
dramatically, it could also cause a reduction in the number, or frequency, of bins to be collected, thereby
adversely impacting the Group's revenues, profit and cash-flow.
Other factors that affect the number of bins or volume of waste collected include urbanisation, given the fact
that waste is usually collected in larger bins in urbanised areas, and the level of immigration into and the extent
of emigration out of a region. Declines in population in the areas the Group operate could negatively impact the
level of revenues and profitability on the Group's contracts. In addition, the Group's costs (largely people, fuel
and maintenance on the vehicles) may be difficult to quickly adjust to match shifting volume levels given the
respective routes still need to be driven. Most of the Group's contracts have price adjustment provisions that
are tied to an index 1, and the Group's costs may increase in excess of the increase, if any, in such indices.
The Group may be adversely affected by exposure under current, as well as future, inflexible, longterm contracts with fixed unit prices.
The Group typically collects waste in a particular geographical area under a long-term contract. The terms and
conditions of many of the Group’s contracts are fixed as part of a tender process; i.e. not open to negotiation.
In fact, the contract forms the basis of the underlying tender on which bids are invited. Any material changes to
the terms and conditions subsequent to the tender being awarded would, by law, require that the contract is
formally re-tendered.
The unit price, i.e. the fee charged per bin or per kilogram/tonne collected, is decided upfront having been
calculated by the bidders on the basis of the contract terms and other information and assumptions provided by
the customer. With the exception of adjustment provisions that allow for annual inflation adjustment of the
fixed unit prices in line with a prescribed index 2, unit prices may only be adjusted in very limited circumstances
for example when waste volumes to be collected increase or decrease by 10% to 20% of the initial annual
volume. Tenders could also include assumptions on roll-out of certain services (for example separate food bins)
which are typically for the risk of the bidder and not the customer. In situations where the rate of roll-out is
slower than expected, this could have a negative impact on profitability.
In some of the municipality contracts in Finland, the index change will only occur if the change is at least two
percent (subject to the specific regulation in the particular contract). Commercial contracts generally have a
back-to-back clause with waste processors for the gate fees 3 and in some contracts an index change will occur
if there is a change regardless of the materiality of change.
The length of municipality contracts in Finland generally varies from five to up to seven years and for
commercial contracts between two and five years which may be extended annually.
The length of the Group's municipal contracts in Sweden, Norway and Denmark generally varies from five to up
to seven years. Entering into inflexible long-term contracts exposes the Group to the risks of:
1
Normally, indices published by Statistics Denmark, Statistics Finland, Statistics Norway and Statistics Sweden, respectively.
2
Normally, indices published by Statistics Denmark, Statistics Finland, Statistics Norway and Statistics Sweden, respectively.
3
A gate fee is a charge levied upon a given quantity of waste received at a waste processing plant.
12
RenoNorden ASA - Prospectus
(i)
Being legally bound to perform an unprofitable contract as a result of inaccurate pricing by the Group
based on erroneous or omitted assumptions or due to insufficient internal controls, for example, but
not exclusively number and cost of vehicles, number of employees etc., without a mechanism to
restore or improve profitability. There is also a risk of miscalculating contracts in the future, however,
significant actions are taken to mitigate this going forward.
(ii)
Being required to compensate the customer in the case where the Group walks away from the
contract. Such compensation could be material and would generally represent the difference between
the cost of a replacement service provider and the level of the Group's winning bid for the remaining
term of the contract.
(iii)
Becoming subject to margin pressure from increases in operating costs, including fuel prices and
wages, and various other costs above that compensation for in the annual index. The Group could
also suffer from cost inflation rates fluctuating during the year compared to the point at which the
index is applied.
Any of the above could materially impact the Group's business, results of operations, profitability, financial
position and prospects.
Tender processes for municipal waste collection contracts are highly regulated, rigid and
transparent.
Most of the Group's tenders are subject to highly regulated, transparent and rigid public tender procedures. The
Group cannot have bilateral discussions with its potential customers. Rather, the Group is entitled to ask
questions related to upcoming tender situations, but these questions have to be made in writing and formally
lodged. These questions and the written answers provided are a matter of public record, although anonymous.
Once the final, signed tender documentation is submitted, it is not capable of being amended, corrected or
updated. If accepted by the customer, the Group is legally bound to deliver what it has undertaken to do in the
tender submission. There is limited ability to sell additional services to customers over and above the
contracted services. It is important that all the documentation is correct, complete and submitted in time to
avoid technical disqualification, or missing the opportunity to compete. This process exposes the Group to the
risk of being disqualified without redress as a result of human error. This process also exposes the Group to
perform the contract as tendered, even if unprofitable, without a mechanism to adjust, except in very limited
circumstances.
All tenders submitted, and the respective unit prices, are made public to all other bidders once the contract is
awarded. This gives all bidders full transparency of competitor bids, so tactics in each contract tender process
are important. Competitors are entitled to ask for and receive all of the Group's tender documentation once the
tender is awarded. This exposes the Group to successful challenge from competitors, which could result in a
contract award being over-turned if errors are found to exist in the documentation after the event. This also
gives competitors a current view of the Group's current operating models, which reduces its competitive
advantage.
The Group may lose contracts by early termination or lack of contract extensions by its customers in
their sole discretion.
The Group's customers may terminate contracts with the Group before the end of the contract term. Many of
the Group's contracts may be terminated by the customer in instances where the Group fails to meet
contractual requirements, following a certain notice period that is generally not shorter than six months.
Compensation may be payable to the Group in some contracts following customer termination. While six
months should give the Group sufficient time to manage down the work-force and related costs in an efficient
and cost effective way, early termination of contracts would adversely impact the Group's business, results of
operations, financial position and prospects.
The Group's contracts may in most cases be terminated by the customer upon material breach of the contract
by the Group. This is also true in some cases, upon repeated failure by the Group to meet certain specified
performance criteria in the contract, such as required level of delivery reliability measured over a certain
period, or an unacceptable level of end-user complaints over a certain period. In such situations, in addition to
termination, the Group may be exposed to related penalties and fines, which can be material.
13
RenoNorden ASA - Prospectus
If the Group is not able to replace revenues from any terminated contracts within a reasonable time period, the
Group's revenues and operating income would decline. To the extent the Group would not be able to redeploy
the related vehicles, they would need to be sold. To the extent the market for used trucks would not be
sufficiently liquid, this could result in a realised loss on sale. In addition to the financial impact, there is also the
risk that the reputation of the Group will suffer and so too its ability to secure future business.
In addition to the initial fixed term, which is generally around five years, the Group's contracts typically also
include a possible extension period of up to three one-year extension options where the customer has the
option to extend the contract on its current terms in its sole discretion. Because of the pay-back period on the
vehicles, the exercise of the extension options could be very valuable to the Group. To the extent that
customers choose not to exercise the extension options, this could negatively impact the Group's financial
position and prospects.
Impairment of goodwill may result in a loss for the Group.
The Group's goodwill impairment reviews are undertaken annually at year-end or more frequently if events or
changes in circumstances indicate a potential impairment. The carrying value of the relevant unit including
goodwill is compared to the recoverable amount, which is the higher of value in use and the fair value less costs
of disposal. Any impairment of goodwill is recognized immediately as an expense and is not subsequently
reversed. Impairment of goodwill may result in a loss on the Group's consolidated income statement.
The Group can provide no assurance that the Group's order reserve will be ultimately realised.
As of 30 September 2016, the Group had an order reserve of approximately NOK 5.0 billion, excluding
customer extension options, and NOK 7.5 billion including extension options, see Section 8.6 "Order reserves"
for further information. The Group calculates order reserve by adding annual future revenue from ongoing or
newly awarded contracts and assumes it remains the same for the duration of the initial fixed term. For the
avoidance of doubt, the revenues are not adjusted for price or volume changes, including indexation. Option
values are calculated in the same manner, running from expiry of the fixed term to the final date, assuming all
the extension options are exercised. The order reserve assumes local currencies, converted to NOK at fixed
exchange rates throughout the period of NOK:SEK= 0.9768, NOK:DKK=1.1.2428 and NOK:EUR=9.2897.
It is important to highlight that the order reserve is indicative, and that in practice, there is a risk that the
actual amounts of revenue earned may differ from the amounts indicated here and in the tables provided in
Section 8.6 "Order reserves" because, among other things:
•
Unit prices are negotiated at the start of the contract. These unit prices will be index-adjusted on the
basis of the official public inflation indices applicable on the anniversary of the respective contracts,
determined by the actual inflation development in the underlying cost base during the preceding
12 months;
•
The customer may, under any contract with the Group, require the Group to collect a higher or lower
volume of waste than that initially set out in the contract, or to increase or decrease the collection
frequency, on the basis of these unit prices;
•
The Group may sell additional services to its customers, for which additional revenue can be earned,
for example leafleting to residents, cleaning or replacement of bins, or tagging of bins;
•
Any customer may, under any contract with the Group, deduct from revenue any daily penalties
imposed by the customer for non-performance by the Group;
•
Any of the Group's contracts may be early terminated by the customer, or any customer may elect
not or fail to exercise an extension option, although compensation may be payable to the Group in
some contracts; and
•
Exchange rates fluctuations.
Non-realisation of the Group's order reserve could adversely affect the Group's business, results of operations,
profitability, financial position and prospects
14
RenoNorden ASA - Prospectus
The Group has low customer- and counter party risk.
The Group has a relatively diversified customer base, and in 2015, no single customer generated more than
10% of total Group revenue. The majority of the Group's waste collection contracts are with municipalities and
inter-municipal companies, which represented 94% of the Group's revenue for 2015. It is generally accepted
that Nordic municipal and inter-municipal counter-parties represent low credit risk. In Finland, the Group has
some corporate customers such as hotels, owners of office blocks and shopping centres. While these represent
a higher degree of counter-party risk, they in total accounted for 6% of the Group's revenue for 2015. In the
event that customers were to fail, refuse to pay or delay payment, or if a customer becomes insolvent or goes
bankrupt, or if the Group's customers change payment terms, or terminate their contracts with the Group,
there is a risk that the Group's business, results of operations and financial position and future prospects could
be negatively affected.
The Group has a relatively concentrated supplier base.
Other than its workforce, the Group's key suppliers are in relation to fuel, vehicles and maintenance. While the
Group works to ensure that it adequately safeguards supply with alternative suppliers, it does have a relatively
concentrated supplier base:
(i)
Fuel. The Group has several fuel suppliers in total, but generally one or two within each country. On
some routes, however, there is a lack of local competition and in these situations, the Group relies on
a single provider. Daily operations highly depend on the vehicle being able to efficiently access fuel.
The route plan is typically set up in a way to take on fuel in an optimised way and the contract is
priced as such. To the extent there is a dispute with a supplier or a lack of, or no available fuel, the
efficiency and profitability of the route will be negatively impacted as drivers are forced to travel to
find less convenient alternative fuel sources, and in extreme circumstances, collection may be
compromised until fuel supply resumes.
(ii)
Vehicles. The Group will typically order vehicles, to the extent necessary, upon being awarded a
contract, from suppliers including Scania, Mercedes and Volvo for chassis and NTM, Joab and
GeesinkNorba for compactors. In most cases, contracts are awarded with sufficient notice to cope
with the respective vehicle manufacturers' normal lead times. In situations where this is not the
case, there is an increased risk of not having all or some of the finalized vehicles in time to operate
the contracts. Often delays of new vehicles occur for reasons outside of the Group's control, namely
quality, classification or engineering problems; changes in governmental regulations; work stoppages
or other labour disturbances at the manufacturer or dealer, or bankruptcy or other financial crisis of
the manufacturer or dealer. When delays do occur, the chassis and compactor manufacturers, who
are dependent on each other to successfully delivery on time to the Group, may refuse responsibility
and blame the other manufacturing party, hence obstructing constructive problem-solving. While the
Group actively manages the supply chain to avoid such delays and has a large fleet with capacity to
cover some level of vehicle delays, there is the risk of severe disruption and material penalties if a
vehicle order cannot be fulfilled or is materially delayed.
(iii)
Maintenance. Keeping the vehicles running is a key element to having efficient operations and
maintaining profitability. Vehicle breakdowns are an everyday feature of the business, which needs
active management. Preventative maintenance and real-time support to fix vehicles efficiently are
core competencies’ and an operational focus for the Group. As a precautionary measure, the Group
maintains appropriate levels of reserve vehicles to substitute into the operations in normal level of
breakdown, as required under the contracts with customers. The Group also has in place
maintenance contracts with vehicle suppliers to provide quick turnaround support cost effectively.
Without adequate systems and controls over this area, and in situations of abnormal level of vehicles
breakdown, there is a risk of disruption to service provision.
Any disruption in the supply of fuel, vehicles or maintenance services or other material supply items could
materially negatively impact the ability of the Group to operate its business and expose it to penalties, fines
and potential contract termination; any of which could adversely affect the Group’s business, results of
operations, profitability, financial position and prospects.
15
RenoNorden ASA - Prospectus
The Group relies on access to road networks.
The Group operates a large fleet of vehicles that visit a great number of individual premises every day in the
geographies in which the Group operates. The efficiency of the service the Group provides is largely dependent
on its large vehicles getting access to road networks in these areas. The Group has a contractual obligation to
its customers to collect and unload waste with such agreed frequency and within prescribed times, regardless of
any disruptions to road transport systems, because of, for example, traffic congestion, road works or closures
and inclement weather. Disruption to road transport systems may require the Group to use alternative, longer
and less cost efficient routes, which may reduce contract profitability. In addition, delays in collection as a
result of any such event may also, according to the Group's contracts, result in imposition of daily penalties by
the customer, and may, in certain circumstances, also entitle to customer to terminate the contract. In
addition, the local authorities may, in some instances, deny waste collecting operators the possibility to collect
waste on certain roads and in particular areas due to health risks to personnel or extremely difficult driving
conditions. Such situations may have an effect on the Group's business, results of operations and financial
position and reduce its opportunity to serve areas in which it is currently operating and to obtain new tender
contracts.
Weather disruption may affect the Group's operations.
The Group's core business is operated outside. As such, weather is a factor that could add complexity and cost
to daily operations, especially in the harsh winters. Given the geographic reach of the Group, harsh winters are
a common occurrence. Snow is an occupational hazard increasing the level of accidents and vehicle damage, as
well as slowing and hindering the speed of collection. Sickness rates also increase. In very cold conditions,
vehicles are difficult to start and break-down levels escalate. Therefore, there is a risk that bad or abnormal
weather conditions may negatively impact service levels, increase rates of damage and thereby negatively
affect the Group’s business, results of operations, financial position and prospects.
The Group is subject to strict environmental and occupational health and safety laws and
regulations.
The Group's is subject to strict laws and regulations relating to waste management and collection, vehicle
requirements and working conditions of the employees of the Group, including specific precautionary and
preventative measures. Please see Section 8.12 "Regulations" for more information on regulations and the
Group's licenses, permits and certifications.
These laws and regulations include rules governing the number of hours that drivers can work on consecutive
days. In periods of high collection activity, high levels of sick leave among, or absence of, employees, or
inclement weather conditions, these regulations may restrict the Group from deploying drivers that otherwise
would have been available, and require the Group to increase its workforce and hence cost base, or hiring more
expensive temporary employees, in order to satisfy its contractual obligations, which could reduce the Group's
operating profitability.
Regulations also govern the weight limits of the loads each of the Group's vehicles can take. For instance, the
Group's waste collection vehicles are generally limited to a loaded weight of 25 tonnes (large vehicle), 20
tonnes (medium sized vehicle) and 7 tonnes (small vehicle). Where a customer requires the Group to collect a
number of units or weight in excess of the number of units or weight initially contemplated to be collected
under a contract, which the Group's customer generally may do without adjustments to the unit prices under
the contract, the Group may be required to re-allocate the vehicles in its fleet, or to acquire additional vehicles,
or additional stops to unload waste from that in the original tender which could negatively impact the Group's
financial position and profitability.
The Group's compliance with existing regulatory requirements is costly, and changes in such laws and
regulations could increase the Group's compliance costs and reduce the Group's profitability.
16
RenoNorden ASA - Prospectus
New environmental and technological standards and requirements may require the Group to replace
its vehicles earlier than originally estimated
The Company intends to, where possible, redeploy used vehicles in new contracts to maximise the useful
lifetime of the vehicles. This is, however, dependent on that municipal customers do not require the latest
available environmental and technical standards to be used in the new contract. At the end of their estimated
useful life, the vehicles have generally been sold to third-parties or returned to the supplier at, or around, net
book value at the date of the sale or return. There is a risk that the Group must write down all or parts of the
vehicle's book value due to changed technological requirements, erasing or reducing residual value at the end
of the contract period for certain vehicles. The Group experienced this in the second quarter of 2016, and an
impairment of NOK 71 million is included as per 30 June 2016. In situations where large number of vehicles are
unable to be redeployed and need to be sold in a short period of time, there is a risk that they will not be able
to be sold at net book value resulting in losses on sale.
Increasing political pressure and societal emphasis on environmental issues has amplified the focus by
municipalities and corporates on the vehicle types used in outsourced contracts. Customers are not legally able
to change the specifications of vehicles deployed on contracts already in force, however, the Group has noticed
that in some new tenders, especially for larger cities, specifications included are for the latest environmental
and technical standards, such as with respect to fuel efficiency, levels of emissions and fuel type, for example
gas, versus diesel and petrol. While this is relevant to a different extent in each of the Group’s core
geographies, the trend is becoming more established. The impact of this trend for the Group is that it may be
required to replace its vehicles earlier, i.e. at the end of a contract cycle rather than at the end of their
previously estimated useful lives. While the Group can manage this by re-using vehicles in contract renewals in
less demanding geographies, such as in Denmark, which currently has lower environmental standards, this
could have the effect of increasing the capital intensity of the Group’s business model.
The Group may also be required to incur various other expenditures for alterations or additions to vehicles to
bring them in line with the latest environmental or safety standards, which could negatively impact the Group’s
results of operations and financial position, and reduce the profitability of the business.
To the extent there is not a liquid market into which to sell vehicles no longer able to be deployed, the Group
may need to recognise impairment charges that will reduce the earnings and net assets of the Group.
Failure of the Group’s logistics and route planning and other IT systems could adversely affect the
Group’s revenues and profitability.
The Group is dependent upon its IT systems for the efficient functioning of its operations, including logistics and
route planning, invoicing and administration. An important part of the Group’s policy is to achieve cost
efficiencies, generally and compared to its competitors, while timely delivering a high quality service. The ability
to do this requires efficient functioning, and continuous improvement, of IT systems. Some customer contracts
also specify that each waste collection unit (bin lifted/kilogram collected) must be registered in the Group’s IT
systems, and if the IT system is not functioning properly the Group risks not receiving payment for the waste
collection service completed.
The Group’s IT systems may become subject to disruption caused by circumstances beyond the Group’s control,
such as power outages, computer systems and network failures, computer viruses, cyber-attacks, or malicious
software programmes. In addition, the deployment of new IT systems can adversely affect, or even disrupt, the
Group’s operations until resolved. Although the Group does have business continuity plans in place to mitigate
against the effect of such events, should the Group’s IT systems fail, this could adversely affect the Group’s
revenues and profitability.
17
RenoNorden ASA - Prospectus
The Group may not be successful in implementing its strategies in the future or be successful in its
initiated operational improvements.
The Group may not be successful in implementing its strategies for the Group in the future. Further, the
adopted strategies may not be right for the Group or may not result in fulfilment of the financial goals or other
objectives. The Group’s future development and success will depend on these strategies being accurate for the
Group, that the measures are being efficiently and correctly implemented and that they provide the expected
result. In the event that such strategies are not accurate for the Group or are not accurately implemented or
implemented within the expected time frames, earnings may not be maintained or grown and savings may not
be realised. Furthermore, the Group may not be successful in the operational improvements it has initiated in
order to turn around the negative margin trend seen over the last years. This may negatively affect the Group’s
business, results of operations, financial position, profitability and future prospects.
The Group can provide no assurance that it will be able to achieve and manage growth by way of
acquisitions.
The Group has been created in part through mergers and acquisitions, most recently in 2013 with the
acquisition of HFT Environment in Finland. The Group may engage in mergers, acquisitions and joint venture
schemes in the future. Mergers, acquisitions and joint ventures are associated with several risks, such as
strategic and due diligence risks, risks relating to financing and valuation, risks relating to sustainability of
profit and cash-generation ability and retention of key customers, suppliers and personnel of the target
company, as well as risks relating to the combination and integration of the business operation.
In international transactions these risks are enhanced because of, among other things, different corporate
cultures, official procedures, local laws and regulations, politics, local foreign exchange, as well as the
interpretation of local circumstances. The Group’s evaluation of potential acquisitions will typically be based on
imprecise and incomplete information and assumptions that may prove to be incorrect. In addition, competition
legislation may also affect or even prevent the Group from making acquisitions.
The Group may not be successful in implementing plans regarding existing or new projects, and mergers or
acquisitions, their implementation or any expectations concerning integration and synergies may not be
achieved according to plan. The Group may not find suitable targets for mergers or acquisitions in the future, at
an acceptable price, and the Group may not be allowed to make such acquisitions due to competition
legislation.
The Group’s business is subject to health and safety risks, including the risk of personal injury to
employees and others.
Providing waste collection services involves risks of fatal and serious accidents, including, but not limited to
fatal accidents or personal injury to employees and the general public, and damage to third party property.
While the Group seeks to minimise its exposure to such risks through training and compliance programs, as
well as vehicle and equipment maintenance programs, if the Group were to incur substantial liabilities not
covered by insurance, its business, results of operations and financial condition could be adversely affected.
Any such incidents could also affect the Groups reputation with local communities, customers and employees.
The Group may from time to time be involved in litigation matters and disputes.
The Group may from time to time be involved in litigation matters and disputes within the framework of its
normal business activities and, like other operators in the Group’s industry, be subject to disputes over tender
awards and claims concerning agreements, product liability, personal injury, alleged faults in supplies of
services, environmental issues, employment matters and government claims for taxes or duties and intellectual
property rights. It is common in the industry to be involved in legal disputes in terms of public procurement
processes that are challenged either by the Group or its competitors. Disputes and claims of this kind can be
time consuming, disrupt normal operations, involve large amounts and result in considerable costs. Moreover, it
can be difficult to predict the outcome of complex disputes, claims or other litigation matters. Such costs
associated with prosecuting or defending such lawsuits, including the diversion of Management’s attention to
these matters may negatively affect the Group’s business, results of operations, financial position and future
prospects.
18
RenoNorden ASA - Prospectus
The Group is exposed to risks and liabilities that may not be adequately covered by insurance.
The Group’s is exposed to a variety of risks that could, among other things, result in damage to property and
environment, personal injury, monetary losses and liability. Although the Group seeks to maintain insurance for
such risks and in such amounts as it considers reasonably prudent, the Group’s insurance policies are subject to
exclusions and limitations of liability both in amount and with respect to insured loss events. Certain risks are
also not possible to insure against. For example, even though certain costs in connection with service provision
stoppages are covered by the Group’s insurance, the long-term effects of such service provision stoppages,
such as loss of confidence with the customers, are generally not possible to insure. Consequently its insurance
may not adequately protect it against losses sustained. In addition, the Group’s current insurance coverage
may be cancelled or become unavailable on reasonable economic terms in the future.
Any damage caused by the Group which is not materially covered by insurance could have a material adverse
effect on the Group’s business, results of operations, financial condition and future prospects. Any claims made
under the Group’s insurance policies may also cause insurance premiums to increase.
The Group’s risk management procedures may fail to identify or anticipate future risks.
The Group's risk management procedures, internal control procedures and the methods used to manage risk
may not identify or anticipate current or future risks or the extent of future exposures, which could be
significantly greater than historical measures indicate. Risk management methods depend on the evaluation of
information regarding markets, customers or other matters that is publicly available or otherwise accessible to
the Group. Failure (or the perception that the Group has failed) to develop, implement and monitor the Group’s
risk management policies and procedures and, when necessary, pre-emptively upgrade them could give rise to
reputational issues which could have a material adverse effect on the Group’s business, prospects, results of
operations and financial conditions.
The Group is dependent upon its key personnel and its local managers.
The Group’s continued success depends in large part on the sustained contribution of the Group’s key
personnel. The Group relies on its senior managers to execute its operational strategies and to identify and
pursue new business opportunities. In addition, the Group depends on its local managers to manage and
control its day-to-day operations and adhere to Group policies and internal control procedures. The Group
manages its operations on a decentralised basis, and also delegates financial and commercial responsibility to
its local managers. Key personnel are of great importance to the Group’s future, especially in implementing the
strategic objectives and directing, managing and controlling business operations effectively in a competitive
marketplace. If key personnel resign, start working for competitors or retire from the Group and are not
suitably and efficiently replaced or if the Group cannot recruit or retain qualified personnel in the future, or if
the cost to replace key personnel is materially higher than the Group currently pays, this may negatively affect
the Group’s business, results of operations, financial position and future prospects. If key personnel do not
comply with Group policies and internal control procedures, this could have a material adverse effect on the
Group's business, prospects, result of operations and financial conditions.
Substantially all of the Group’s employees are parties to collective bargaining agreements and trade
unions.
Substantially all of the Group’s employees are party to collective bargaining agreements and trade unions. The
Group’s relationship with works councils and trade unions is therefore important. The presence of works
councils and trade unions may limit the Group’s flexibility in dealing with its workforce and ultimately lead to
increased operating costs. Inability to agree local pay deals, or a lengthy strike or other work stoppage by the
Group’s employees could have a material adverse effect on the Group’s ability to conduct its operations and
complete its contractual obligations, which again could affect revenues and profits earned under contracts,
result in delays that could entitle the customer to impose of daily penalties on the Group, and in certain
circumstances also entitle the customer to terminate the contract. Any such delays, stoppages or interruptions
could have a material adverse effect on the Group’s results of operations and financial position.
19
RenoNorden ASA - Prospectus
Increases in the cost of labour may reduce the Group’s profitability.
Labour costs represent major operating expenses for the Group. Labour costs are dependent upon, among
other things, unemployment levels, demand and supply imbalances in various geographic regions, prevailing
wage rates, collective bargaining arrangements, insurance costs, changes in employment and labour legislation
and employee turnover rate in the waste collection industry. The Group competes with other businesses in its
markets for qualified employees. The labour market is currently tight in some of the areas in which the Group
operate, for example in Norway and parts of Finland. Historically, the Group has been able to find the right
personnel as needed, but in the future, a shortage of qualified employees may require the Group to enhance its
wage and benefits packages to compete more effectively for employees. An increase in wage rates or the need
to take on temporary employees to meet shortfalls would reduce the Group’s profitability.
Changes in the prices of diesel fuel and liquefied natural gas (“LNG”) may affect the Group’s
profitability.
The Group needs diesel fuel and LNG to run its large fleet of collection vehicles and other vehicles, and the
expenses relating especially to diesel fuel represent major operating expenses for the Group. The prices of
diesel fuel and LNG fluctuate based on events outside of the Group’s control, including, but not limited to, local
taxes and oil price. The Group tries to minimise the risk of increased costs of diesel through indexation of the
unit price, where fuel is included as one of the component costs, in the customer contracts. However, this may
not be sufficient and a time lag between the increase in fuel price and index adjustment may be apparent. The
Group has historically entered into OTC commodity hedging agreements in order to lower the risk of increased
fuel costs. However, the Group does not have diesel cap agreements going forward. A sustained increase in the
costs of diesel fuel and LNG, or reductions in the supply, would increase the Group’s operating costs and reduce
the Group’s profitability or could interrupt or curtail the Group’s operations.
The presence of a Nordic black market for the waste collection industry may have a material
adverse effect on the Group’s revenues.
A black market in the waste collection industry may occur in order for black market participants to avoid
government regulation and taxes. While consumers and customers usually shun the black market because they
consider it wrong and illegal, there may be some customers who purchase such services regardless. Europe has
seen examples of such black markets in Italy and Spain. Fortunately, the governments in the Nordic countries
have so far been able to regulate waste collection services in such a way that black-markets have not made
their strong-hold. However, if such were to occur, the Group may experience a lack in tendering contracts and
thereby a reduction in the Group’s revenues.
Exchange rate fluctuations may affect the Group’s results of operations, financial position and
future prospects.
The Group is exposed to currency risk since exchange rates affect the Group’s income statement, statement of
financial position and cash flow statement. Currency exposure is the result of purchases and sales of goods and
services in other currencies besides the respective company's local currency (transaction exposure) and of the
conversion of statement of financial position and income statements in foreign currencies into NOK (translation
exposure). This translation exposure does not give rise to an immediate cash effect, and should not impact the
Group’s financial covenants. Changes in exchange rates can also affect the Group’s suppliers’ and thus
indirectly affect the Group’s profits. Furthermore, the Group is exposed to foreign currency transactions. The
Group’s business model is to provide services from the local subsidiary to municipalities in their local currency.
Bank loans are denominated in the four currencies of Norway, Sweden, Finland and Denmark largely in
proportion to the underlying earnings, such that the financing does not give rise to significant exposures for the
Group. As a result of the international structure of the Group, the Group is exposed to some foreign currency
exchange risks relating to various transactions in currencies other than the functional currency of each
company. The Group is principally exposed to changes in EUR, DKK and SEK compared to NOK. Exchange rate
fluctuations may negatively affect the Group’s business, results of operations, financial position and future
prospects.
20
RenoNorden ASA - Prospectus
Changes in rules related to accounting for income taxes, changes in tax laws in any of the
jurisdictions in which the Group operates or adverse outcomes from audits by taxation authorities
could result in an unfavourable change in its effective tax rate.
The Group has grown by way of mergers and acquisitions in the Nordic markets. Mergers and acquisitions
typically entail exposure on existing and future tax positions. Although the Group has obtained qualified advice
by local counsel in its mergers and acquisitions, tax exposure may exist on the transactions that have created
the Group.
The Group operates its business in different tax jurisdictions; Denmark, Finland, Norway and Sweden. As a
result, its effective tax rate is derived from a combination of the applicable tax rates in these jurisdictions. The
Group’s effective tax rate may be lower or higher than its tax rates have been in the past due to numerous
factors, including the sources of its income and the tax filing positions it takes. The Group estimates its
effective tax rate at any given point in time based on a calculated mix of the tax rates applicable to the Group
and on estimates of the amount of business likely to be done in any given jurisdiction. Changes in rules related
to accounting for income taxes, changes in tax laws in any of the jurisdictions in which the Group’s operates,
expiration of tax credits formerly available, or adverse outcomes from tax audits that the Group may be subject
to in any of the jurisdictions in which it operates could result in an unfavourable change in its effective tax rate.
A loss of a tax dispute or a successful tax challenge to the Group’s operating structure or to the
Group’s tax payments, among other things could result in a higher tax rate on the Group’s earnings,
which could result in a significant negative impact on its earnings and cash flows from operations.
From time to time, the Group’s tax payments may be subject to review or investigations by tax authorities of
the jurisdictions in which the Group operates. If any tax authority successfully challenges the Group’s
operational structure, intercompany pricing policies, the taxable presence of its subsidiaries in certain countries,
or if the Group loses a material tax dispute in any country, or any tax challenge of the Group’s tax payments is
successful, its effective tax rate on its earnings could increase substantially and the Group’s earnings and cash
flows from operations could be materially adversely affected. There could also be a risk that any adjustment is
retrospective. There are, for instance, limited transactions taking place between the companies in the Group
and related companies, which must be carried out in accordance with arm’s length principles in order to avoid
adverse tax consequences. There can be no assurance that the tax authorities will conclude that the Group’s
transfer pricing policy calculates correct arm’s length prices for intercompany transactions, which could lead to
an adjustment of the agreed price, which would in turn lead to increased tax cost for the Group.
Some of the Group’s employees have acquired shares in the Company at a time when there was no public
market for its shares. In the event the tax authorities would deem the purchase price as lower than the fair
market value for such investments there is a risk that the Group becomes liable for paying payroll tax based on
the difference between the tax authorities’ view of the fair market value and the purchase price at the time of
investment.
Certain of the Group’s agreements and instruments are subject to change of control or similar
provisions.
Certain of the Group’s agreements and instruments are subject to change of control provisions that may be
triggered by the completion of the Rights Issue or changes of control in the Company after the Rights Issue. For
example, the Group’s Senior Facility contains a change of control provision which may be triggered if any
person or group of persons acting in concert acquire or gains direct or indirect control of more than 50% of the
issued Shares and/or the voting shares in the Company. Further, the standard terms and conditions of many of
the Group’s counter-parties under its vehicle lease agreements contain change of control provisions, as is
customary for these types of agreements, and some of the Group’s customer contracts with municipalities or
inter-municipal companies contain change of control provisions. Where considered needed and appropriate, the
Company aim to obtain consents or waivers or other comfort to the change of control provisions in these
agreements. Failure to receive necessary consents or waivers for any reason could result in the loss of
contractual rights and benefits, or the termination of agreements, which could also result in cross-default
provisions in other financing agreements and instruments being triggered, any of which could have a material
and adverse effect on the Group’s business, results of operations and financial condition.
21
RenoNorden ASA - Prospectus
2.2
Risks relating to financing
The Group operates in a capital intensive industry.
The Group operates in a capital intensive industry that requires a substantial amount of capital expenditure and
other long-term committed expenditures, including, but not limited to, those relating to the leasing of vehicles.
The Group has funded and expects to fund future investments and other capital and operating expenses from a
combination of cash on hand, cash generated from operations and bank and leasing facilities. One risk in this
regard is that the relevant financial institutions providing the credit facilities or loans may cease providing such
arrangements, outside of the control of the Group. Another risk is that the relevant financial institutions
providing the credit facilities or loans may require guarantors to guarantee the due performance of the Group’s
obligations under those loan arrangements. The Group may not be able to obtain or provide such guarantees at
all, or obtain such guarantees on commercially reasonable terms. Lease agreements typically have a term of
between seven and ten years. There is a risk that if vehicles are not utilisable for the full duration of the leasing
contract, the vehicles may need to be disposed of at the end of a contract period (say five or seven years),
leaving the remaining loan to be settled from the disposal proceeds. In a situation where the vehicle is not sold
at or around the value or the outstanding loan, the Group will be required to repay the remaining lease
balances out of operating cash flow or cash balances, with the commensurate negative impact on the Group’s
financial position.
The Group expects to have sufficient cash and/or committed financing to meet its obligations as they fall due.
However, no assurances can be given that it will be able to generate sufficient cash from operations or obtain
the necessary financing or the required guarantee can be provided for the relevant financing arrangement or
that such financing will be at interest rates and on the terms that are favourable to it or consistent with its
expectations. If the Group is unable to secure necessary financing required to complete the purchase of these
vehicles, the Group may not be able to fulfil its obligations under the vehicle purchase contracts or to meet
other funding requirements and may incur penalties under those contracts, the payment of which may
adversely affect its business, financial condition and results of operations.
The Group may not obtain the financing it requires in the future and there is a risk of higher
financing costs related to future debt refinancing.
The Group is financed by equity and debt, and is therefore exposed to the risks associated with debt financing,
inter alia, covenants which upon un-remedied breach may result in the loan being considered due and payable.
See Section 6 "Reasons for the rights issue" related to potential future breach of covenants. Interest payments
could adversely affect the Group, e.g. by reducing or postponing investments or by requiring the Group to sell
assets, issue equity or restructure the debt at unattractive terms. The Group may require additional capital in
the future due to unforeseen liabilities, to fund acquisitions or in order to take advantage of other business
opportunities, or to be able to respond to competitive pressures. The Group may not be able to obtain
necessary financing in a timely manner on acceptable terms, or at all, in the future. The current loan
agreement expires in December 2019 and there is a risk that financing costs might be higher in the future, see
Section 10.5 "Material indebtedness". The Group’s ability to obtain such additional capital or financing will
depend in part upon prevailing market conditions as well as conditions of its business and its operating results,
and those factors may affect its efforts to arrange additional financing on satisfactory terms. If the Group raises
additional funds by issuing additional shares or other equity or equity-linked securities, it may result in a
dilution of the holdings of existing shareholders. If funding is insufficient at any time in the future, this could
adversely impact the Group’s business, results of operations, cash flow, financial position and prospects. To the
extent the Group is unable to meet capital expenditure requirements on new or renewed contracts out of
operating cash flow in situations where lease or bank financing cannot be obtained, the Group will not be able
to tender for contracts, thereby negatively impacting the financial condition, performance and prospects of the
Group.
22
RenoNorden ASA - Prospectus
The Company operates as a holding company and depend on its subsidiaries for cash to satisfy its
obligations and to pay dividends.
The Company operates as a holding company and its principal assets consist of direct and indirect
shareholdings in subsidiaries. The Company’s ability to make required payments of interest and principal on the
Company’s indebtedness and funding of the Group’s operations, as well as to pay dividends, is affected by the
ability of the subsidiaries to transfer available cash resources to the Company. Transfer of funds to Company
from its subsidiaries, by way of dividends, intercompany loans or otherwise may be restricted or prohibited by
legal and contractual requirements applicable to the respective subsidiaries. Limitations or restrictions of the
transfer of funds between companies within the Group may become more restrictive in the event that the
Group experiences difficulties with respect to liquidity and financial position. This may also negatively affect the
Group’s business, results of operations, financial position and prospects.
The Group’s current and future debt levels could have important consequences to the Group.
The Group is more leveraged than many other public companies. The Company is of the opinion that the
Group’s capital structure generally is beneficial for the Group as a substantial portion of the Group’s debt is
incurred under vehicle leasing arrangements, which provides a cheaper and more efficient way of financing a
high amount of fixed assets than alternative financing sources, and because such financing is backed by
vehicles which have relatively liquid values, and are mainly supported by long-term contracts with municipality
customers. The Group’s level of debt, and any additional debt incurred in the future could however have
important consequences to the Group, including:
•
affecting the Group’s ability to obtain additional financing on favourable terms, or at all, for working
capital, capital expenditures, acquisitions or other purposes;
•
the sustained pressure on the Group's margins in combination with increased investments could lead
to a covenant breach;
•
affecting the Group’s costs of borrowing, which could increase with high leverage levels;
•
requiring the Group to use a substantial portion of its cash from operations to make principal and
interest payments on its debt, reducing the funds that would otherwise be available for operations,
future business opportunities and dividends to its shareholders;
•
making the Group more vulnerable than its competitors with less debt to competitive pressures, a
downturn in its business or the economy generally; and
•
limiting the Group’s flexibility in responding to changing business and economic conditions.
The Group’s ability to service its current and future debt will depend upon, among other things, its future
financial and operating performance, which will be affected by prevailing economic conditions as well as
financial, business, regulatory and other factors, some of which are beyond its control. If the Group’s operating
income is not sufficient to service its current or future debt, the Group will be forced to take action such as
reducing or delaying its business activities including contract tenders, acquisitions, investments or capital
expenditures, selling assets, restructuring or refinancing its debt or seeking additional equity capital. The Group
may not be able to affect any of these remedies on satisfactory terms, or at all.
Interest rate fluctuations could affect the Group's cash flow and financial condition in addition to
the price of the Shares.
The Group faces interest rate risk from borrowings and deposits with a floating rate. The Group may enter into
and maintain certain hedging arrangements designed to fix or limit risk on a portion of these rates, but in the
future such arrangements may not be available on commercially reasonable terms. The Group has sought to
reduce such interest rate risk by entering into an OTC interest rate cap agreement with a bank, which in effect
caps the interest rate until December 2016 for the majority of the Company’s bank debt. If interest rates were
to rise significantly the Group’s interest expense would correspondingly increase, thus reducing free cash flow.
Accordingly, fluctuations in interest rates could negatively affect the Group’s business, results of operations,
financial position and future prospects.
23
RenoNorden ASA - Prospectus
2.3
Risks related to the Shares
The price of the Shares has, and could, fluctuate significantly, which could cause investors to lose a
significant part of their investment.
The market for securities is very volatile. As an equity investment can both rise and fall in value, it is not
certain that an investor will get back the capital invested. An investment in the Company’s shares should
therefore be preceded by a careful analysis of the Group, its competitors and the business environment,
general information about the industry and other relevant information.
The value of the Company's Shares has, and may, fluctuate significantly in the future, even as a result of
events that are not directly linked to the Group or to the operations of the Company. Therefore there is no
guarantee regarding the future development of the price of the Company's shares. The share price can be
negatively affected as a result of capital market volatility, general macroeconomic conditions, the possibility of
a large number of shares being sold on the market, or as a result of an expectation that such divestment will
occur. Sales of shares by major shareholders or executive officers may also make it difficult for the Group to
obtain capital through new issues of shares or other securities in the future.
In addition, the liquidity and market price of the Shares may be affected by major fluctuations, including
fluctuations in actual or projected results of operations or those of its competitors, changes in earnings
projections or failure to meet investors’ and analysts’ earnings expectations, investors’ evaluations of the
success and effects of the policy described in this Prospectus, as well as the evaluation of the related risks,
changes in general economic conditions, seasonal fluctuations that cause the Group’s results of operations to
vary among quarters, changes in shareholders, changes in the regulatory environment and other factors. Those
changes may occur without regard to the operating performance of these companies. The price of the Shares
may therefore fluctuate based upon factors that have little or nothing to do with the Group, and these
fluctuations may materially affect the price of the Shares.
Furthermore, limited liquidity of the Company’s shares may increase the fluctuations of the share price. Limited
liquidity may also make it difficult for individual shareholders to sell their shares. It is possible that shareholders
in the Company will not be able to sell their share at a price acceptable to the shareholder at every given time.
In addition, the trading market for the Company’s shares will be influenced by the research reports that
research analysts publish about the Company or its business. If one or more of these analysts cease coverage
of the Company’s business or fail to publish reports on the Company regularly, the Company could lose visibility
in the financial markets, which in turn could cause the Company’s share price or trading volume to decline.
Moreover, if one or more of the analysts who cover the Company’s business adversely changes their
recommendations regarding the Company’s shares or if the Company’s operating results do not meet their
expectations, the Company’s share price could decline.
Future issuances of Shares or other securities could dilute the holdings of shareholders and could
materially affect the price of the Shares.
The Company may in the future decide to offer additional Shares or other securities in order to finance new
capital-intensive projects, in connection with unanticipated liabilities or expenses or for any other purposes.
There is no assurance the Company will not decide to conduct further offerings of securities in the future.
Depending on the structure of any future offering, certain existing shareholders may not have the ability to
purchase additional equity securities. If the Company raises additional funds by issuing additional equity
securities, holdings and voting interests of existing shareholders could be diluted.
Future sales, or the possibility for future sales of substantial numbers of Shares may affect the
Shares' market price
The market price of the Shares could decline as a result of sales of a large number of Shares in the market
after the date hereof or the perception that these sales could occur. These sales, or the possibility that these
sales may occur, also might make it more difficult for the Company to sell equity securities in the future at a
time and at a price that it deems appropriate.
24
RenoNorden ASA - Prospectus
The Company cannot predict what effect, if any, future sales of the Shares, or the availability of Shares for
future sales, will have on their market prices. Sales of substantial amounts of the Shares in the public market
following the date hereof, or the perception that such sales could occur, may materially and adversely affect the
market price of the Shares, making it more difficult for holders to sell their Shares or the Company to sell
equity securities in the future at a time and price that they deem appropriate.
Pre-emptive rights to secure and pay for Shares in additional issuance could be unavailable to U.S.
or other shareholders.
Under Norwegian law, unless otherwise resolved at the Company’s general meeting of shareholders (the
"General Meeting"), existing shareholders have pre-emptive rights to participate on the basis of their existing
ownership of Shares in the issuance of any new Shares for cash consideration. Shareholders in the United
States, however, could be unable to exercise any such rights to subscribe for new Shares unless a registration
statement under the U.S. Securities Act is in effect in respect of such rights and Shares or an exemption from
the registration requirements under the U.S. Securities Act is available. Shareholders in other jurisdictions
outside Norway could be similarly affected if the rights and the new Shares being offered have not been
registered with, or approved by, the relevant authorities in such jurisdiction. The Company is under no
obligation to file a registration statement under the U.S. Securities Act or seek similar approvals under the laws
of any other jurisdiction outside Norway in respect of any such rights and Shares, and doing so in the future
could be impractical and costly. To the extent that the Company’s shareholders are not able to exercise their
rights to subscribe for new Shares, their proportional interests in the Company will be diluted.
Investors could be unable to exercise their voting rights for Shares registered in a nominee account.
Beneficial owners of the Shares that are registered in a nominee account (such as through brokers, dealers or
other third parties) could be unable to vote such Shares unless their ownership is re-registered in their names
with the VPS prior to any General Meeting. There is no assurance that beneficial owners of the Shares will
receive the notice of any General Meeting in time to instruct their nominees to either effect a re-registration of
their Shares or otherwise vote their Shares in the manner desired by such beneficial owners.
The transfer of Shares is subject to restrictions under the securities laws of the United States and
other jurisdictions.
The Shares have not been registered under the U.S. Securities Act or any U.S. state securities laws or any
other jurisdiction outside Norway and are not expected to be registered in the future. As such, the Shares may
not be offered or sold except pursuant to an exemption from the registration requirements of the U.S.
Securities Act and applicable securities laws. See Section 16 “Selling and Transfer Restrictions”. In addition,
there is no assurance that shareholders residing or domiciled in the United States will be able to participate in
future capital increases or rights offerings.
The Company’s ability to pay dividends is dependent on the availability of distributable reserves and
the Company may be unable or unwilling to pay any dividends in the future.
The size of any future dividend from the Company is dependent on a number of factors, such as the Company’s
business development, results, financial position, cash flow, available liquidity and need for working capital.
There are many risks that may affect the Company’s earnings and there is no guarantee that the Company will
be able to present results that enable distribution of dividend to shareholders in the future. If no dividend is
distributed, returns on the investment in the Company will solely be generated by the potentially positive
development of the share price.
Norwegian law provides that any declaration of dividends must be adopted by the shareholders at the General
Meeting. Dividends may only be declared to the extent that the Company has distributable funds and the
Company’s Board of Directors finds such a declaration to be prudent in consideration of the size, nature, scope
and risks associated with the Company’s operations and the need to strengthen its liquidity and financial
position. As the Company’s ability to pay dividends is dependent on the availability of distributable reserves, it
is, among other things, dependent upon receipt of dividends and other distributions of value from its
subsidiaries and companies in which the Company may invest. As a general rule, the General Meeting may not
declare higher dividends than the Board of Directors has proposed or approved. If, for any reason, the General
Meeting does not declare dividends in accordance with the above, a shareholder will, as a general rule, have no
claim in respect of such non-payment, and the Company will, as a general rule, have no obligation to pay any
dividend in respect of the relevant period.
25
RenoNorden ASA - Prospectus
One of the factors that could influence the price of the Shares is its annual dividend yield as compared to yields
on other financial instruments. Thus, an increase in market interest rates will result in higher yields on other
financial instruments, which could adversely affect the price of the Shares.
Investors could be unable to recover losses in civil proceedings in jurisdictions other than Norway.
The Company is a public limited liability company organised under the laws of Norway. As a result, it may not
be possible for investors to effect service of process in other jurisdictions upon the Company, to enforce against
the Company judgments obtained in non-Norwegian courts, or to enforce judgments on the Company in other
jurisdictions.
Norwegian law could limit shareholders’ ability to bring an action against the Company.
The rights of holders of the Shares are governed by Norwegian law and by the Articles of Association. These
rights may differ from the rights of shareholders in other jurisdictions. In particular, Norwegian law limits the
circumstances under which shareholders of Norwegian companies may bring derivative actions. For instance,
under Norwegian law, any action brought by the Company in respect of wrongful acts committed against the
Company will be prioritised over actions brought by shareholders claiming compensation in respect of such acts.
In addition, it could be difficult to prevail in a claim against the Company under, or to enforce liabilities
predicated upon, securities laws in other jurisdictions.
The transfer of Shares and Subscription Rights is subject to restrictions under the securities laws of
the United States and other jurisdictions
None of the Shares or the Subscription Rights have been registered under the U.S. Securities Act or any U.S.
state securities laws or any other jurisdiction outside of Norway and are not expected to be registered in the
future. As such, the Shares and the Subscription Rights may not be offered or sold and the Subscription Rights
may not be granted or used except pursuant to an exemption from, or in transactions not subject to, the
registration requirements of the U.S. Securities Act and other applicable securities laws. See Section 16 "Selling
and transfer restrictions". In addition, there is no assurances that shareholders residing or domiciled in the
United States will be able to participate in future capital increases or rights offerings.
Exchange rate fluctuations could adversely affect the value of the Shares and any dividends paid on
the Shares for an investor whose principal currency is not NOK.
The Shares will be priced and traded in NOK on Oslo Børs and any future payments of dividends on the Shares
will be denominated in NOK. Investors registered in the VPS whose address is outside Norway and who have
not supplied the VPS with details of any NOK account, will, however, receive dividends by cheque in their local
currency, as exchanged from the NOK amount distributed through the VPS.
If it is not practical in the sole opinion of DNB Bank ASA ("DNB"), being the Company's VPS registrar, to issue a
cheque in a local currency, a cheque will be issued in USD. The issuing and mailing of cheques will be executed
in accordance with the standard procedures of DNB. The exchange rate(s) that is applied will be DNB's rate on
the date of issuance. Exchange rate movements of NOK will therefore affect the value of these dividends and
distributions for investors whose principal currency is not NOK. Further, the market value of the Shares as
expressed in foreign currencies will fluctuate in part as a result of foreign exchange fluctuations. This could
affect the value of the Shares and of any dividends paid on the Shares for an investor whose principal currency
is not NOK.
Market interest rates could influence the price of the Shares.
One of the factors that could influence the price of the Shares is its annual dividend yield as compared to yields
on other financial instruments. Thus, an increase in market interest rates will result in higher yields on other
financial instruments, which could adversely affect the price of the Shares.
Lack of liquidity in the Company's Shares may increase price fluctuations of the share price, and
make it difficult for individual shareholders to sell their shares.
The Company is, by listing standards, a small company, and experience has shown that the liquidity of the
Company's shares has been limited. Limited liquidity of the Company's shares may increase the fluctuations of
the share price, as well as make it difficult for individual shareholders to sell their shares. It is possible that
shareholders in the Company will not be able to sell their shares at a price acceptable to the shareholder at any
given time.
26
RenoNorden ASA - Prospectus
In addition, the trading market for the Company's shares will be influenced by the research reports that
research analysists publish about the Company or its business. If one or more of these analysts cease coverage
of the Company's business or fail to publish reports on the Company regularly, the Company could lose visibility
in the financial markets, which in turn could cause the Company's share price or trading volume to decline.
Moreover, if one or more of the analysts who cover the Company's business adversely changes their
recommendations regarding the Company's shares or if the Company's operating results do not meet their
expectations, the Company's share price could decline.
2.4
Risk related to the Rights Issue
Existing Shareholders who do not participate in the Rights Issue may experience significant dilution
in their shareholding
Subscription Rights that are not traded or exercised by the end of the Subscription Period will have no value
and will automatically lapse without compensation to the holder. To the extent that an Existing Shareholder
does not exercise its Subscription Rights prior to the expiry of the Subscription Period, whether by choice or due
to a failure to comply with procedures set forth in Section 15 "The terms of the Rights Issue", or to the extent
that an Existing Shareholder is not permitted to subscribe for Offer Shares as further described in Section 16
"Selling and Transfer Restrictions ", such Existing Shareholder's proportionate ownership and voting interests in
the Company after the completion of the Rights Issue will be diluted. Even if an Existing Shareholder elects to
sell its unexercised Subscription Rights, or such Subscription Rights are sold on its behalf, the consideration it
receives in the trading market for the Subscription Rights may not reflect the immediate dilution in its
shareholding as a result of the completion of the Rights Issue.
An active trading market in Subscription Rights may not develop on the Oslo Stock Exchange and/or
the market value of the Subscription Rights may fluctuate
An active trading market in the Subscription Rights may not develop on the Oslo Stock Exchange. In addition,
because the trading price of the Subscription Rights depends on the trading price of the Shares, the price of the
Subscription Rights may be volatile and subject to the same risks as described for the Shares in Section 2.3
"Risks related to the Shares".
The sale of Subscription Rights by or on behalf of Existing Shareholders may result in a reduction in
the market price of the Subscription Rights and increased volatility in the Shares
Certain Existing Shareholders may be unable to take up and exercise their Subscription Rights as a matter of
applicable law. The Subscription Rights of such Existing Shareholders, with the exception of Subscription Rights
held through financial intermediaries, may be sold on their behalf in the market by the Manager pursuant to
instructions from the Company, as further described in Section 15.9 "Subscription Rights", but no assurance
can be given as to whether such sales may actually take place or as to the price that may be achieved. Other
holders of Subscription Rights may also choose not to exercise their Subscription Rights and therefore sell them
in the market. The sale of Subscription Rights by or on behalf of holders of such rights could cause significant
downward pressure on, and may result in a substantial reduction in, the price of the Subscription Rights and
the Shares.
If the Rights Issue is withdrawn, the Subscription Rights will no longer be of value
If the Rights Issue is withdrawn, all Subscription Rights will lapse without value, subscriptions for, and
allocations of, Offer Shares that have been made will be disregarded and any subscription payments made will
be returned without interest or any other compensation.
27
RenoNorden ASA - Prospectus
3
RESPONSIBILITY FOR THE PROSPECTUS
This Prospectus has been prepared in connection with the Rights Issue described herein and the listing of the
Offer Shares on the Oslo Stock Exchange.
The Board of Directors of RenoNorden ASA accepts responsibility for the information contained in this
Prospectus. The Board Members confirm that, after having taken all reasonable care to ensure that such is the
case, the information contained in this Prospectus is, to the best of their knowledge, in accordance with the
facts and contains no omission likely to affect its import.
30 January 2017
The Board of Directors of RenoNorden ASA
Erik Thorsen
Chairman
Charlotte Gaarn Hansson
Niklas Nikita Sloutski
Penelope Kate Briant
Board member
Board member
Board member
Markus Metyas
Ingvild Huseby
Per Johan Eriksson
Board member
Board member
Board member
28
RenoNorden ASA - Prospectus
4
GENERAL INFORMATION
4.1
Other important investor information
The Company has furnished the information in this Prospectus. No representation or warranty, express or
implied is made by the Manager as to the accuracy, completeness or verification of the information set forth
herein, and nothing contained in this Prospectus is, or shall be relied upon as, a promise or representation in
this respect, whether as to the past or the future. The Manager assumes no responsibility for the accuracy or
completeness or the verification of this Prospectus and accordingly disclaims, to the fullest extent permitted by
applicable law, any and all liability whether arising in tort, contract or otherwise which it might otherwise be
found to have in respect of this Prospectus or any such statement.
Neither the Company nor the Manager, or any of their respective affiliates, representatives, advisers or selling
agents, is making any representation to any offeree or purchaser of the Offer Shares or holder of the
Subscription Rights regarding the legality of an investment in the Offer Shares or the Subscription Rights. Each
investor should consult with his or her own advisors as to the legal, tax, business, financial and related aspects
of a purchase of the Offer Shares and the use of the Subscription Rights to subscribe for Offer Shares and the
Subscription Rights.
Investing in the Offer Shares involves a high degree of risk. See Section 2 "Risk factors" beginning on page 11.
4.2
Presentation of financial and other information
4.2.1
Financial information
The Company's audited consolidated financial statements as of, and for the year ended, 31 December 2015
(the "Financial Statements") and the Company's unaudited condensed consolidated interim financial
statements as of, and for the three and nine month periods ended, 30 September 2016 (the "Interim
Financial Statements") have been incorporated by reference hereto, see Section 17.3 "Incorporation by
reference".
The Financial Statements have been prepared in accordance with International Financial Reporting Standards as
adopted by the European Union ("IFRS"), while the Interim Financial Statements have been prepared in
accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the EU
("IAS 34"). The Financial Statements have been audited by KPMG AS ("KPMG"), as set forth in their report
incorporated by reference, see Section 17.3 "Incorporation by reference". The Interim Financial Statements
have not been audited.
The Interim Financial Statements have been restated to correct errors that originated in the period covered by
the interim financial statements ended 30 June 2016. In connection with the contract reviews in the second
quarter of 2016, the Company should have shortened its estimated useful lives for all vehicles and decreased
its residual values for some of its vehicles. The impairment review and impairment tests performed were
incomplete, and did not take into consideration an increase in the estimated discount rates and that some
vehicles already were not in use. The correction of these errors led to an increase in depreciation and
impairments. The Interim Financial Statements issued 16 December 2016 replaces the previous interim
financial statements ended 30 September 2016, which were issued in the interim financial report as of
8 November 2016. As a consequence, the interim financial statements issued in the report of 8 November 2016
and the report of 16 August 2016, respectively, should not be read without the restated Interim Financial
Statements.
The Group's retroactive adjustment of the Interim Financial Statement to reflect the correction of errors related
to impairment of goodwill, and certain vehicle assets and changes in estimates related to depreciation of certain
vehicle assets is further described in note 5 to the Interim Financial Statement and Section 10.3 "Recent
developments and trends".
4.2.2
Alternative performance measures ("APMs")
In this Prospectus, the Company has used basic alternative performance measures ("APMs"). The Group
defines "EBITDA" as operating profit (loss) before depreciation, amortisation, write down of assets, impairment
losses and loss on onerous contracts. "EBITDA Margin" is defined as EBITDA in percent of total operating
revenue. "EBIT" equals operating profit (loss).
29
RenoNorden ASA - Prospectus
The APMs presented herein are not measurements of performance under IFRS or other generally accepted
accounting principles and investors should not consider any such measures to be an alternative to: (a)
operating revenues or operating profit (as determined in accordance with IFRS or other generally accepted
accounting principles), as a measure of the Group’s operating performance; or (b) any other measures of
performance under generally accepted accounting principles. The APMs financial measures presented herein
may not be indicative of the Group’s historical operating results, nor are such measures meant to be predictive
of the Group’s future results. The Company believes that the APMs measures presented herein are commonly
reported by companies in the markets in which it competes and are widely used by investors in comparing
performance on a consistent basis without regard to factors such as depreciation, amortisation and impairment,
which can vary significantly depending upon accounting methods (particularly when acquisitions have
occurred), business practice or based on non-operating factors. Accordingly, the Group discloses the APMs
financial measures presented herein to permit a more complete and comprehensive analysis of its operating
performance relative to other companies and across periods, and of the Group’s ability to service its debt.
Because companies calculate the APMs financial measures presented herein differently, the Group’s
presentation of these APMs financial measures may not be comparable to similarly titled measures used by
other companies.
4.2.3
Industry and market data
This Prospectus contains statistics, data, statements and other information relating to markets, market sizes,
market shares, market positions and other industry data pertaining to the Group's future business and the
industries and markets in which it may operate in the future. Unless otherwise indicated, such information
reflects the Company's estimates based on analysis of multiple sources, including data compiled by professional
organisations, consultants and analysts and information otherwise obtained from other third party sources,
such as annual financial statements and other presentations published by listed companies operating within the
same industry as the Company may do in the future. Unless otherwise indicated in the Prospectus, the basis for
any statements regarding the Company's competitive position in the future is based on the Company's own
assessment and knowledge of the potential market in which it may operate.
The Company confirms that where information has been sourced from a third party, such information has been
accurately reproduced and that as far as the Company is aware and is able to ascertain from information
published by that third party, no facts have been omitted that would render the reproduced information
inaccurate or misleading. Where information sourced from third parties has been presented, the source of such
information has been identified. The Company does not intend, and does not assume any obligations to update
industry or market data set forth in this Prospectus.
Industry publications or reports generally state that the information they contain has been obtained from
sources believed to be reliable, but the accuracy and completeness of such information is not guaranteed. The
Company has not independently verified and cannot give any assurances as to the accuracy of market data
contained in this Prospectus that was extracted from these industry publications or reports and reproduced
herein. Market data and statistics are inherently predictive and subject to uncertainty and not necessarily
reflective of actual market conditions. Such statistics are based on market research, which itself is based on
sampling and subjective judgments by both the researchers and the respondents, including judgments about
what types of products and transactions should be included in the relevant market.
As a result, prospective investors should be aware that statistics, data, statements and other information
relating to markets, market sizes, market shares, market positions and other industry data in this Prospectus
(and projections, assumptions and estimates based on such information) may not be reliable indicators of the
Company's future performance and the future performance of the industry in which it operates. Such indicators
are necessarily subject to a high degree of uncertainty and risk due to the limitations described above and to a
variety of other factors, including those described in this Prospectus Section 2 “Risk Factors” and elsewhere in
this Prospectus.
4.2.4
Other information
In this Prospectus, all references to "NOK" are to the lawful currency of Norway, all references to "DKK" are to
the lawful currency of Denmark, all references to "SEK" are to the lawful currency of Sweden, all references to
"USD" are to the lawful currency of the United States and all references to "EUR" are to the lawful common
currency of the EU member states who have adopted the Euro as their sole national currency. The Financial
Information is published in NOK.
30
RenoNorden ASA - Prospectus
The "Nordic countries" in the Prospectus refers to Denmark, Finland, Norway and Sweden, and not including
Iceland throughout.
4.2.5
Rounding
Certain figures included in this Prospectus have been subject to rounding adjustments (by rounding to the
nearest whole number or decimal or fraction, as the case may be). Accordingly, figures shown for the same
category presented in different tables may vary slightly. As a result of rounding adjustments, the figures
presented may not add up to the total amount presented.
4.3
Cautionary note regarding forward-looking statements
This Prospectus includes forward-looking statements that reflect the Company's current views with respect to
future events and financial and operational performance. These forward-looking statements may be identified
by the use of forward-looking terminology, such as the terms "anticipates", "assumes", "believes", "can",
"could", "estimates", "expects", "forecasts", "intends", "may", "might", "plans", "projects", "should", "will",
"would" or, in each case, their negative, or other variations or comparable terminology. These forward-looking
statements are not historic facts. They appear in the following Sections in this Prospectus, Section 2 "Risk
Factors", Section 7 "Industry and Market Overview", Section 7 "Business of the Group", and include statements
regarding the Company's intentions, beliefs or current expectations concerning, among other things, potential
risk factors, financial strength and position of the Group, operating results, liquidity, prospects, growth, the
implementation of strategic initiatives, as well as other statements relating to the Group's future business
development and financial performance, and the industry in which the Group operates.
Prospective investors in the Shares are cautioned that forward-looking statements are not guarantees of future
performance and that the Group's actual financial position, operating results and liquidity, and the development
of the industry in which the Group operates, may differ materially from those made in, or suggested by, the
forward-looking statements contained in this Prospectus. The Company cannot guarantee that the intentions,
beliefs or current expectations upon which its forward-looking statements are based will occur.
By their nature, forward-looking statements involve, and are subject to, known and unknown risks,
uncertainties and assumptions as they relate to events and depend on circumstances that may or may not
occur in the future. Because of these known and unknown risks, uncertainties and assumptions, the outcome
may differ materially from those set out in the forward-looking statements. Important factors that could cause
those differences include, but are not limited to:
•
implementation of the Group's strategy and its ability to further expand its business and growth;
•
the competitive nature of the industry the Group operates in and the competitive pressure and
changes to the competitive environment in general;
•
earnings, cash flow, dividends and other expected financial results and conditions;
•
fluctuations of exchange and interest rates, and diesel fuel and LNG;
•
changes in general economic and industry conditions, including changes to tax rates and regimes and
other increases in costs, including wage inflation;
•
changes in the legal and regulatory environment;
•
the state of the Group's relationships with major customers, suppliers and the renewal, extension or
termination of any contract with any major customer or supplier;
•
inadequacy of the Group’s insurance to cover the Group's losses;
•
political, governmental, social, legal, environmental and regulatory changes;
•
failure to retain and attract a sufficient number of skilled personnel;
•
changes in and compliance with laws and regulations;
31
RenoNorden ASA - Prospectus
•
access to funding; and
•
legal proceedings.
Additional factors that could cause the Group's actual results, performance or achievements to differ materially
include, but are not limited to, those discussed under Section 2 "Risk Factors".
The information contained in this Prospectus, including the information set out under Section 2 "Risk Factors",
identifies additional factors that could affect the Group's business, financial condition, results of operations,
cash flows, liquidity, performance and prospects. Prospective investors in the Shares and/or Subscription Rights
are urged to read all Sections of this Prospectus and, in particular, Section 2 "Risk Factors" for a more complete
discussion of the factors that could affect the Group’s future performance and the industry in which the Group
operates when considering an investment in the Company.
These forward-looking statements speak only as at the date on which they are made. The Company undertakes
no obligation to publicly update or publicly revise any forward-looking statement, whether as a result of new
information, future events or otherwise. All subsequent written and oral forward-looking statements attributable
to the Company or to persons acting on the Company's behalf are expressly qualified in their entirety by the
cautionary statements referred to above and contained elsewhere in this Prospectus.
32
RenoNorden ASA - Prospectus
5
DIVIDENDS AND DIVIDEND POLICY
5.1
Dividend policy
In deciding whether to propose a dividend and in determining the dividend amount, the Board of Directors will
take into account legal restrictions, as set out in the Norwegian Public Limited Liability Companies Act of 13
June 1997 no. 45 (the "Norwegian Public Limited Liability Companies Act") (see Section 5.2 "Legal
constraints on the distribution of dividends”), the Group’s capital requirements, including capital expenditure
requirements, its financial position and condition, future growth opportunities, general business conditions and
any restriction that its contractual arrangements in place at the time of the potential dividend may place on its
ability to pay dividends and the maintaining of appropriate financial flexibility. Except in certain specific and
limited circumstances set out in the Norwegian Public Limited Liability Companies Act, the amount of dividends
paid may not exceed the amount recommended by the Board of Directors.
The Company paid NOK 50,136,224 in 2015 which equals NOK 1.84 dividend per share, and NOK 50,000,000 in
2014 which equals NOK 1.835 dividend per share. The Company's Board of Directors will not propose dividend
distribution for the year ended 31 December 2016 due to the Group's current financial situation.
The Company will aim to pay dividends in the future. However, there can be no assurance that a dividend will
be proposed or declared in any given year as this, and the amount of any dividend, will be determined by the
prevailing circumstances at the time. If a dividend is proposed or declared, there can be no assurance what the
dividend amount will be.
5.2
Legal constraints on the distribution of dividends
Dividends may be paid in cash, or in some instances, as contribution in kind. The Norwegian Public Limited
Liability Companies Act provides the following constraints on the distribution of dividends applicable to the
Company:
•
Section 8-1 of the Norwegian Public Limited Liability Companies Act provides that the Company may
distribute dividends to the extent that the Company's net assets, following the distribution covers (i)
the share capital, (ii) the reserve for valuation variances and (iii) the reserve for unrealised gains.
The amount of any receivable held by the Company which is secured by a pledge for Shares in the
Company, as well as the aggregate amount of credit and security which, pursuant to Section 8–7 to
Section 8-10 of the Norwegian Public Limited Liability Companies Act fall within the limits of
distributable equity, shall be deducted from the distributable amount.
•
The calculation of the distributable equity shall be made on the basis of the balance sheet included in
the approved annual accounts of the last financial year, provided, however, that the registered share
capital, as of the date of the resolution to distribute dividends, shall be applied. Following the
approval of the annual accounts of the last financial year, the General Meeting may also authorise
the Board of Directors to declare dividends on the basis of the Company's audited annual accounts.
Dividends may also be resolved by the General Meeting based on an interim balance sheet which has
been prepared and audited in accordance with the provisions applying to the annual accounts and
with a balance sheet date not further into the past than six months before the date of the General
Meeting's resolution.
•
Dividends can only be distributed to the extent that the Company's equity and liquidity following the
distribution is considered sound by the Board of Directors, acting prudently.
In deciding whether to propose a dividend and in determining the dividend amount, the Board of Directors will
take into account legal restrictions, as set out in the Norwegian Public Limited Liability Companies Act, the
Company's capital requirements, including capital expenditure requirements, its financial condition, general
business conditions and any restrictions that its contractual arrangements in place at the time of the dividend
may put on its ability to pay dividends and the maintaining of appropriate financial flexibility. For a description
of restrictions on payment of dividends in the Group's credit facilities, see Section 10.5 "Material borrowings".
Except in certain specific and limited circumstances set out in the Norwegian Public Limited Liability Companies
Act, the amount of dividends paid may not exceed the amount recommended by the Board of Directors.
33
RenoNorden ASA - Prospectus
The Norwegian Public Limited Liability Companies Act does not provide a time limit in which entitlement to
dividends lapses. Subject to various exceptions, Norwegian law provides a limitation period of three years from
the date an obligation is due. There are no dividend restrictions or specific procedures for non-Norwegian
residential shareholders to claim dividends. For a description of withholding tax on dividends applicable to nonNorwegian residents, see Section 14 "Taxation".
5.3
Manner of dividend payments
Any future payments of dividends on the Shares will be denominated in NOK, and will be paid to the
shareholders through the VPS. Investors registered in the VPS whose address is outside Norway and who have
not supplied the VPS with details of any NOK account, will, however, receive dividends by cheque in their local
currency, as exchanged from the NOK amount distributed through the VPS. If this is not practical, in the sole
opinion of DNB, being the Company's VPS registrar, to issue a cheque in a local currency, a cheque will be
issued in USD. The issuing and mailing of cheques will be executed in accordance with the standard procedures
of DNB. The applicable exchange rate(s) will be DNB's rate on the date of issuance. Dividends will be credited
automatically to the VPS registered shareholders' NOK accounts, or in lieu of such registered NOK account, by
cheque, without the need for shareholders to present documentation proving their ownership of the Shares.
34
RenoNorden ASA - Prospectus
6
REASONS FOR THE RIGHTS ISSUE
The Group has in 2016 struggled with operational issues combined with a challenging competitive environment
with observable increased competition and price pressure, leading to delivered operating results below the
Group’s expectations. The operational issues includes loss making contracts in Norway related to tender wins
due to miscalculation of bids, in addition to new and revised estimates for two ongoing contracts in Denmark
leading to estimated losses. Also, truck delivery challenges in Denmark has contributed to lower efficiency and
inhibited the implementation of planned route improvements, which has resulted in higher operating costs than
initially planned. See Section 8.1.1 "Introduction" for more information regarding these issues.
In the restated Interim Financial Statements as of 30 September 2016, the Group reported provisions
recognized in the period ended 30 June 2016 for onerous contracts in Denmark and Norway of NOK 166 million
in total and a goodwill impairment of NOK 239 million in Norway and Denmark, and impairment of equipment of
NOK 71 million. This has contributed to a decrease in the Group’s equity ratio which was reported at 13% as of
30 September 2016.
The combination of increased investments and decreased EBITDA has also lead net interest bearing debt
("NIBD") over EBITDA (NIBD/EBITDA) approaching the maximum covenant level of 5.0x (4.85x as of 30
September 2016) permitted by the Group's financing arrangements.
Although significant improvement measures have been taken and new Management has been on-boarded, the
above issues continue to put pressure on the statement of financial position and covenants of the Group.
The Company expects revenue for and as of the period ended 31 December 2016 to be slightly below the level
for the same period ended 31 December 2015 and a weaker seasonal development in EBITDA margin in the
period ended 31 December 2016 compared to the previous year. Furthermore, the Company expects the total
capital expenditure for the period ended 31 December 2016 to be slightly higher compared to the level as of
the period ended 30 September 2016. Going forward, the Company expects the Group EBITDA margins to
stabilize in the short term and thereafter slightly improve in the medium term, and Management will apply a
disciplined approach to new contracts. At the same time, starts-ups of large contracts are expected in 2017,
mainly related to already committed contracts, are expected to lead to capital expenditures in 2017 which are
above the capital expenditure level of 2016.
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.
A covenant breach is expected to result in a significant increase in financing cost and disruption of
Management's focus on operational improvements.
Given the current situation, the Board of Directors, has decided to execute the Rights Issue of NOK 350 million
to strengthen the Group's statement of financial position and create headroom with respect to its NIBD/EBITDA
covenant, thus providing a better platform for the business going forward and increased refinancing flexibility.
See Section 2.2 "Risks relating to financing" for more information regarding risks related to the Group's
financing.
35
RenoNorden ASA - Prospectus
7
INDUSTRY AND MARKET OVERVIEW
The information contained and data included in this Section 7 "Industry and market overview" has been
prepared by PwC at the request of the Company for the purpose of being included in this Prospectus.
PwC has based the information contained in this Section on data and research from recognised research
companies, as well as official financial statistics and other publicly available information.
The industry and market overview does not purport to contain all of the information the recipient may desire
nor require to make a decision to proceed with further investigations. Industry publications or reports generally
state that the information they contain has been obtained from sources believed to be reliable, but the accuracy
and completeness of such information is not guaranteed. Neither PwC nor the Company has independently
verified this information, and cannot give any assurances as to the accuracy of market data contained in this
Section that was extracted from these industry publications or reports and reproduced herein. Market data and
statistics are inherently predictive and subject to uncertainty and not necessarily reflective of actual market
conditions. Such statistics are based on market research, which itself is based on sampling and subjective
judgements by both the researchers and the respondents, including judgements about what types of products
and transactions that should be included in the relevant market. Interested parties should conduct their own
investigations and analyses of the industry and the Company. Certain statements, estimates and projections
with respect to future industry development are included herein. Such statements, estimates and projections
reflect various assumptions and anticipated results, which may or may not be correct.
As a result, prospective investors should be aware that statistics, data, statements and other information
relating to markets, market sizes, market shares, market positions and other industry data in this Section (and
projections, assumptions and estimates based on such information) may not be reliable indicators of the
Group’s future performance and the future performance of the industry in which it operates. Such indicators are
necessarily subject to a high degree of uncertainty and risk due to the limitations described above and to a
variety of other factors, including those described in Section 2 "Risk factors" and elsewhere in this Prospectus.
Although the information set out herein is believed to be correct, no representation or warranty, express or
implied, is given by PwC or the Company, as to the accuracy or completeness of the contents of this industry
and market overview or to the accuracy or completeness of the projections included herein or of any other
document or information supplied at any time in connection with the Rights Issue.
7.1
Waste management value chain
The waste management industry comprises collection, treatment and trading of household and commercial
waste. RenoNorden specialises in collection and transportation of household waste in Scandinavia, and now
operates across the entire Nordic region, except Iceland. The Groups’ operations in Finland also include some
activity in commercial waste collection.
36
RenoNorden ASA - Prospectus
The definition of municipal waste differs somewhat across the Nordics. In Norway and Denmark, the term
includes only waste from households, public places and recycling stations. In Sweden and Finland, municipal
waste also includes comparable waste generated outside of the home, i.e. waste collected from public places,
hospitals, schools, stores, restaurants, offices etc. Commercial waste comprises waste from commercial
businesses, construction and industry.
In general, municipalities have ownership of household waste throughout the value chain, and it is their
responsibility to ensure proper waste collection from their inhabitants and waste treatment in accordance with
governmental regulations. Collectors of household waste do not take ownership of the waste as opposed to
collectors of commercial waste who own the waste and receive revenue or generate cost from selling or
disposing recycled waste fractions (e.g. gate fees). Hence, collectors of household waste are not exposed to
fluctuating material prices or associated environmental risks, and are less exposed to changes in waste
volumes.
7.2
The Nordic household waste collection market
7.2.1
Market structure
Responsibility for municipal waste collection and treatment is largely the same across the Nordic countries and
mirrors EU developments where all responsibility and cost lies on the municipalities.
Traditionally, household waste collection has been a relatively unsophisticated service in which a single waste
bin is emptied at a given frequency using standard waste vehicles. As environmental concerns have grown,
requirements for increased recycling and separation of waste fractions have emerged. In parallel, focus has
been given to the cost aspects of municipal services leading to more outsourcing to external collection
providers. This has resulted in an increasing private market for collection services. Thus, collection has become
more specialised, requiring improved route planning and setting higher requirements to the waste collection
vehicles and the external providers.
Household waste collection services is usually either managed as an internal (in-house) operation (financed
directly from the operational budget, and either operated by a municipal or an inter-municipal company), or
outsourced to a third-party provider, such as RenoNorden. When services are outsourced, the contract is
awarded through a public tender process.
The cost for household waste collection in Scandinavia is in principle fully recovered by the municipality through
a waste management fee charged to the households. The fee is meant to cover the entire cost for the
municipalities including collection and transportation, sorting, treatment and disposal. The low-cyclical nature of
the market is explained by collectors not having ownership for the waste, reducing the impact from material
prices and variation in volume. Furthermore, temporary fluctuations in household waste volume can be
accommodated without modifying bin-size or collection frequency, and most contracts are relatively long term
without price fluctuations for the services.
7.2.2
Regulatory development
The waste volume is generally expected to increase with economic growth. This has prompted governments to
prioritise and stress initiatives on how to reduce the amount of waste produced, but also to make best use of
the waste.
In the end of 2013, European Member States’ governments developed a resource/waste strategy in accordance
with the EU Waste Directive 2008/98/EC (Article 29 of the Directive). The focus of the Directive was grounded
in waste reduction. In 2015, the European Commission concluded that simply setting targets to reduce waste
output did not account for the entire circle of waste management and what is needed to ‘close the loop’. In
December 2015, the European Commission passed the Circular Economy Package, which includes revised
legislative proposals on waste reduction in addition to clear direction on recycling and turning waste into
valuable resources. Key elements of the revised waste proposal include: i) a sharp increase in targets for
recycling (a common recycling target of 65% of municipal waste by 2030), ii) a ban on landfilling of separately
collected waste fractions and iii) a requirement for separate collection of bio-waste. In this context, European
Member States are prioritising actions, setting goals and indicators for waste reduction and reuse in accordance
with the requirements of the amended EU Waste Directive.
37
RenoNorden ASA - Prospectus
The elevation of recycling in the waste
High
Reduce (volume of waste produced)
Reuse
Priority
Recycle (or compost)
hierarchy
is
municipal
waste.
Package
Elevated importance
under the Circular
Economy Package
Recover (energy)
attractive
leads
to
The
for
collectors
Circular
more
of
Economy
complex
waste
collection contracts with higher requirements
and a higher number of fractions, increasing
barriers to enter, as well as being total
market
size-positive,
in
a
pay-per-bin
structure.
Dispose
Low
The extent and impact of regulatory reform
differ
between
the
Nordic
countries.
Nevertheless, the trends and initiatives in
Source: European Commission's Waste, 2016
the respective countries are fairly similar.
In December 2016, the Norwegian Ministry of Environment issued a memorandum to the Government on waste
and recycling, reaffirming an overall goal of 50% material recycling of paper, metals, plastics and glass waste in
Norway by 2020, and a goal of 65% recycling by 2030. In practice, the municipalities are responsible for
household waste, and increased recycling can be achieved through either increased sorting in the home or
through centralised sorting facilities. The share of household waste that is recycled has been stable at 37%39% the past three years. The Ministry’s memorandum outlines potential initiatives to lift the recycling rate,
with suggested implementation from 2017 onwards.
In Denmark, the EU Waste Directive has led to a resource and waste strategy for 2018, including several
initiatives on conservation of resources in the waste hierarchy for both industries and households. Denmark is
characterised by low landfilling rates (approximately 1.3%) and the highest rate of incineration in EU-28
(approximately 54%). Historically, the increase of the recycling rate has been slow. The strategy going forward
is underpinned by increasing instances of separate collection, with the end objective of 50% recycling by 2022.
As in Denmark, the EU Directive has led to a number of initiatives in Sweden. The Swedish Environmental
Protection Agency has determined that the waste recycling level in Sweden should reach 50% by the year 2020
through decreasing the amount of waste and increasing the recycled part of the total waste. Another goal is
that at least 50% of the food waste should be biologically treated before 2018.
Historically, Finland had set a national target of 50% recycling by 2016. The recycling rate in Finland was at
approximately 37% in 2015. While their internal target was overly ambitious, Finland has confirmed it is a
governmental priority to fulfil the EU Directive’s 2020 target of 50% recycling.
In general, these regulations are changing the way municipalities collect household waste as it requires even
more segmented disposal as well as more complex sorting systems in both households and central sorting. The
requirements are likely to be beneficial to operators in the waste collection market as the requirements, among
other things, will lead to an increase in the number of fractions to be collected.
Country
Household recycling rate (2015)
Household recycling rate goal
Norway
38%
50% by 2020
65% by 2030
Denmark
44%
50% by 2022
65% by 2030
Sweden
50%
50% by 2020
65% by 2030
Finland
37%
50% by 2020
65% by 2030
Source: The Ministry of Environment in the respective countries
38
RenoNorden ASA - Prospectus
7.2.3
Tender process
According to the EU Public Procurement Directive, all central, county and municipal authorities in the Nordic
countries are required to arrange purchases over EUR 209,000 as open and transparent tender processes. This
ensures a level playing field between niche service providers and vertically integrated waste management
companies. Inter-municipal tendering is increasing, driving larger contract sizes and reduced administration
costs for local authorities. Tenders for household waste collection contracts awarded by municipalities typically
have durations of five years with options for two further years (one plus one), exercisable at the discretion of
the municipalities.
Price is the main criteria in contract awards, but most issuers also include additional quality criteria. One or
more of the following criteria will typically be included in addition to price:
•
Quality, i.e. capacity, stability, competence, previous experience.
•
Environment, i.e. environmental concerns and energy utilisation.
•
Understanding of assignment, i.e. accordance with tender, number of modifications.
Over the past five years, price has been increasingly used as a main criteria, shifting from a period (20072010) where issuers put more emphasis on quality criteria. The use of soft criteria has turned out to be
somewhat problematic due to challenges in measuring and evaluating quality criteria accurately. Several tender
outcomes in Norway have been appealed to the Norwegian Complaints Board (KOFA) by participants, claiming
that selection mechanisms have not fulfilled the transparency requirement. This has also been the case in
Sweden with the Stockholm contracts in 2016. In addition, as more requirements on e.g. equipment and
environmental standards have been included in the qualification process, an emphasis on quality criteria has
been reduced.
The average number of participants in tender processes has in general been stable during the last decade,
indicating complex tender processes with more services to be performed and illustrating the consolidation trend
seen in some of the markets. The municipal reform in Denmark in 2007 reduced the number of municipalities
leading to larger contracts, thus changing the contract structure and competitive landscape. In general, it is
easier to operate contracts in Denmark due to geography and its heritage as a transport-intense market,
resulting in higher tender participants. In Finland, a number of small operators have entered different local
markets, resulting in an increase in the number of participants per tender.
Development in average number of participants in tenders 4
6.0
4.5
3.6
3.2
3.6
3.3
3.7 3.8
Sweden
2006-2008
5.0
4.2 4.2
3.5 3.6 3.6 3.5
Norway
2003-2005
5.1
4.9
Denmark
2009-2010
2011-2012
4.3
3.7
3.2 3.4
Finland
2013-2014
2015-2016
Source: Doffin, Opic, Credita, Tenders Electronic Daily, PwC
7.2.4
Market size 2010-2019
The total household waste volume handled in the Nordic market is estimated to 13.2 million tons in 2016.
Waste volumes have increased steadily since 2010, in line with moderate population and GDP growth across the
Nordics. Projections towards 2019 indicate a stable and positive annual growth rate of 2%. Modest volume
growth is expected in all the Nordic countries, where the strongest growth is expected in the Danish market.
4
Small sample size for Finland 2015-16 (six tenders) due to limited available information
39
RenoNorden ASA - Prospectus
Market volume – Nordic household waste collection
Million tonnes
+2%
+1%
13.4
13.6
13.8
CAGR
15-19
12.1
12.4
12.5
12.6
12.7
13.0
13.2
2.7
2.7
2.6
2.7
2.7
2.7
2.8
Finland
1.0%
2.7
2.7
2.5
3.3
3.2
3.2
3.2
3.3
3.3
3.4
3.5
3.6
3.6
Denmark
2.3%
4.2
4.4
4.4
4.4
4.5
4.7
4.8
4.8
4.9
5.0
Sweden
1.5%
2.1
2.2
2.2
2.3
2.3
2.3
2.3
2.3
2.4
2.4
Norway
1.0%
2010
2011
2012
2013
2014
2015
2016e
2017e
2018e
2019e
Source: Market information, PwC analysis
The Nordic market for collection and transportation of municipal household waste is estimated at
NOK 8.3 billion in 2016 (i.e. the total market including the in-house part), and is forecasted to grow 3% per
annum, reaching NOK 9.0 billion in 2019.
Market value – Nordic waste collection
NOK billion
+3%
+4%
8.7
9.0
CAGR
15-19
7.7
7.9
8.1
8.3
8.5
1.9
Finland
1.7
1.9
1.7
1.8
2.7%
1.8
2.0
1.7
2.1
2.2
2.3
2.3
Denmark
2.1
2.1
2.2%
2.1
2.3
2.1
2.1
2.1
2.2
2.2
2.3
2.5
2.6
Sweden
3.5%
2.0
2.4
1.9
1.4
1.5
1.6
1.8
1.9
1.9
1.9
2.0
2.0
2.1
Norway
2.3%
2010
2011
2012
2013
2014
2015
2016e
2017e
2018e
2019e
7.2
7.5
1.6
2.1
6.8
1.4
Source: Market information, PwC analysis
7.2.5
Market drivers and trends
Typically, household waste collection contracts are valued based on the number of units collected, price per
unit, and total distance covered. One unit represents a bin or a container. The unit price is a function of waste
complexity, which again is a function of the type of waste (e.g. unsorted waste, paper, metal etc.) and unit
size. As a result, a contract collecting only half-full containers has the same value as a contract collecting only
full containers. This means that the market value is only partly dependant on the market volume, with the
exception being when high volumes increase the unit size (i.e. waste complexity) or the number of units.
Population growth and increased recycling are the main drivers for volume growth.
Industry drivers
Price drivers
Volume drivers
•
indexation
•
Population growth
•
Waste collection complexity
•
GDP growth
•
Technology requirements
•
Waste per capita
•
Re-tendering
•
Collection frequency
40
RenoNorden ASA - Prospectus
Industry driver forecast 2015-2019
Industry drivers
2015 – 2019 Annual Estimate
Indexation
DK 0.9%
NO 1.1%
Annual impact on price per capita
FI 0.8%
SE 1.1%
Re-tendering (price pressure)
DK -3.8%
NO -3.8%
Price reduction on retenders
FI 0%
SE 0%
Population growth
DK 0.8%
NO 1.0%
Annual impact on population
FI 0.4%
SE 1.5%
Waste complexity
DK 1.5%
NO 0.7%
Annual impact on price per capita
FI 0.8%
SE 1.1%
Source: SCB, Eurostat, SSB, DST, PwC analysis
7.2.5.1
Indexation
Contracts typically include provisions to adjust the unit price based on defined national indices. The most
commonly used indices are:
•
Norway - Cost index for road transport (with separate indices for different vehicle types), published
by Statistics Norway (SSB).
•
Sweden – Waste index (A12:1 household waste collection index), published by Statistics Sweden
(SCB) on behalf of Avfall Sverige, from 2012 and onwards.
•
Denmark - Cost index for household waste collection, published by Statistics Denmark (DST).
•
Finland - Cost index for road transport of goods, published by Statistics Finland (Tilastokeskus).
All indices have shown year-on-year growth in the recent years.
7.2.5.2
Re-tendering
At expiry, contracts are usually renewed through a public tender process. The most important selection criteria
in these processes is price, creating price pressure that in many cases offsets the index adjustment effect.
Increasing competition on re-tenders in Norway has recently yielded a high price pressure, but this is expected
to be more stable going forward. While changes to the contract scope can happen during the contract period,
adjustments are most common when re-tendering, i.e. catchment area, truck requirements, number of
fractions collected, pick-up frequency etc. Scope changes impact contract pricing, rendering price comparisons
to historical contracts not possible on a like-for-like basis.
7.2.5.3
Growing population and GDP in the Nordics
The Nordic population is forecast to grow at 1% annually from 2015 – 2019, increasing the total amount of
waste produced in the region. This is expected to positively impact the need for waste transportation services.
41
RenoNorden ASA - Prospectus
Population growth 2015 - 2019
GDP per capita in kNOK*
Country
2015
2019
Est.
15-19
CAGR
Country
2015
2019
Est.
15-19
CAGR
Sweden
9.9
10.5
1.5%
Sweden
425
457
1.9%
Norway
5.2
5.4
1.0%
Norway
632
608
-1.0%
Denmark
5.7
5.8
0.8%
Denmark
437
487
2.8%
Finland
5.5
5.6
0.4%
Finland
351
388
2.5%
* Constant currency of NOK:SEK= 0.9768, NOK:DKK=1.1.2428 and NOK:EUR=9.2897
Source: Market information
Despite the regulatory initiatives to maximise conservation of resources through reducing the amount of waste
generated, waste volumes in the Nordic countries has historically increased. The amount of waste generated
per capita is a key market driver, and often follows the GDP development. In line with GDP per capita, the
generated waste volume declined in 2008, but has shown signs of recovery across all Nordic markets since
2009, and is anticipated to keep growing in 2016-2019 alongside GDP and population.
7.2.5.4
Increasing waste collection complexity
Increased environmental awareness and political attention in all Nordic markets have led to new policies and
schemes being implemented on waste management related services. This has often resulted in more complex
waste collection procedures.
The ability to reach national and European recycling goals depends on the growing societal norm for households
to sort waste into different fractions. The most common fractions collected today are organic waste, paper &
cardboard, glass, metal and plastic. The share of population with four or more fractions collected is the highest
in Norway and Finland while Denmark is lagging behind the other Nordic countries, representing potential
upside on re-tendered contract values if further requirements are implemented. The number of different
fractions collected at each household has increased steadily from 2010 to 2015, and is expected to continue to
grow.
Households with four or more fractions collected
40%
30%
23%
25%
21%
13%
14%
5%
Norway
Finland
Denmark*
2010
2015
*2015 figures for Denmark is based on 2013 information as the latest available estimate
Source: PwC
42
Sweden
RenoNorden ASA - Prospectus
In the Nordics in general, a larger responsibility is put on the households to pre-sort their waste into different
fractions using multi-fraction solutions. With multi-fraction solutions, several different systems are being
attended for, e.g. the four-bin system and the domestic sorting system. The four-bin system demands better
technology vehicles and expertise from the collection services firm, which drives the price per collection.
According to industry experts and interviewed municipalities, a shift from a two-bin system to a four-bin system
would increase the contract price by approximately 30%. In Sweden, this price increase has not yet affected
the outsourced market, largely because the four-bin system is relatively new to the market, so the majority of
the municipalities using this solution have waste collection services in-house. In connection with renewing
outsourced contracts, an increasing demand for multi-fraction solutions is expected.
The domestic sorting solution is especially common in apartment buildings, and allows each household to sort
their waste in several different compartments situated near their home. Each waste type has one large
compartment, which is collected with different vehicles. It does not necessarily drive the price as much as the
four-bin system because it is not as advanced – however it drives the number of collections which in turn
increases the contract values.
Another possible sorting solution that is frequently discussed is the opti-bag system. The opti-bag system
allows the household to sort each waste type in differently coloured plastic bags and throw them into the same
compartment. All the waste gets picked up by one vehicle and transported to a refuse disposal plant. In order
for the opti-bag solution to work, the refuse disposal plant has to be equipped with a reader to map the correct
colour of the bag and sort it into its category. This system does not drive complexity for the waste collection
part (easy to pick up, no advanced vehicles needed). However, since compactors cannot be used it drives
volume. The opti-bag solution requires significant investment from municipalities. Hence, the likelihood of the
opti-bag solution becoming a standard system is considered moderate.
7.2.5.5
Stable outsourcing trend estimated
The main reasons for operating waste collection in-house are the historical tradition of municipalities running
their own waste collection and a general resistance towards dismissing internal employees for the benefit of
external service providers.
The level of waste collection outsourced in the Nordic countries has been stable from 2010 to 2016, and is
estimated to be approximately 80% in 2016. Sweden and Norway are the least developed outsourcing markets,
with outsourcing levels of approximately 66% and 68% respectively. In both countries, there is a history of
using municipality-owned players for a number of community services, such as waste collection. For Sweden,
the slightly reduced share in 2016 is likely a result from SamTek’s bankruptcy and services being in-sourced.
The level of outsourcing is not estimated to increase in the years up to 2019, as most municipalities considering
outsourcing waste collection already are doing so, based on the municipalities interviewed. The Nordic countries
generally have high degrees of outsourcing in comparison to other countries. This is particularly true for Finland
and Denmark, which are the two countries with the highest shares of outsourcing in Europe.
Level of outsourcing in Nordic countries 2010, 2016 – by population
93%
67%
100%
94%
67%
Norway
67%
Denmark
66%
Sweden
2010
2016
Source: Management information, RenoNorden database and PwC analysis
43
100%
Finland
RenoNorden ASA - Prospectus
7.2.6
Contract opportunities
The average contract length in the Nordic household waste market is five years, with a one plus one extension
option. The options are usually exercised. Assuming all options are exercised, and that each contract is
renewed upon expiry, gives the market pipeline set out below. Typically, around a 100 contracts are retendered each year. The tender process is usually conducted one year prior to the current contract’s expiration,
meaning that the tender process for the 2020 volumes is in 2019. Consequently, 2017 is excluded from the
graph as most of the contracts have already been retendered.
Contract values to be tendered, 2018-2023 (MNOK)
1 421
124
1 219
1 089
194
312
198
152
983
82
1 025
309
124
351
180
1 257
208
257
776
424
409
379
289
297
306
315
324
333
2018
2019
2020
2021
2022
2023
294
Norway
Sweden
Denmark
358
Finland
Source: Management Information, RenoNorden database and PwC analysis
The pipeline only includes contracts that are currently being publicly tendered, and does not cover any new
contracts being added from increased outsourcing.
In Sweden, the Stockholm contract was re-tendered in 2016, coming into effect in March 2017. A large share of
contracts (36 contracts), are being retendered in 2020, compared to an average of 27 the preceding years. For
Denmark, the 2022 peak is caused by many larger contracts going out for tender at the same time. Norway
experiences a peak in 2023, which mainly driven by more contracts being retendered this year than usual, 17
compared to an average of 8 the other years.
Due to limited contract information available, the Finnish pipeline is derived using the Finish market size and
assuming a five-year contract period. Consequently, all contracts are re-tendered over a five-year period, and
the pipeline can be described as the market size divided by five. To account for the cost price index, the
contracts that are being retendered are index adjusted. As commercial contracts are assumed to run on a
continued basis, only contracts tendered by municipalities are included in the Finnish pipeline.
7.2.7
The competitive landscape
The household waste market in the Nordics has a clear leader in RenoNorden, with an estimated market share
of 31% of the outsourced part of the population in the Nordic countries, an increase of 3ppt since 2013. 5 The
growth has been achieved organically through winning several new contracts in Denmark and Sweden.
The Group is the only operator that is present across the Nordic countries. In-house collection of waste
comprise approximately 20% of the total market. There are several operators with a market share 5%-10%.
5
Excluding the impact of the outcome from the Oslo tender as discussed below.
44
RenoNorden ASA - Prospectus
Estimated Nordic market shares – 2016 6
Nordics
~ 8.3 NOKbn
2016e
Norway
Sweden
Denmark
Finland
~ 1.8 NOKbn
~ 2.2 NOKbn
~ 2.3 NOKbn
~ 1.9 NOKbn
In-house 7%
In-house
20%
In-house
33%
In-house
34%
In-house
In-house
In-house
Other
Retur
Retur
3%
VeiReno
VeiReno 5%
56%
Other
23%
Other
Renova5%
Renova
Ragn9%
Sells Ragn-Sells
24%
~31% of outsourced
market
14%
Meldgaard
Meldgaard
Other
Other
Sihvari
8%
15%
SUEZ
16%
Norsk Gjenvinning
Norsk
Gjenvinning
RenoNorden
Other
Local 13%
Marius Pedersen
6%
27%
18%
Other
RenoNorden
38%
~57% of outsourced
market
RenoNorden
SUEZ
19%
M.Larsen
Morten
Larsen
11%
SITA
Norsk
Gjenvinning
35%
Lassila &
Tikanoja
RenoNorden
RenoNorden
30%
19%
~28%RenoNorden
of outsourced
market
RenoNorden
~32% of outsourced
market
RenoNorden
15%
RenoNorden
In Norway, there are two leading operators, namely RenoNorden and Norsk Gjenvinning, whereof RenoNorden
is the largest, having a market share of 57% of the outsourced market (serving 38% of the Norwegian
population in 2016), an increase of 11% since 2013. However, the 2016 market shares exclude the impact of
VeiReno winning the Oslo contract commencing October 2016. VeiReno won the contract on price with a total
bid of NOK 420 million, NOK 129 million below RenoNordens bid and NOK 81 million below Norsk Gjenvinnings’
bid. Adjusting market shares to reflect the outcome of the Oslo contract results in VeiReno’s market share
increasing from 5% of the population served, to 17%. Accordingly, RenoNorden and Norsk Gjenvinning, who
previously shared the contract, concede market share of 6% and 6% respectively. VeiReno now faces the
challenge of executing the Oslo contract in its entirety.
The Swedish market is relatively fragmented, with the top three nationwide private operators (RenoNorden,
SUEZ and Ragn-Sells) making up only 39% of the market. RenoNorden is the market leader with a 19% market
share. The second largest operator is SUEZ, previously SITA, closely followed by Ragn-Sells. Market shares
exclude the Stockholm contract that was split between RenoNorden and SUEZ (where RenoNorden won seven
districts and SUEZ won 4 districts), which come into effect in March 2017. There are signs that the market is
consolidating as smaller private players, such as Liselott Lööf, lost the Stockholm contract (April 2016), SamTek
filed for bankruptcy (April 2016) and Bengt Werpers Åkeri was acquired by SUEZ (2015). Market shares among
the municipality-owned players have remained fairly constant with Renova being the largest municipality-owned
player with 5% market share and most frequently active in the Western parts of Sweden. Other large
municipality owned players are Sysav, SRV and Vafab.
The Danish market is concentrated with the top six players accounting for 85% of the market. The remaining
15% is split between municipalities operating their collection in-house (6%) and smaller local players (9%).
RenoNorden is the largest player, with a 30% market share. The second largest player is MLarsen with a 19%
market share, followed by Meldgaard with a 14% market share. In January 2016, Marius Pedersen acquired
Miljøteam, making them the fourth largest player with a 13% market share. Denmark has the lowest share of
households with four or more fractions collected of the four countries, suggesting potential for further price
development.
6
a) Household, municipal contracts only, excluding Finland which includes commercial contracts.
b) November 2016 Market shares based on population served
c) Marius Pedersen acquired Miljøteam January 1, 2016
Source: Management Information, RenoNorden database and PwC analysis
45
RenoNorden ASA - Prospectus
The Finnish market is dominated by three nationwide operators, RenoNorden, Suez Finland and Lassila &
Tikanoja, with a combined market share of 65%. Hartwall Capital’s acquisition of Suez Finland is expected to be
completed by the end of 2016, but no significant changes in the company’s operations are expected at the
beginning of the ownership. In the capital region, RenoNorden has managed to increase its market share during
2016, from 8% to 11%, whereas Lassila & Tikanoja and Suez have seen their market share somewhat
decrease. Beside the three largest operators, Retena has in 2016 increased its position in the capital region
from 9% to 17%. However, Retena is considered to be a local player and its total market share is 4%.
Top 3 Nordic competitors to RenoNorden
Peer
Services
Waste Mgmt
Industrial
services
Presence
Comments
Finland,
Ambition to become the
operations in
largest recycling company
based provider of
Sweden (facility
Waste and Facility
Other
Latvia and
management
EBIT %
Nationwide in
Facility
services
Listed Finnish
Revenue
mgmt only),
NOK 5.9
billion
6%
in the Nordics. Focusing on
fortifying market position
and bolt-on acqusitions
Russia
The Finnish unit of the Suez
Waste Mgmt
Listed French
global specialist in
securing and
recovering
resources
Industrial
services
Water Mgmt
Other
group (NOK 645 million
revenue in 2015) is to be
>70 countries
sold in late December 2016
with 70% of
revenue in
NOK 137
Europe, present
billion
9%
to Hartwall Capital. Suez
acquired SITA in 2016
increasing their Nordic
in Sweden and
presence. Group has
Finland
focused on inorganic growth
since 2014
Waste Mgmt
PE-owned
Norwegian waste
management
player
Industrial
services
Facility
services
Norway
NOK 4.1
billion
Other
Source: Public company information, company websites and Mergermarket.
46
Focusing on cost reduction
5%
to meet challenging market
conditions
RenoNorden ASA - Prospectus
8
BUSINESS OF THE GROUP
8.1
Overview
8.1.1
Introduction
As shown in the table below, the Group is a leading 7 domestic waste collection services provider, operating
across the Nordic region and headquartered in Frogner in Sørum, Norway. The Group operates primarily in the
household waste collection segment within the wider waste management industry and is the only operator in
this segment that has operations in four Nordic countries. In general, the Group tenders for household waste
collection contracts awarded by municipalities that typically have durations of five to seven years with extension
options for the municipalities for two further years (one plus one).
The Group also sells additional services to its customers, for which additional revenue can be earned, for
example leafleting to residents, cleaning or replacement of bins, or tagging of bins. In Finland, the business
also operates in the commercial waste collection segment (6% of revenue in 2015) for selected clients on a
contracted basis.
As at the date of this Prospectus, the Group employs 2,000 people and has more than 1,000 vehicles of which it
services close to 300 municipalities and over six million inhabitants in Norway, Sweden, Denmark and Finland.
Country
Market position 8
Employees
Vehicles 9
Branches 10
Norway
No. 1
550
352
25
Sweden
No. 1
486
257
17
Denmark
No. 1
732
305
23
Finland
No. 2
Total
240
101
10
2,008
1,015
75
Since establishment, the Group has experienced strong revenue growth, both organically and through
acquisitions. The graphs on the following pages show the revenue, EBITDA and EBITDA margin development for
the Group from 1 January 2014 to 30 September 2016. In 2015, the Group generated revenues of NOK 1,808
million and EBITDA of NOK 291 million (EBITDA margin of 16.1%) 11, compared to the last twelve months prior
to 30 September 2016, revenue of 1,934 million and EBITDA of 255 million (EBITDA margin on 13.2%) 12. See
Section 4.2.2 "Alternative performance measures ("APMs")" for a definition of EBITDA.
The decrease in EBITDA margins is mainly driven by a combination of replacement of high margin contracts
with lower margin contracts and increased competition and price pressure observed within the Group's business
segment.
The recent decrease in EBITDA margins in the last twelve months prior to 30 September 2016, is further
explained by truck delivery challenges in Denmark, in addition to start-up and close-down costs in Sweden. The
Group expects that the EBITDA margins will stabilize in the short term, based on the Group's disciplined
approach to new contracts, and thereafter slightly improve in the medium term.
7
See Section 7.2.7 "The competitive landscape" for market share data.
8
See Section 7 "Industry and market overview" for market share data. Finnish market shares include commercial waste.
9
Table includes asset heavy and operation critical vehicles only. The table does not include smaller units, such as trailers,
company cars, forklifts, tractors and vans. See Section 8.3.3 “Vehicles, fleet management and maintenance” for further details
on the fleet of vehicles.
10
Branches defined as physical locations with ongoing operations. Source: Management.
11
In 2015, the Group's operating profit was NOK 158 million.
12
As of 30 September 2016, the Group's operating loss was NOK 405 million. See the Interim Financial Statements as of 30
September 2016 for more information. See Section 17.3 "Incorporation by reference herein"
47
RenoNorden ASA - Prospectus
The following summarises the recent operational issues and measures taken to address these issues:
•
Tender process: Loss making contracts in Norway is related to tender wins due to miscalculation of
bids, in addition to new and revised estimates for two ongoing contracts in Denmark leading to
estimated losses. Several bids delivered in 2016 was found to have been calculated with insufficient
employee and truck resources. This was caused by a combination of human errors, ex. diesel fuel
costs being omitted from a tender, and overconfidence in the Group's ability to operate complex
contracts with slim resources on the operational and administrative side. To minimize and avoid such
errors in the future, the Group has improved risk assessment and group controlling, established
specific team with key roles and responsibilities in all countries, in addition to introducing database
with key performance indicators ("KPI’s") to support tender processes and avoid human mistakes.
•
Truck deliveries in Denmark: Truck delivery challenges in Denmark has contributed to lower
efficiency and inhibited the implementation of planned route improvements, which has resulted in
higher operating costs than initially planned. To address the issue the Group has renegotiated
agreements and executed on-site refurbishment and some factory refurbishment. To avoid similar
issues going forward, the Group has strengthened procurement routines through implementation of
more stringent routines and recruiting a new Group Procurement Director leading the process.
•
Cost base: New management has identified several cost reducing and efficiency measures. In
addition, the Group has identified potentials through improved route planning and better resource
planning.
The
Group
has
identified
measures
in
the
three
and
nine
months
ended
30 September 2016, which will be incorporated in 2017, which is expected to permanently lower cost
base by a reasonable amount per year. Furthermore, management has increased operational control
through weekly monitoring.
Quarterly and yearly revenue development for the Group 13
NOK million
The Group is exposed to seasonal variances where typically the first quarter of the year is the weakest quarter
due to limited extra collections, such as for waste from vacation houses, and the calendar effect of a short
month of February.
13
LTM means the last twelve months and indicates a period of time from the last twelve months prior to 30 September 2016.
48
RenoNorden ASA - Prospectus
Quarterly and yearly EBITDA and EBITDA margin development for the Group
NOK million
8.1.2
History
RenoNorge (the former name of RenoNorden) was established in 2000 in Norway. At that time, the Norwegian
waste market was dominated by two vertically integrated waste management companies. The core premise of
the Company’s tailored business model, which remains today, was to be a focused, specialist waste collection
service provider to municipalities and to create a niche operator within this segment.
RenoNorden was awarded its first contract in 2001 by the Kongsberg municipality in Norway, and continued
thereafter to grow organically in Norway by successfully winning public waste collection tenders. The Group is
today the largest household waste collection service provider in Norway, in terms of number of households
serviced 14. In 2016, the Group serviced approximately 150 municipalities in Norway and one of every three
Norwegians.
In 2007, RenoNorden was awarded its first contract in Sweden by AOS Skaraborg and continued thereafter to
grow organically in Sweden by successfully winning public waste collection tenders. In 2010, RenoNorden
acquired a Swedish competitor’s assets out of bankruptcy, including its contracts in Stockholm and Malmö. The
Group is today the largest household waste collection service provider in the Swedish market 15, in terms of
number of households serviced.
In 2010, RenoNorden completed the acquisition of the tender division of the household waste collection service
provider Renoflex-Gruppen A/S. Renoflex-Gruppen A/S was at the time a regional operator in the Danish
market, based in Zealand, but provided the Group with a strong platform for further expansion into the Danish
market. In 2011, the Group further strengthened its position in the Danish market through the acquisition of
Nord-Ren A/S in Jutland. Through the acquisition of Nord-Ren A/S, the Group became a national operator in
Denmark and is today the largest household waste collection service provider in the Danish market 16, in terms
of number of households serviced.
RenoNorden entered the Finnish market in December 2013 through the acquisition of HFT Environment. The
Group is today the second largest within the waste collection market in Finland (including commercial waste), in
terms of population serviced, including both household and commercial waste. 17 The acquisition underpins the
Group's position as a leading provider of waste collection services in the Nordics. Further, the acquisition also
marked RenoNorden's first move into commercial waste collection.
14
See Section 7 "Industry and market overview" for market share data.
15
See Section 7 "Industry and market overview" for market share data.
16
See Section 7 "Industry and market overview" for market share data.
17
See Section 7.2.7 "The competitive landscape" for market share data.
49
RenoNorden ASA - Prospectus
RenoNorden was listed on the Oslo Stock Exchange in December 2014, and shortly thereafter completed two
smaller acquisitions of local competitors in Norway and Denmark, respectively.
8.1.3
Organisational structure
The Company is a holding company, and operates through its operating subsidiaries in Norway, Sweden,
Denmark and Finland. The Group Management is set up to reflect the Nordic focus of the Group, and the
majority of the Group's central management works out of the Group’s headquarters in Frogner, Sørum, Norway.
In addition, the Norwegian, Swedish, Danish and Finnish operating subsidiaries have central country
management teams.
The main premise of the business model is that each country shall have core resources in place to be able to
drive its day-to-day operations independently, but such that these resources shall be complemented and
supported by certain key functions which are more efficiently managed centrally for the benefit and support of
the whole Group, such as tendering, fleet management and business development. Aligned KPI reporting across
the Group enables the Group's headquarter to monitor operational performance across geographies.
Within each country, the Group operates a lean and efficient central country management team with a main
focus on adapting the business to national conditions, and to monitor and ensure adherence to the national
regulatory environment. The central country management is also responsible for monitoring and following the
local market through continuous market surveillance, and for preparing and submitting tenders. Monthly profit
and loss performance is monitored and consolidated at country level before submitted to the central Group
management for review. Another key responsibility for the central country management is to assist and aid
branches in the start-up phase of any new contract.
The chart below provides an overview of the central Group management and the central country management.
The Danish country manager Torben Lindholm ends his employment with the Group in March 2017, and a
replacement is hired. For further information on the Group’s Management, see Section 11.3 "Management"
50
RenoNorden ASA - Prospectus
Within each country, the Group operates a network of local branches that manage the day-to-day operations of
Group’s respective customer contracts. Each branch typically has an operational manager (branch manager)
with responsibility to deliver on contracted services on a daily basis, focus on profitability improvements,
expand local business and ancilliary services through close and pro-active customer interaction, to ensure
appropriate fleet maintenance and that the necessary resources are available within the branch or are called
upon from central functions. It is also the branch manager's responsibility to report monthly profit and loss
performance to the central country management. The branch managers are part of a yearly incentive
programme designed to align their incentives with continuously improving the overall performance of the
operations.
In addition to a branch manager, a branch typically consists of waste collection operators and ancillary support
staff. A foreman carries out standard waste collection operations, similar to the other collection operators, but
takes on more of an administrative and coordinating role. The number of collection operators and support staff
per branch depends on the size of the contract, but ranges from 10 to 35. All personnel in the Group are
employed on standard contract terms, appropriate to the position and country in which they are working. The
Group employs the majority of its workforce, which is collection operators, in direct response to the award of a
new contract.
In Norway, the availability of skilled personnel within the automotive and transport sector has been limited in
the recent years. As a result, the Group has required a number of operators from other European countries. All
international staff receives the same compensation as locally-recruited staff. In addition, the Group supports
international staff as they relocate, providing, if appropriate, help with accommodation. RenoNorden requires
that all international workers take local language courses when they begin work. Importantly, much of the
training material and handbooks provided by the Group are available in a range of languages to ensure all
employees have a good understanding of important Group procedures, particularly in relation to health and
safety. In the future, availability of local personnel is expected to improve and the Company anticipates that it
will be able to recruit a greater proportion of new employees domestically also.
In Sweden, Denmark and Finland, the availability of suitable personnel has been less of an issue and the
majority of employees are local.
The predominant salary system for waste collectors is based on a simple model, under which they are paid a
base salary, equivalent to a 37.5 hour working week. In addition, all operators have the ability to supplement
this salary by demonstrating a superior efficiency or competency in their work. This is regulated by the branch
manager. There are examples of variations to the salary system, for example in Denmark and in a few
branches in Sweden. In those branches the waste collectors are paid a performance based salary that is based
on the number of waste collection lifts performed. There is a guaranteed minimum salary for the collectors,
however, the employees are generally paid more than the minimum salary. The actual number of hours a waste
collection operator works varies during the course of the year, depending on factors such as waste volumes to
be collected, road maintenance and winter weather conditions, which affect time used on the routes. The daily
work schedule, with an early start and early finish, is somewhat unorthodox to a typical “nine to five” job.
However, RenoNorden ensures that suitable focus and consideration is placed on the welfare and satisfaction of
its employees. The employee turnover rate in the business, over the past three years, has been approximately
15%. Over the same period, the average short-term sickness rate was approximately 3.0%. Management
believes these figures are lower than market comparable benchmarks.
8.1.4
Customers and markets
The Group's principal customers are municipalities, whom represented 94% of the Group’s revenue in Norway,
Sweden, Denmark and Finland in 2015. Municipalities in the Nordics generally have very strong credit ratings,
which limits the counter-party credit risk exposure of the Group. In 2015, 6% of the Group’s revenue, came
from selected commercial contracts, 100% of which from the Group's operations in Finland. A typical
municipality contract has a duration for five years to seven with extension options for the customer for two
further years (one plus one). The Group also operates shorter contracts for commercial waste in Finland where
the typical contract duration is two to three years.
51
RenoNorden ASA - Prospectus
In accordance with national legislation in Norway, Sweden, Denmark and parts of Finland, municipalities are
required to facilitate collection of household waste from their inhabitants. Most municipalities fulfil this duty by
outsourcing the service to third-party operators such as the Group. These countries have all implemented the
EU Public Procurement Directive and appurtenant regulations in their national legislation, which ensures that
awards of household waste collection contracts by municipalities are made on the basis of transparent public
tender processes.
The Group’s core business activity is the collection and transportation of household waste from households to
designated waste separation and treatment facilities. In Norway, Sweden and Denmark, these facilities are
often owned by the municipalities. With the exception of contracts for commercial waste collection in Finland,
the Group does not assume ownership of the waste during collection and transport and is not pursuant to laws
or regulations imposed such ownership. The Group's operations do not include taking any risk on the secondary
value of the waste it collects as it only collects and transports it for its customers. Furthermore, the Group does
not process the waste and is therefore not exposed to environmental liabilities in the same manner as vertically
integrated waste management companies are.
Household waste collection is a vital service required by municipalities. The demands of inhabitants to receive
the most seamless and least intrusive service, coupled with growing regulatory, environmental and
technological requirements, places increasing obligations on waste collection operators. RenoNorden believes
that the Group, with its scale and position in the Nordic market, is well positioned to meet customized and
innovative solutions in the future.
In Finland, the household waste market is split between areas where the municipalities facilitate collection of
household waste, like in Norway, Sweden and Denmark and areas where the households contract with
collection providers directly. The Group primarily operates within the former section of this market. In Finland,
the Group also has certain commercial contracts with customers under which it provides collection services
similar to the services it provides to municipalities, but for light commercial waste.
8.2
Geographic presence
RenoNorden is present in Norway, Sweden, Denmark and Finland and is headquartered in Frogner, Sørum
approximately 30 km north of Oslo.
In 2015, the Norwegian operations accounted for approximately 34% of the Group's total revenues and 30% in
the last twelve months prior to 30 September 2016, making it the Group's largest market. The Group has
increased its presence in both Sweden and in particular Denmark, both by way of organic growth, through
winning contract tenders, and as a result of acquisitions. As of 30 September 2016, Denmark was the Group's
largest market both in term of revenue and number of employees. The Group entered the Finnish market in
December 2013 by acquiring the then third largest operator in the Finnish waste collection market (in terms of
number of households serviced), HFT Environment. The Swedish, Danish and Finnish operations accounted for
approximately 23%, 32% and 16% of the Group’s total revenues in the last twelve months prior to 30
September 2016, respectively. The Group is now the largest household waste collection operator in the Nordic
region, and a market leader in Norway, Sweden and Denmark, in terms of households served 18.
The chart below depicts the Group's geographic presence.
See Section 7 "Industry and market overview" for market share data.
18
52
RenoNorden ASA - Prospectus
RenoNorden locations across the Nordics
8.2.1
Norway
The Group has a total of 25 branch offices in Norway. RenoNorden believes it has built up a strong reputation
and track record in the 16 years that it has been in operation in this country. From the award of its first
contract in 2001, the Group has grown significantly and currently, as of the date of this Prospectus, operates 35
contracts in Norway.
8.2.2
Sweden
The Group has a total of 17 branch offices in Sweden. The Group won its first contract in Sweden from AOS
Skaraborg in 2007 and began operations in Sweden in 2008. The Group has since grown steadily in Sweden.
In August 2016, the Group was awarded seven out of eleven contracts in Stockholm. However, an appeal was
made by three competitors and the contracts were thus not signed. On 26 January 2017, the appeal was
rejected by The Administrative court of appeal in Stockholm (Sw: Kammarrätten i Stockholm), and the
contracts are planned to be signed on 10 February 2017 unless a new appeal is made to the higher juridical
instance.
Sweden is the Group’s largest market, and the Group’s third largest segment, in terms of revenue. The Group is
of the opinion that it has built a strong reputation and track record during the eight years it has been in
operation in this country. From the award of its first contract in 2007, the Group has grown significantly and
currently operates 38 contracts in Sweden.
8.2.3
Denmark
The Group has a total of 23 branch offices in Denmark. The Group entered the Danish market in January 2010
through the acquisition of the household waste collection division of Reno-Flex-Gruppen A/S. In March 2011,
RenoNorden completed its second acquisition in Denmark, acquiring the shares of Nord-Ren A/S. Nord-Ren
operated contracts in the North Western region of Denmark and therefore presented a good complementary fit
with the Group’s other operations. Through these acquisitions and further tender awards, the Group has
become the largest operator in Denmark, in terms of number of households serviced, and is currently operating
a total of 43 contracts in 36 municipalities.
53
RenoNorden ASA - Prospectus
8.2.4
Finland
The Group has 10 branch offices in Finland. The Group entered the Finnish market by acquiring the then third
largest waste collection operator, HFT Environment. The Finnish household waste collection market is operated
in a different setting than the other Nordic countries, in several ways. In Finland, the household waste market
is split between areas where the municipalities facilitate collection of household waste, similar to Scandinavia,
and areas with free markets. In free market areas, households normally can select service operator amongst
two to three operators with license to operate in a specific region. Households enter into contracts with the
service operator directly. The Group primarily operates within the former section of this market. In some
contracts the Group must pay gate fees to the waste facility.
8.3
Operating model
8.3.1
RenoNorden's operating model
RenoNorden provides waste collection services primarily to municipalities and inter-municipal companies in the
Nordic region, based on contracts that are secured through highly regulated and transparent tender processes.
The Group has a niche focus and operates the majority of its contracts itself with leased or owned vehicles, and
with its own employed staff. In some contracts, the Group does collect some waste from businesses or more
industrial-type operations, such as hospitals, care homes or schools as well as from recycling and collection
stations. However, this is mainly waste that is similar to household waste rather than hazardous waste or
specially-treatable items. In Finland, where the Group operates a commercial waste collection in parallel with
municipal waste contracts, waste collection from business and industrial-type fractions represent a meaningful
share of the total revenues. These commercial clients are typically customers, such as hotels, owners of office
buildings and shopping centres.
The operating model is based on having a diversified contract portfolio, comprising of:
•
many relatively small contracts, where a single contract represent a limited part of the total
revenues;
•
contracts with different expiry dates spanning a number of years;
•
contracts with municipalities, which retains ownership to the waste lifted and bears the responsibility
for the disposal; and
•
contracts with selected counter-parties that are not municipalities.
The Group operates in a niche segment of the Nordic waste management value chain, as depicted in the chart
below.
54
RenoNorden ASA - Prospectus
This niche segment is characterised by an established and stable regulatory environment, including:
●
Municipal responsibility for collection. Municipalities in the Nordics are in general legally responsible
to collect domestic waste. Since household waste collection is believed to be a non-vital basic public
service, these services are largely outsourced.
●
Public and transparent tender processes. The EU Public Procurement Directive, and national
legislation implementing the Directive, requires public authorities to tender services which have a
value in excess of EUR 209,000 in public and transparent processes. This secures transparent tender
processes on equal terms. An awarded contract gives the service provider monopoly in the collection
area.
●
Consumer relationships being managed by the municipalities. It is primarily the municipalities who
manage consumer relationships, i.e. the relationship with the households, such as with respect to
complaints. Only in limited cases in Denmark, it is the responsibility of the waste-collection operator
to manage customer complaints and similar day-to-day issues.
●
Municipal waste ownership and processing. In general, with exception of Finland, it is the
municipalities that own the waste collected, and it is also the municipalities that represent most of
the processing capacity. Therefore it is limited, or no, economic incentive to collect waste volume
other than for the logistic service revenues, and collectors do not take on volume risk or substantial
environmental liabilities.
8.3.2
Description of the operational processes for commercial collection
The process of winning and operating a commercial contract follows a similar structure as a municipal contract.
Initially, a contact is established with a potential customer for which the Group performs a situation review of
their current waste management set-up including, but not limited to, location of facilities, number of fractions,
potential volumes, waste bin set-up, and suitable collection frequency. The Group then details a proposal for a
service delivery, detailing material flows, collection schemes and total cost level, before negotiating the contract
with the prospective customer. After a contract is signed, the Group initiates the preparation phase and verifies
that the internal organisation has the delivery capacity needed, or engages with required sub-contractors. In
parallel, internal accounting and statistical systems are prepared to track the performance of the upcoming
service delivery.
After the service has been delivered for 1-2 months, the Group and the client meets in a start-up evaluation
meeting to verify to what extent the Group has delivered services to expected levels. This type of service
review meeting typically occurs throughout the length of the contract with frequencies adapted to the contract
size, to ensure tight collaboration with larger customers. These review meetings also offer the opportunity for
additional add-on sales, for example adding additional waste fractions or volumes, statistical performance
reports, or consultative services.
Well in advance of a contract reaching its expiry date, the Group engages with the customer to promote
extension of the agreement so it is not made subject to competitive tenders.
8.3.3
Vehicles, fleet management and maintenance
8.3.3.1
Vehicles overview
As of November 2016, the Group had a total vehicle fleet of 1,229 vehicles, including reserves. Of these, 1,015
vehicles were classified by the Group as asset heavy and operation critical. The remaining 214 vehicles were
smaller and less operational critical vehicles, including company cars, vans, forklifts, etc.
All vehicles used for standard household waste collection services have vehicle bodies with modules customised
for waste collection. The vehicle body has a waste container that is usually equipped with a compactor. The
waste container may contain up to four chambers, depending on the number of waste fractions that are
transported, including paper and plastics in separate chambers. Some vehicles are equipped with cranes for
lifting waste containers, and some with suction equipment designed for sub-terrain containers.
55
RenoNorden ASA - Prospectus
The majority of the vehicles in the Group's fleet are on financial leases and most of its waste collection vehicles
are sourced from Scania, Mercedes and Volvo. Compactors are delivered by separate suppliers, with volumes
being split mainly between NTM, Joab and GeesinkNorba.
The majority of the Group's vehicles are diesel-fuelled. However, tender specifications, and increased
environmental focus has led to the inclusion of a number of LNG-fuelled vehicles, delivered by Mercedes and
Scania, in the fleet. As of November 2016, 181 of the vehicles were LNG-fuelled.
The Group continues to work with its main suppliers continuously to further develop and optimise the
technology in the vehicles. Often, changes and modifications are made to support increased efficiency and to
prevent personnel injuries or damage to the equipment.
The chart below shows the Group's fleet of vehicles, split by country and type as of November 2016. The charts
include the entire fleet of 1,229 vehicles.
RenoNorden locations across the Nordics
No Trucks
56
RenoNorden ASA - Prospectus
The charts below provides certain selected data on vehicles in the Group's fleet:
Type
Main specifications
Brands
Comprimator
831 vehicles
• 2-4 axels
• Normally 15-26 tons
• Main brands: Scania,
Mercedes and Volvo
• Main vehicle for waste collection
• Primarily rear-end loading
Side feed comprimator
18 vehicles
• 2-4 axels
• Main brands: Scania and
Volvo
• Used for collection of waste bins
lifted and emptied on the side of
the vehicle
• Used mainly in Sweden
Flatbed truck
29 vehicles
• 2 axels
• Up to 8 tons
• Main brand: Mercedes
• Used for collection of various
types of containers
• Mainly used in Norway and
Denmark
Other heavy units
36 vehicles
• 2-4 axels
• Main brands: Scania and
Volvo
• Different types of vehicles used
for collecting and moving
different types of material
Other
smaller units
214 vehicles/units
•
•
•
•
•
•
•
•
8.3.3.2
Picture
Company cars
Trailers
Lift trucks
Pick-up vehicles
Tractors
Vans
Fork lifts
Other vehicles
• Different types of vehicles used
for collecting and moving
different types of material
Fleet management
Group fleet management, which is part of the central Group management, is responsible for setting the overall
strategic direction with respect to the the fleet.
RenoNorden has focused on developing a strong relationship with a limited number of vehicle suppliers. The
Company believes that this contributes to the Group's ability to buy vehicles with shorter delivery schedules
than otherwise would have been the case, thus supporting flexibility with regard to planning and contract startup. In some cases, where there is a short lead-time between contract award and start-up, beneficial delivery
schedules for new vehicles can be a competitive advantage.
Given the nature of the contracts that the Group is awarded, the Group generally does not need to acquire
vehicles until it has won the contract. As a result, the Group has historically been able to purchase its vehicles
entirely through debt financing. This provides the Group with good flexibility to grow the business, without
requiring significant equity resources. The average price per vehicle vary with specification of each contract, but
higher technological requirements from customers lead to higher capex, which today is approximately NOK 1.5
- 2.0 million for a fully equipped vehicle.
The fleet is primarily financed through bank debt and financial leases. Historically, start-up investment has been
in the area of 80-100% of the first-year contract revenues in Norway and Sweden, with somewhat less
investment in Denmark (in the area of 60-70% of first-year contract revenues) and Finland (approximately
80% of the first-year contract revenues). Leases are typically at a 1.5 - 2.3% margin with a five to ten year
duration. RenoNorden’s current financing strategy for its vehicles is to primarily use financial leasing.
Historically, this has not always been the preferred option and currently close to 49% of the heavy asset fleet
are owned by the Group while 51% of the fleet of vehicles are currently financed through leases. As the Group
intends to use financial leasing as the primary source of financing going forward, the share of leased vehicles
and vehicles is expected to increase.
57
RenoNorden ASA - Prospectus
8.3.3.3
Maintenance
The high standard of the Group's vehicles and high level of maintenance and care that are given to the Group's
vehicle fleet contributes to the Group's reputation, in the opinion of the Company. Waste collection
operators must leave their vehicles in a good and clean state at the end of each shift. Light maintenance,
such as washing, greasing and oiling is carried out on-site, on a weekly basis. The Group always secures ample
space and facilities for vehicle maintenance and parking at its premises.
All maintenance costs are accounted for in the profit and loss statement. Operating cost relate to replacement
of spare parts of tyres, maintenance service and repairs, etc.
As a result of the Group’s maintenance practice, the Group intends to reuse vehicles in new contracts when it is
possible. However, changes in the contract criteria requested from the municipalities, particularly in relation to
environmental or technical changes, can mean that the Group chooses, or is required, to replace vehicles
earlier. At the end of their useful life for the Group, the vehicles are sold on to third parties or returned to the
supplier. The average age of the current vehicle fleet, which is used in connection with the operation of
contracts (1,015 heavy asset vehicles), was 5.9 years as of November 2016 19.
8.4
Overview of a typical public tender process in the Nordics for household waste collection
contracts
8.4.1
Tender submission process
The following chart depicts a typical tender process in the Nordics for household waste collection contracts.
Overview of the formal tender process
Tender invitation
Tender
meeting
Award letter
distribution
Tender
collection
Complaint
period
Contract
signing
Pursuant to the EU Public Procurement Directive, and national legislation implementing the Directive, all public
authorities are required to hold tender processes, when acquiring services from a third party with a total value
above EUR 209,000. Generally, the Group's customer contracts are of a value above this threshold.
Municipalities increasingly make use of specialised procurement consultants to assist them in tender processes.
This means that the Group is often facing a specialised procurement consultant rather than the municipality
that is submitting the tender. Dealing with a counterparty that is specialised in the tender process contributes
to a smoother process, and the risk of potential open issues in the final contract is reduced. All tender
invitations are made public at the start of a process. In Denmark, Norway, Sweden and Finland, tender
invitations (regarding procurements with a value above EUR 209,000) are published on Tenders Electronic
Daily, an electronic journal containing tender invitations from the EU and the EEA. All tender invitations in these
countries are also published on mercell.com or Doffin.
A tender process may include a pre-qualification phase. In such tender processes, the tender invitation will
specify the relevant pre-qualification criteria a potential bidder will need to satisfy before being allowed to
submit a bid for the contract.
The exact criteria and documentation required to be presented in a pre-qualification process will vary, but will
often cover financial stability, track record in previous contracts operated and qualitative assessments of the
assets and resources available. This pre-qualification process allows municipalities to continue to assess tenders
on the merits of the actual bid that they submit, but provides them with more safety and certainty that the
services delivered will be of an appropriate standard.
19
Includes asset heavy and operation critical vehicles only, and not include smaller units, such as trailers, company cars,
forklifts, tractors and vans.
58
RenoNorden ASA - Prospectus
The tender documents, provided in connection with the tender invitation, give an overview of existing waste
collection operations and any modifications or extensions to the operations that are anticipated in the new
contract. Information provided in the documents typically covers a description of demography, road network,
expected volumes, and offer instructions. In some instances, electronic maps are also supplied. In addition, the
main terms of the contract are given and the service level requirements are specified. These include tolerance
levels for deviations, vehicle equipment, IT demands etc. Bidders will typically be asked to provide a bid based
on a unit price per waste container per collection. The tender documents will also specify the criteria upon
which the tender offers shall be evaluated. A common precondition in tenders is that the waste volumes to be
collected by the operator may increase or decrease by 10% to 20% without additional changes in operator
compensation level. For large contracts, this may correspond to one or several additional trucks and at least as
many drivers. Such volume changes may lead to suboptimal capacity utilization of the additional resources with
negative effect on total contract profitability.
Once a tender process is made public, the municipality will typically offer the opportunity for participants to
raise questions in relation to the tender within a given time frame. In Norway and Denmark, this is more
commonly done through a public tender meeting. During a public tender meeting, the municipality presents the
basis for the tender contract, and the interested parties are able to participate in a Q&A session. The minutes
from such meetings will become a part of the final contract. In Sweden, it is more common to submit written
questions, which are then answered by the municipality within a given deadline. The answers to these written
questions will, in the same way as minutes from public tender meetings, become a part of the final contract.
The tender process for commercial business in Finland follows a less rigid structure and allows for more
dialogue regarding potential solutions. The first step is a site visit to the potential customer where the Group’s
service offering is presented and suitable approaches to meeting the client’s need is discussed. Thereafter, a
detailed mapping of the customer’s units and locations are performed to verify the scope and limitations of the
assignment. The Group then submits a proposal to the prospective customer detailing service level and price
position, where a discussion with the customer follows and improvements are made to the proposal. In
instances where the Group competes for the business against competitors, the client’s decision process is
typically longer than in non-competitive situations. The full tender process typically takes approximately 2-4
months in Denmark, Sweden and for household contracts in Finland, 3-10 months in Norway and 1-3 months
for commercial contracts in Finland.
The process of submitting tenders is subject to strict regulation and tender documents are usually required to
be delivered either digitally or in hard copy, within a specified date and time.
8.4.2
Tender award process
Price remains the main purchase criteria in the majority of contracts. However, other factors have become
relevant in the evaluation of bids, particularly where no pre-qualification round has been undertaken. These can
include specific requirements for new types of technology, more environmentally-friendly equipment, but often
also include more qualitative factors, concerning track record, reputation and ability to deliver on target.
Once the award letter is sent out, there is typically a short stand-still period (usually 10 days), during which the
competing bidders may request information or appeal the decision. The contract is then signed after the standstill or potential appeal process. If the decision is appealed, the contracting municipality processes the appeal
first, and if the municipality’s conclusion is also appealed, then this is sent further to the relevant complaints
authority.
In Norway, complaints are handled by the Norwegian Complaints Board ("KOFA"), where complaints processes
often take between 2-3 months to resolve. In Sweden, complaints are filed to The Administrative Court
(Swedish: "Förvaltningsrätten") and in Denmark complaints are filed to The Danish Business Authority (Danish:
"Klagenævnet for udbud"). In Finland, complaints are filed to the Market Court (Finnish: "Markkinaoikeus,
Marknadsdomstolen"). Unless the complaint is successful, the complaint process will typically not affect the
start-up of a contract, as the read-time from the award of the contract to actual start-up normally is more than
three months.
59
RenoNorden ASA - Prospectus
8.4.3
Contract signing
Once final approval of the service provider has been given, a contract meeting is typically held, where
supplementary information relevant to the award may be provided. Small changes to the contract may be
made. However, once a bidder has been selected, the terms of the contract are not negotiable, as this would
change the basis for the tender contest.
Approximately 85% of the Group's contracts are entered into for a period of five years or longer, and most
contracts have a total duration of seven years. Approximately, 21% of the Group’s contracts have a duration of
longer than seven years. These usually include an option to extend the contract with two years (one plus one)
at the discretion of the municipality. It is very rare, in the experience of the Company, that the options on its
contracts is not exercised. The Group’s extension track record is very high. This is often due to the reluctance of
municipalities to enter into the long and onerous tendering process more frequently than necessary.
The contracts usually specify an initial annual contract price, which is commonly calculated on the basis of an
agreed price per unit and an estimate of the number of units that are to be served. The initial contract price is
commonly subject to two adjustment mechanisms. Firstly, the estimated unit numbers are usually adjusted
periodically, often on a monthly (for example in Norway and Finland) or quarterly (for example in Sweden)
basis to adjust for changes in the workload of the contract, e.g. due to changes in the number of households.
Secondly, the unit price on which the contract is based is usually adjusted on an annual basis in accordance
with monthly, or in Denmark, and in some contracts in Sweden, quarterly, index changes, typically changes in
specific cost indices for waste transportation provided by the National statistics agencies. These unit price
increases match the underlying cost increase, and does not drive an increase in profitability. Most contracts in
Norway, Denmark and Finland are indexed at full value, while a portion of the contracts in Sweden offer a 8090% indexation and some contracts in Sweden, standard indexation. Contracts will also typically include a
penalty regime, which commonly allows for a reduction in the service providers’ remuneration if certain predefined quality standards are not met or if collection is delayed. This is in use in all the Nordic markets, and
favours operators, such as the Group, who have a strong focus and track record of quality in delivery. Penalty
levels at the Group are considered low.
The Group typically invoices customers with a 30 day notice period. The Group is of the opinion that its working
capital requirements are low. Historically, working capital has been fluctuating between 5% and 10% of last 12
months revenues.
8.5
Description of the Group's business model
In the process of tendering for and operating a contract that has been won, there are four key stages. The
Group’s success in securing and effectively operating a contract is dependent on thorough understanding,
planning and execution in each of these stages.
8.5.1
Tendering
The process, starting from market surveillance and receiving tender documents for a new contract and ending
when the contract is awarded, can be categorised in three steps:
i. Initial contract analysis. The tender documents, describing the current waste collection system and any
potential changes, are reviewed by RenoNorden before a public hearing regarding the tender that is held. After
the hearing, RenoNorden starts analysing the tender contract. When considering tendering for a prospective
contract, RenoNorden makes an assessment of its strategy in the area in question and sets an internal priority
for winning the contract.
The geographic area for the new contract is inspected. During the inspection period, several factors are
evaluated, such as geography, collection distance, location of any containers, population density, terrain and
manning requirements. Any deviances from the “normal” conditions, such as population density, location of
dumpsites and recycling stations are noted and evaluated. Other factors, such as proximity to suitable
garage/mechanic facilities and fuel stations, are also considered.
60
RenoNorden ASA - Prospectus
ii. Production planning. Further to the initial contract analysis, a simulation of the potential operation is
performed, based on a wide array of input factors such as number of waste bins and waste type per area, kilos
per bin, and number and type of vehicles. A production plan is created based on the capacity analysis, with a
separate route plan for each vehicle, taking into consideration tonnage and number of bins. The ability to
navigate different kinds of terrain is also considered in the route planning process and the suitability of selected
vehicle types is assessed. Optimising the production plan is essential to winning contracts, in order to make
sure that RenoNorden is able to price its offer as competitively as possible.
iii. Stress testing. To further improve the Group’s competitiveness, shadow-bids are developed primarily in
large tenders to estimate potential approaches used by competitors. For large tenders, the Group may also
assign an additional tender team based in another country to develop a competing bid based on a “clean slate”
approach. This facilitates an open discussion on contract limitations and counteracts relying on only tried-andtested approaches. The decision on how to structure the final bid is taken jointly by the tender manager, line
management, and senior management using all available input from different production scenarios, shadow
bids, and other implications.
All necessary documentation is carefully reviewed before being physically delivered to the municipality within
the timeframe allowed.
To over time build a more solid understanding of how the approaches and actual advantages of competitors,
the Company performs detailed post-award analyses of competitors bid. As information submitted to public
tenders are public domain, the Group has the right to obtain certain insights into competitor bid levels.
8.5.2
Contract start-up
RenoNorden has developed significant experience in how to prepare for the start-up of new waste collection
contracts most efficiently. This includes routines and documents for hiring the desired workforce, route
planning, as well as pre-job and on-the job training.
After the Group has won a tender, the process starts for hiring a branch manager. The manager is usually local
and therefore familiar with the contract area. Branch managers typically have a background from the wider
transportation industry or from other industries with an emphasis on similar practical business fundamentals.
The branch manager has a key role in setting up the new branch, to ensure that the branch can be run as
autonomously as possible once the operation of the contract is up and running. Together with the Group’s
central management, the branch manager is responsible for finding suitable premises, hiring a local team of
collectors and participating in internal training according to the Group's standards.
Obtaining and allocating the correct vehicle fleet for the contract remains a responsibility for the central office.
However, the branch manager is responsible for liaising with the central office during the lifetime of the
contract and for ensuring that the maintenance and standard of the vehicles is upheld.
In areas where the Group takes over a contract from a competitor, an information meeting is held and all
competent and willing workers are invited to apply for a job with the Group. The Group is not obliged to employ
the workers and the proportion of workers transferred varies from contract to contract. Workers transferred
typically have in-depth, existing knowledge of the area concerned and the job requirements, and this therefore
makes the application and training process for such employees quicker.
The Company has route planners with the explicit role to continuously optimise and improve the route
scheduling. Route scheduling remains a central function, but once the contract has begun, branch managers
will often also provide input to this optimisation process as well as to re-optimise throughout the contract
lifetime, as required.
61
RenoNorden ASA - Prospectus
8.5.3
Operation of contract
Focus and attention on the operation of the contract is a critical element in the Group’s business model, to
maximize profitability over the contract's lifespan. An important element in achieving margin improvement is
continuously working with reducing the cost level of local contracts and uncovering opportunities for further
revenue and profit generation. This is driven by the line management whereby the local branch manager is
responsible for optimising department profitability and is incentivised by the level of profit generation.
RenoNorden believes that its customers recognise the quality of its services, and great emphasis is placed on
ensuring that this level of quality is maintained throughout its contract portfolio. RenoNorden has defined its
own targets for regularity of service and customer satisfaction. All instances of deviations from the desired
quality are logged and reported, in order to measure whether the targets are reached. Deviations (both
frequency and type) are key factors in a municipality’s overall assessment of the performance of the Group.
One of RenoNorden's main quality targets relates to the number of missed or unsatisfactory collections. It is the
responsibility of the branch managers to rectify any deviations from quality targets for a contract as quickly as
possible. Internal training programmes, well-developed systems for quality assurance, internal manuals and
thorough job descriptions are methods used to contribute to quality. Waste collection operators are
continuously evaluated on their performance, with a greater regularity of follow up during the first few weeks of
employment to ensure that routes are followed correctly and that all collections are made. Routines with
regards to internal controls, vehicle maintenance and all health, safety and environment issues are included in
the quality assurance system.
See Section 8.12 "Regulations" for more information on the certifications in Norway, Denmark, Sweden, and
Finland.
8.5.4
Closing of contracts
As a contract reaches its expiration date, it is the responsibility of the branch manager to initiate the
discontinuation of operations; provided, of course, that RenoNorden has not re-won the tender. The branch
manager reviews that all contractual requirements with the customer has been met, and starts planning for
closing the branch by discontinuing rental, utilities, subcontractor, and other relevant agreements. Vehicles and
other equipment are either reassigned to other contracts to maximise the useful lifetime, or sold on the open
market to the highest bidder.
In order to motivate the workforce to continue delivering the daily operations, different incentive schemes are
usually considered to maintain the workforce throughout the full contract lifetime.
8.6
Order reserves
As of 30 September 2016, the Group had an order reserve of approximately NOK 5.0 billion, excluding
customer extension options, and NOK 7.5 billion including customer extension options. It is very seldom for the
options on a contract not to be exercised. The charts below depict the Group's total order reserve, divided by
year and country.
Order reserves as per September 2016
NOK million
62
RenoNorden ASA - Prospectus
The Group calculates order reserves by adding annual revenue from ongoing or newly awarded contracts and
assumes it remains the same for the duration of the initial fixed term. For the avoidance of doubt, the revenues
are not adjusted for price or volume changes, including indexation. Option values are calculated in the same
manner, running from expiry fixed term to final date, assuming all the extension options are exercised. The
order backlog assumes local currencies, converted to NOK at fixed exchange rates throughout the period of
NOK:SEK= 0.9768, NOK:DKK=1.2428 and NOK:EUR=9.2897.
Typical contract duration varies across regions. Average contract length including extension of options in
Norway of 7.8 years, Sweden of 7.0 years, Denmark of 6.2 years and 5.0 years for municipal contracts in
Finland.
The actual amounts of revenues earned and the actual periods during which revenues are earned may differ
from the amounts and periods shown above due to various factors. Revenues earned under the Group’s
customer contracts are generally based on unit prices agreed at the time of execution of the contract. The
customer may under a contract with the Group require the Group to collect a higher or lower volume than
initially set out in the contract, or to increase or decrease the collection frequency, on the basis of these unit
prices. The revenues the Group earn under a contract is accordingly affected by, among other things, the
amount of waste the customer require the Group to collect and transport in the geographical area covered by a
contract, which again is affected by the amount of waste generated in that area. Other factors that may cause
order reserves not to be realised include unit price adjustments, revenue deduction due to daily penalties
imposed by the customer, termination of any contract or lack of use of any extension option by any customer,
counter-party credit and other risk and exchange rate fluctuations. Hence, the Company can provide no
assurance that the Group’s current order reserves will be ultimately realised. See Section 2 “Risk Factors” for
more information.
8.7
Key strengths
RenoNorden believes that the Group's future prospects for success are enhanced by the following aspects of its
business:
•
Niche focus and industry fundamentals support steady and sustainable market growth. Waste
collection is an essential service that is largely governed by entrenched EU and local legislation. The
established and stable regulatory environment in the Nordics does not, in the opinion of the
Company, benefit vertically integrated waste management companies.
The Group operates in strong growing economies with increasing waste volumes and increaseing
waste fractions, as further discussed in Section 7 "Industry and market overview". A long-term trend
is that municipalities outsource more waste collection services, where Sweden and Norway represent
the biggest opportunities for growth in the addressable market. The Group’s growth is driven by the
increasing GDP and populations within all four countries it operates, as well as increased contract
complexity driving contract values.
•
Attractive business model with long-term contracts, strong counter-parties and order reserve. As
further elaborated in Section 8.6 "Order reserves", the Group, as at 30 September 2016, had an
order reserve of approximately NOK 5.0 billion, excluding customer extension options, and NOK 7.5
billion including customer extension options. It is very seldom for the options on a contract not to be
exercised and the Group’s extension track record is good. The Group’s long-term municipal contracts,
which typically have durations of five years with extension options of two further years (one plus
one), provide good revenue visibility. The portfolio of contracts currently held by the Group protects
against large movements in the year to year profitability. Because muncipalities in the Nordics
generally have strong credit ratings, the Group has a limited counter party risk exposure. For more
information about the specifics of the muncipal contracts in relation to the Group's revenues, see
Section 8.1.4 "Customers and markets".
63
RenoNorden ASA - Prospectus
Apart from historical acquisitions, close to all of the Group's capital expenditure is related to purchase
of vehicles in connection with initiation of new and renewal of contracts, which is typically lease
financed. Capital expenditure in connection with a contract is principally incurred when a contract is
secured, which enables attrative financing through leases and debt, and maintenance capital
expenditure is limited. Given the financing level of new capital expenditure related to operating a
contract, most new contracts have a positive net cash flow from the first year of operation. See
Section 8.3.3 "Vehicles, fleet management and maintenance" for more information about the Group's
start-up expenditure in the Nordics in comparance with first-year contract revenues.
Efficient operational set-up with local focus on contract management, operations and profit
•
optimisation. RenoNorden’s niche focus enables a lean organisation with a decentralized structure
and local responsibilities and incentives. RenoNorden places a large part of it success on the ability to
engage and create strong local departments. The local departments are the main point-of-contact
with the customers and the users of the Group’s services. RenoNorden differentiate itself by
delegating a large portion of the responsibility for the individual contracts to the branch managers.
This includes the responsibility for financial and commercial interests. Group profitability is generated
in each local contract with its specific preconditions and dedicated local management is critical. Local
management is expected to understand changes in run-rate levels and implement changes to
counter for unwanted developments. To do this the Group has invested in operational systems
allowing quick and flexible reporting monitoring monthly profit and loss development as well as main
key performance indicators, including fuel, maintenance, sick leave, etc. The focus is on development
of key cost drivers and outliers versus budget targets. A stringent and more centralized governance
model ensures that local changes are quickly reported to the central Group management level, so
that additional Group resources can be allocated if appropriate. The branch managers report monthly
to regional managers, who report to central country managers – who in turn reports to the Group
CEO. Branch managers are incentivised with bonuses tied to target realisation of both financial and
action plan targets.
A market leading Nordic operator. The Group is the largest household waste collection operator in
•
Norway, Sweden and Denmark, and the second largest operator in Finland for household and
commercial waste collection (not including the private waste collection market in Finland) 20. With its
Nordic presence, the Group is positioned to explore benefits from scale including among others
leverage from a large truck fleet, structured sourcing strategies of compactors, bins etc, procurement
savings, IT solutions and the ability to establish central support functions for local branches.
Scale benefit and flexible cost structure tied to contracts. The Group's cost structure is flexible in
•
terms of employee costs and operating expenses as these costs are in practice related to actual
municipality contracts. Furthermore, the Group continuously focuses on strict cost control through
scale benefits and local ownership programs in order to keep focusing on operational improvement
initiatives.
8.8
Strategy
RenoNorden’s key priorities in the short to medium term consist of measures to improve and secure a sound
platform for the business going forward. Currently the company is implementing a cost reduction and efficiency
program for the entire business to further drive up the profitability and competitiveness by relooking at its
procurement efficiencies, deployment of vehicles, allocation of employees and route optimisation for all
contracts. The key priorities in the short to medium term are summarized though the following:
•
Operational control and management. Focus on improving daily operational control and cost
management at the local branch level.
•
Prioritize margins over volume. With recent operational issues and new loss-making contracts
commencing in 2017 and phase out of high-margin contracts, the Group will focus on preserving and
improving margins for current operations, rather than targeting aggressive volume growth. Measures
include improvements in local contracts, review of cost structure and organizational realignment with
the aim to increase margins.
20
See Section 7 “Industry and Market Overview” for market share data.
64
RenoNorden ASA - Prospectus
•
Predictable execution of order backlog. As part of increased emphasis on margins, the Group will
concentrate on current backlog and contracts to secure stability of the business. This will free up
resources and enable the Group to direct efforts towards operational issues and increasing margins.
•
Disciplined approach to new contracts. Clear financial targets and risk assessment routines to avoid
human mistakes. This includes implementation of standardized internal processes and systems that
secure continuous control and risk assessment in all tender processes across all four countries.
Furthermore, procurement routines will be strengthened to avoid additional start-up cost in relation to
delayed deliveries and other similar procurement issues.
8.9
Legal proceedings
From time to time, the Company and other companies in the Group are involved in any major litigation,
disputes and other legal proceedings arising in the normal course of its business. It is common in the industry
to be involved in legal disputes in terms of public procurement processes that are challenged either by the
Group or its competitors. This should be seen as part of the day to day business and the Group is well
experienced in these processes.
Neither the Company nor any other company in the Group is, nor has been, during the course of the preceding
12 months involved in any legal, governmental or arbitration proceedings which may have, or have had in the
recent past, significant effects on the Company's and/or the Group's financial position or profitability. The
Company is not aware of any such proceedings, pending nor threatened.
8.10
Contracts outside the ordinary course of business
Neither the Group nor any member of the Group has entered into any material contracts outside the ordinary
course of business for the last year prior to the date of this Prospectus. Further, the Group has not entered into
any other contract outside the ordinary course of business which contains any provision under which any
member of the Group has any obligation or entitlement.
8.11
Property and plants
The Group does not own any real property or plants.
8.12
Regulations
8.12.1
Overview
The Group's operations are subject to numerous regulations including, but not limited, to regulations
concerning labour and employment, transportation, traffic, pollution of air and water, health, safety and
environment. Non-compliance by Management or the Group’s employees may result in fines, penalties or a
decrease in reputational standing, which could reduce the demand for the Group’s services and hurt its
business and results of operations.
The nature of the Group's business related to public tender processes requires the Group to follow and comply
with strict public procurement rules, see Section 8.4 "Overview of a typical public tender process in the Nordics
for household waste collection contracts". In addition, the Group must hold licenses and permits for
transportation for goods on public roads. Since the Group primarily deliver a collection and transportation
service there are few specific waste environmental regulations it needs to comply with other then those related
to transportation.
8.12.2
Transportation and other licenses and permits
In Norway, RenoNorden AS holds a permit allowing it to transport waste in Norway. Such permits are granted
by the transport authority of Akershus Fylkeskommune to a specific person employed in the company.
In Denmark, RenoNorden A/S holds a permit allowing it to transport goods in Denmark. Such permits are
granted by the Danish Transport Authority.
In Sweden, RenoNorden AB holds (i) a permit allowing it to transport goods in Sweden, (ii) a permit allowing it
to transport waste and dangerous goods in Sweden, and (iii) a permit allowing it to operate its washing facility.
65
RenoNorden ASA - Prospectus
In Finland, the license requirements for the Group’s business differ from the requirements in Norway, Sweden
and Denmark. According to Finland's environmental protection legislation, permits are needed for all activities
involving the risk of pollution of air and water, or soil contamination. The Group is of the opinion that it holds all
permits in Finland relevant for the Group’s operations, which is (i) a permit for transportation of goods in
Finland, (ii) entries into the waste management registers of the Finnish Environmental Protection Authority in
the municipality within which collection occurs, and (iii) certain other environmental permits for temporary
storage of separately collected bio waste and bio waste transfer depots.
8.12.3
Environmental, health and safety matters
The Company is of the opinion that it operates materially in accordance with current legislation on
environmental, health and safety matters applicable to the Group, and the Group continuously works to
proactively anticipate changes in such legislation. The Group allocates significant resources to secure that it
operates in accordance with laws that are generally applicable to it, but also industry-specific regulations.
The Company is of the opinion that the Group operates in compliance with the national regulations and
legislation related to the working environment in each country. This applies to the physical as well as the
psychological working environment. The Group strive to promote the employees’ health for the benefit of
themselves and the Group.
The Group is working hard to make improvements to the environment, employees and ensure high quality to
the customers. The Group’s policy on climate and the environment is to (i) minimise the impacts on the
environment from vehicles and other activities, (ii) inspect equipment systematically to ensure unintended
consequences on the environment, and (iii) continuous improvement of environmental performance.
8.12.4
Quality control and certifications
The Group holds several quality control and certifications in relation with its operations. Several of these are
required by municipalities for the Group to be able to participate in public tenders and some are related to
RenoNorden’s ambition to be in the forefront of environmental and safety responsible companies.
In Norway, the Group holds the following independent third party certifications: NS-EN ISO 9001 (Quality
Management), NS-EN ISO 14001 (Environmental Management System) and SN-BS OHSAS 18001 (Working
Environment Management System).
In Sweden Denmark and Finland, the Group holds the following independent third party certifications: ISO 9001
(Quality Management) and ISO 14001 (Environmental Management System). In addition to these certifications,
Denmark and Finland also hold OHSAS 18001:2008 (Working Environment Management System).
8.13
Insurance
The Group holds various operating insurance policies covering employees' accidents and travel, damage to
property, general liability, legal expenses (including tax litigation), loss and damage from natural disasters,
business disruption, transport, cars and claims made directly at its directors and officers.
The Company considers the Group to be adequately covered with regard to the nature of the business activities
of the Group and the related risks in the context of available insurance offerings and premiums. The
Management regularly reviews the adequacy of the insurance coverage. However, no assurance can be given
that the Group will not incur any damages that are not covered by its insurance policies or that exceed the
coverage limits of such insurance policies.
8.14
Research and development, dependency on contracts, patents and licenses
The Group has no research and development, patents or licenses that are material to its business or
profitability.
It is the Company’s opinion that the Group’s existing business or profitability is not dependent upon any
contracts.
It is further the opinion of the Company that the Group’s existing business or profitability is not dependent on
any patents or licences.
66
RenoNorden ASA - Prospectus
9
CAPITALISATION AND INDEBTEDNESS
The information presented below should be read in conjunction with the other parts of this Prospectus, in
particular Section 10 "Financial and other information" and the Financial Statements and Interim Financial
Statements and the notes related thereto, incorporated by reference hereto, see Section 17.3 "Incorporation by
reference".
This Section provides information about the Group's unaudited consolidated capitalisation and net financial
indebtedness on an actual basis as at 30 September 2016 and, in the “As adjusted 30 September 2016”
columns, the Group's unaudited consolidated capitalisation and net financial indebtedness as at 30 September
2016, on an adjusted basis to give effect to the completion of the Rights Issue raising net proceeds of NOK 330
million in new equity through the issuance of the Offer Shares, and approximately NOK 20 million in transaction
costs as if this transaction had happened on 30 September 2016.
Other than as set forth as above, there has been no material change to the Group’s unaudited consolidated
capitalisation and net financial indebtedness since 30 September 2016.
9.1
Capitalisation
In NOK million
As of 30
As adjusted 30
September
September
2016
20166
Indebtedness1
Total current debt:
Guaranteed .............................................................................................................
Secured2 .................................................................................................................
105
Unguaranteed and unsecured ....................................................................................
Total non-current debt (excluding current portion of long-term debt):
Guaranteed .............................................................................................................
Secured3 .................................................................................................................
519
Unguaranteed and unsecured4 ...................................................................................
759
Total indebtedness ................................................................................................
1,383
Shareholders’ equity
Share capital ...........................................................................................................
27
Legal reserve5 .........................................................................................................
247
357
Other reserves .........................................................................................................
Total shareholders’ equity.....................................................................................
Total capitalisation................................................................................................
274
604
1,657
1,987
1
The table includes interest bearing debt.
2
Current leasing obligation secured in the vehicles totalling NOK 105 million.
3
Non-current leasing obligation secured in the vehicles totalling NOK 519 million.
4
Long-term bank borrowings of NOK 759 million is unsecured with the subsidiaries as mutual guarantors.
5
Legal reserve included additional paid in capital of NOK 501 million, currency translation reserve of NOK 17 million and
retained earnings NOK (271 million).
6
The adjustment includes the share capital increase in connection with the issuance of the Offer Shares in the amount of
NOK 330 million and the estimated expenses in the amount of NOK 20 million.
67
RenoNorden ASA - Prospectus
9.2
Net financial indebtedness
In NOK million
As of 30
As adjusted 30
September
September
2016
20164
(A)
Cash ..............................................................................................................
-
(B)
Cash equivalents .............................................................................................
149
(C)
Trading securities ............................................................................................
(D) Liquidity (A)+(B)+(C) ..................................................................................
330
149
479
(E) Current financial receivables ........................................................................
(F)
Current bank debt............................................................................................
(G) Current portion of non-current debt1 ..................................................................
105
(H) Other current financial debt ..............................................................................
(I)
Current financial debt (F)+(G)+(H) ..............................................................
(J)
Net current financial indebtedness (I)-(E)-(D) .............................................
(K)
Non-current bank loans3 ...................................................................................
(L)
Bonds issued ...................................................................................................
(M) Other non-current loans2 ..................................................................................
(N) Non-current financial indebtedness (K)+(L)+(M) .........................................
(O) Net financial indebtedness (J)+(N) ..............................................................
105
(44)
(374)
759
519
1,278
1,234
1
Current leasing obligation secured in the vehicles totalling NOK 105 million.
2
Non-current leasing obligation secured in the vehicles totalling NOK 519 million.
3
Long-term bank borrowings of NOK 759 million is unsecured with the subsidiaries as mutual guarantors.
4
The adjustment reflects the net proceeds from the Rights Issue (based on the assumptions set out above the tables).
9.3
904
Working capital statement
The Company is of the opinion that the working capital available to the Group is sufficient for the Group's
present requirements, for the period covering at least 12 months from the date of this Prospectus.
9.4
Contingent and indirect indebtedness
As at 30 September 2016 and as at the date of the Prospectus, the Group did not have any contingent or
indirect indebtedness, except for the off-balance sheet arrangements described in Section 10.7 "Off-balance
sheet arrangements".
68
RenoNorden ASA - Prospectus
10
FINANCIAL AND OTHER INFORMATION
10.1
Financial Statements and Interim Financial Statements
The Interim Financial Statements and the Financial Statements have been incorporated by reference hereto,
see Section 17.3 "Incorporation by reference herein". The Financial Statements have been audited by KPMG, as
set forth in their report included therein. The Interim Financial Statements have not been audited.
The Interim Financial Statements have been restated to correct errors that originated in the second quarter of
2016 ended 30 June 2016. In connection with the contract reviews in the three and six months ended 30 June
2016, the Company should have shortened its estimated useful lives for all vehicles and decreased its residual
values for some of its vehicles. The impairment review and impairment tests performed were incomplete, and
did not take into consideration an increase in the estimated discount rates and that some vehicles already were
not in use. The correction of these errors led to an increase of the depreciation for this time period. The Interim
Financial Statements issued 19 December 2016 replaces the interim financial statements ended 30 September
2016, which was dated in the interim financial report as of 8 November 2016 and published 9 November 2016.
As a consequence, the interim financial statements issued in the report of 9 November 2016 and the report of
16 August 2016, should not be read without the restated Interim Financial Statements.
The Group's retroactive adjustment of the Interim Financial Statement to reflect the correction of errors related
to impairment of goodwill, write-downs of certain vehicle assets and changes in estimates related to
depreciation of vehicle assets and onerous contracts is further described in note 5 to the Interim Financial
Statement and Section 10.3 "Recent developments and trends".
The net loss for the nine month period ended 30 September was increased by NOK 221 million, and the loss
before tax increased by NOK 242 million. The pre-tax adjustments were as follows:
•
In accordance with IAS 36, the Group has recognized additional impairment losses related to goodwill
in Denmark and Norway of combined NOK 148 million; and
•
Following increased changes in technological requirements in contracts, the Group has in the three and
six month period prior to 30 June 2016 seen that the value at the end of the contract period is limited
for certain older vehicle groups. This has led to a write down of book value for these groups to
expected recoverable amount. Furthermore, the review revealed that some of the trucks were already
taken out of use as of 30 June 2016 and had a carrying value higher than expected sales price less
cost to sell at that time, which required that an immediate impairment is recognized. In addition,
estimated useful life of vehicles is reduced to 10 years, also due to the increased technological change.
The write down at 30 September 2016 amounted to NOK 71 million and increase in depreciation of
NOK 16 million.
•
Recalculating the depreciation time has also led to a change in the provision for the loss on onerous
contracts in Denmark, with an accumulated net impact on loss before taxes of NOK 7 million.
10.2
Auditor
The Company's auditor is KMPG AS, Sørkedalsveien 6, NO-0306, Oslo, Norway. KPMG's partners are members
of The Norwegian Institute of Public Accountants (Nw.: Den Norske Revisorforening). KPMG has been the
Company's auditor since 11 August 2011. The Financial Statements of the Company as of 31 December 2015,
and for the year then ended, have been audited by KPMG, and the auditor's report is included together with the
Financial Statements as incorporated hereto, see Section 17.3 "Incorporation by reference". KPMG has not
audited, reviewed or produced any report on any other information provided in this Prospectus.
69
RenoNorden ASA - Prospectus
10.3
Recent developments and trends
The Group is exposed to macroeconomic trends in Norway, Sweden, Denmark and Finland. Basic data on the
macroeconomic situation in the Nordic countries is presented in Section 7 "Industry and Market Overview". In
general terms, the level of waste generation is connected with rates of economic growth and the
macroeconomic situation. Moreover, macroeconomic conditions have significant influence on the levels of
disposable income of population and consumption. Level of consumption affects total volume of waste
generated in the Nordics, and therefore affects the Group’s business. However, it should be noted that these
changes are slow and affect the Group’s operations in the long-term. In general, the Group operates in strong
growing economies which underpin a steady development in waste volumes. Waste collection in the Nordic
countries is an essential service largely governed by entrenched EU and local legislation. The Nordic market
structure does not benefit vertical integration – the municipalities own the waste and most of the processing
capacity. There is a long-term trend of municipalities outsourcing more waste collection services to the private
sector, and where Sweden and Norway seem to represent the biggest opportunity.
The Group’s development is dependent on the level of domestic waste collection contract renewals/tenders in
the market each year. While this defines the amount of the addressable market that the Group can target in
order to grow its market share each year, it also highlights the level of market share the Group needs to
defend, i.e. own contracts to renew/re-win. The level of contracts coming to the market in each country each
year fluctuates, depending on the renewal dates on the individual contracts and this tender rate is further
influenced whether the underlying contracts are extended or not. The mix of new and renewing contracts and
the Group’s success rates in each will have an impact on the Group's operations, financial performance and
financial position. These trends are relevant for the current financial year of 2017.
Since 31 December 2015 and until the date of the Prospectus, the Group has experienced operational issues,
delivering results below the Group’s expectations. The current Management of the Group has taken significant
measures to improve the operations of the Group.
Below is an overview of the material developments in the Group's business since 31 December 2015:
1.
Operations: The Group has experienced a decrease in EBITDA and operating profit driven by expired
high margin contracts, continued operational challenges related to new contracts and investments
into strengthening the organisation.
2.
Provisions made for onerous contracts: Based on significant deviations between the Group's bid
prices on contracts won in Norway, compared to prices from competitors, the current Management
and Board of Directors decided to initiate a thorough review of the contracts won between December
2015 and June 2016 together with an external consultant. The Group identified six onerous contracts
in Norway and two onerous contracts in Denmark, which according to IAS 37, totalled NOK 166
million in losses. The losses were calculated based on best estimation of future income and
unavoidable costs (measured at discounted value) related to each contract. The contracts run for
periods from five to ten years, assuming that the municipalities exercise the options for
prolongations. The loss includes write down of assets related to the contracts. The identified losses in
Norway are mainly for contracts not yet started. Consequently, the full amount of NOK 166 million is
classified as provisions in the financial statement as of 30 September 2016 and in the line item "loss
on onerous contracts" in the statement of comprehensive income. Reclassifications will be made
when the corresponding assets are acquired to reduce the carrying value of such assets. In Denmark,
new and revised estimates for ongoing contracts have led to the estimated losses. The split between
provision and write down of assets (where applicable) will be performed as part of recalculation of
the contracts at year end.
3.
Impairment: Goodwill in the Norwegian and Danish segment were impaired NOK 239 million and
equipment by NOK 71 million as of 30 June 2016.
4.
Reduced depreciation time and reduced residual values of the Group's vehicles led to increased
depreciation.
5.
Financing: The Group has invested NOK 263 million in Vehicles as of 30 September 2016, financed
by lease arrangements.
70
RenoNorden ASA - Prospectus
Except from the above, there have been no significant changes in the financial or trading position of the Group
since the date of the Interim Financial Statements, which have been incorporated by reference hereto, see
Section 17.3 "Incorporation by reference".
10.4
Investments
10.4.1
Principal historical investments
The table below shows the principal historical capital expenditures and investments of the Group for the nine
months ended 30 September 2016, as split by country.
Norway
Sweden
Leased vehicles ....................................................................
17
50
128
36
Other..................................................................................
9
12
4
7
32
Total..................................................................................
26
62
132
43
263
In NOK million
Denmark
Finland
Total
231
For the nine month period ended 30 September 2016, total capital expenditures amounted to NOK 263 million,
mainly relating to the acquisition of vehicles in connection with project start-ups or renewals.
The Group has sold vehicles for NOK 11 million in the nine month period ended 30 September 2016.
The table below shows the principal historical capital expenditures and investments for the period between
1 October 2016 to 30 November 2016, split by country.
Norway
Sweden
Denmark
Finland
Leased vehicles ....................................................................
38
18
0
11
67
Other..................................................................................
1
2
0
3
6
Total..................................................................................
39
20
0
14
73
In NOK million
Total
The timing of the investments fluctuate depending upon the number of contracts in the different countries for
the different months. Norway has had no major deliveries of new vehicles in the first nine months ended
30 September 2016, as opposed to Denmark and Sweden. Norway experienced a larger delivery in vehicles for
October and November 2016. Finland has had more ongoing investments throughout the first eleven months of
2016 ended 30 November.
There has been no principal capital expenditures or investments since the date of the Interim Financial
Statements and to the date of this Prospectus, except for purchase of equipment with capital expenditure of
NOK 73 million as of end of November 2016 as included in the table above.
10.4.2
Principal investments in progress and planned principal investments
The Group's investments are primarily related to investments in new vehicles and relevant add-on acquisitions.
Generally the Group will only make an investment in vehicles following the award of a binding new waste
collection contracts 21. As such, investments in new vehicles can fluctuate, depending on the level of additional
contracts awarded in the next years. Furthermore, the Management opportunistically explores new
opportunities to accelerate growth through small acquisitions of companies offering regional or competitive
advantages or synergies, in line with the Group's policy. The Group intends to finance all future capital
expenditures from a combination of cash on hand, cash generated from operations, bank facilities and lease
arrangements.
As mentioned, the Group has a policy of investing in new vehicles based on signed sales contracts. As such,
investments in new vehicles can fluctuate, depending on the level of additional contracts awarded in the next
years. These investments are expected to be funded through financial lease agreements. There is normally a
period of six to nine months from contracts are won until the investments are made. For known new contracts
(excluding Stockholm) and renewals, the Group expect to invest approximately NOK 300 million in leased
vehicles in 2017.
21
See Section 8.3.3.2 "Fleet management".
71
RenoNorden ASA - Prospectus
Except from the commitments mentioned in Sections 10.4 "Investments" and 10.6 "Contractual cash
obligations and other commitments", the Group has no significant committed future investments as of the date
of this Prospectus.
10.5
Material indebtedness
As of 30 September 2016, the Group had finance lease obligation with a book value of NOK 624 million 22 and
the Senior Facility with booked value of NOK 759 million.
On 10 November 2014, the Group refinanced its Senior Facility and entered into new bank facilities agreements
with DNB Bank ASA and Danske Bank A/S as lenders (the Senior Facility) for a NOK 620,000,000 multicurrency
term loan facility and a NOK 350,000,000 multicurrency revolving credit facility.
Senior Facility
The Senior Facility was entered into on 10 November 2014 by the Company as parent, certain of the Company's
subsidiaries as original borrowers and/or guarantors, and DNB Bank ASA and Danske Bank A/S, Norwegian
branch, as original lenders. The Senior Facility comprises a NOK 620,000,000 multicurrency term loan facility
and a NOK 350,000,000 multicurrency revolving loan facility, of which NOK 150,000,000 is reserved for one or
more ancillary guarantee facilities. The term loan facility and the revolving credit facility have a term of five
years from the signing date. The Senior Facilities were used to refinance the existing bank facilities.
The Senior Facilities provide that the Group's leverage ratio, i.e. the consolidated total net debt to consolidated
EBITDA shall not be higher than 5.0x, and that the Group’s interest coverage ratio, i.e. consolidated EBITDA to
net finance charges, shall be no less than 4.0x.
The interest on each loan for each interest period is the percentage rate per annum which is the aggregate of
(i) the applicable margin (being 2.00% with respect to the term loan facility and 1.75% with respect to the
revolving loan facility) and (ii) the relevant interbank offered rate.
There is no mandatory repayment on the Senior Facility until the termination date on 10 November 2019, but
the borrowers may repay the Senior Facility more rapidly than set forth in the Senior Facility without any
premium or penalty, except for break costs in the event of prepayment in the middle of an interest period.
If a change of control (triggered by either (i) the acquisition or gain of control of more than 50.00% of the
issued Shares and/or voting shares of the Company by any person or group of persons acting in concert, or (ii)
a delisting of the shares of the Company), or (iii) a sale of all or substantially all of the assets of the Group,
occurs, the lenders have the right to cancel the commitments with 30 days' notice and declare the outstanding
loans (together with accrued interest) immediately due and payable
The following maturity profile and estimated interest costs for the Senior Facility are based on a 1.7% NIBOR
on average for the term of the loan:
In NOK millions
2016
2017
2018
2019
Repayment (revolving loan facility) ..................
-
-
-
-
Repayment (term loan facility) ........................
-
-
-
(620.0)
(620.0)
Total repayments ........................................
-
-
-
Estimated interest (revolving loan facility).........
2.5
2.5
2.5
2.1
Estimated interest (term loan facility) ...............
24.5
24.5
24.5
21.1
Total interest ..............................................
26.9
26.9
26.9
23.2
Assumptions:
A commitment fee of 40% of the applicable margin applies to the revolving credit facility.
10.6
Contractual cash obligations and other commitments
10.6.1
Operating lease payments
22
See the Interim Financial Statements incorporated by reference hereto, see Section 17.3 "Incorporation by reference".
72
RenoNorden ASA - Prospectus
The Group has branch offices under operating leases in Norway, Sweden, Denmark and Finland, and leases
some operating equipment under operating leases. The following tables set out the Group's future
commitments of lease payments, for years and branch offices, respectively, under operating leases based on a
standard rental period, with payments (i.e. fixed rental costs) under 1 year, 1-5 years, after 5 years, as of
31 December 2015.
The table below includes an overview of the Group's commitments in connection with operating leases for the
Group’s operating equipment:
As of
31 December
2015
In NOK millions
Within 1 year ........................................................................................................
6,982
1-5 years .............................................................................................................
5,930
After 5 years ........................................................................................................
80
Total commitments relating to operating leases ................................................
12,992
As of 30 September 2016, the remaining commitments under the Group's operating leases of vehicles and
similar were approximately NOK 9 million. See Section 10.7 "Off-balance sheet arrangements".
The table below includes an overview of the Group's commitments in connection with the operating leases for
the Group’s offices:
As of
31 December
2015
In NOK millions
Within 1 year ........................................................................................................
18,602
1-5 years .............................................................................................................
26,686
After 5 years ........................................................................................................
5,825
Total commitments relating to operating leases ................................................
51,114
As of 30 September 2016, the remaining commitments under the Group’s operating lease contracts related to
branch offices were approximately NOK 69 million, an increase following renewal of branch office leases. See
Section 10.7 “Off-balance sheet arrangements”.
10.6.2
Finance lease payments
The Group also has finance leases relating to vehicles. The following table sets out the Group’s net future lease
payment obligations under such finance leases, with payments within 1 year, 1-5 years, after 5 years, as of
31 December 2015.
As of
31 December
2015
In NOK millions
(IFRS)
Within 1 year ........................................................................................................
93,774
1-5 years .............................................................................................................
351,331
After 5 years ........................................................................................................
100,592
Total of future lease payments................................................................................
545,666
Future finance charges on finance lease liabilities ......................................................
(41,306)
Present value of future minimum lease payments .....................................................
504,360
10.7
Off-balance sheet arrangements
The Group's off-balance sheet arrangements as of 30 September 2016 were as follows:
•
The remaining commitments under the Group's operating lease contracts related to branch offices
are approximately NOK 69 million.
73
RenoNorden ASA - Prospectus
•
The remaining commitment under the Group's operating leases of vehicles and similar are
approximately NOK 9 million.
•
Commitments related to contracts with subcontractors which vary in length from one to eight years,
and relate to operational services.
Bank guarantees of approximately NOK 147 million, issued as collateral for the fulfilment of the Group's
obligations under their contracts with municipalities.
10.8
Related party transactions
There have been no significant changes to the related party transactions as described in note 21 to the
Financial Statements following 31 December 2015 until the date of this Prospectus.
10.9
Significant change
There have been no significant changes in the financial or trading position of the Group since the date of the
restated Interim Financial Statements for the nine months ended 30 September 2016, which have been
incorporated by reference into the Prospectus, see Section 17.3 "Incorporation by reference".
74
RenoNorden ASA - Prospectus
11
BOARD OF DIRECTORS, MANAGEMENT AND CORPORATE GOVERNANCE
11.1
Introduction
The General Meeting is the highest authority of the Company. All shareholders in the Company are entitled to
attend and vote at General Meetings of the Company and to table draft resolutions for items to be included on
the agenda for a General Meeting.
The overall management of the Group is vested in the Company's Board of Directors and the Group's
Management. In accordance with Norwegian law, the Board of Directors is responsible for, among other things,
supervising the general and day-to-day management of the Group's business ensuring proper organisation,
preparing plans and budgets for its activities monitoring that the Group's activities, accounts and assets
management are subject to adequate levels of control and undertaking investigations necessary to perform its
duties.
The Board of Directors has two sub-committees: an audit committee and a remuneration committee. In
addition, the Company's Articles of Association provides for a nomination committee.
The Management is responsible for the day-to-day management of the Group's operations in accordance with
Norwegian law and instructions set out by the Board of Directors. Among other responsibilities, the Company's
chief executive officer (the "CEO"), is responsible for keeping the Group's accounts in accordance with
prevailing Norwegian legislation and regulations and for managing the Group's assets in a responsible manner
and ensuring adequate internal control frameworks are implemented. In addition, the CEO must according to
Norwegian law brief the Board of Directors about the Group's activities, financial position and operating results
at a minimum of one time per month.
11.2
Board of Directors
11.2.1
Overview of the Board of Directors
The Company's Articles of Association provide that the Board of Directors shall consist of a minimum of three
and a maximum of seven Board Members. The current Board of Directors consists of seven Board Members, as
listed in the table in Section 11.2.2 "The Board of Directors" below.
The composition of the Board of Directors is in compliance with the independence requirements of the
Norwegian Code of Practice for Corporate Governance, last updated 30 October 2014 (the "Norwegian
Corporate Governance Code"), meaning that (i) the majority of the shareholder-elected members of the
Board of Directors is independent of the Company's Management and material business contacts, (ii) at least
two of the shareholder-elected Board Members are independent of the Company's main shareholders
(shareholders holding more than 10% of the Shares in the Company), and (iii) no members of the Company's
Management serves on the Board of Directors.
The Company's registered business address, Lindebergvegen 3, N-2016 Frogner, Norway, serves as the c/o
address for the Board Members in relation to their directorship of the Company.
As at the date of this Prospectus, none of the Board Members holds any options or other rights to acquire
Share.
11.2.2
The Board of Directors
The names and positions, current term of office and shareholding of the Board Members as at the date of this
Prospectus are set out in the table below.
Name
Position
Served since
Term expires
Shares
Erik Thorsen ........................... Chairman
2014
AGM 2017
0
Charlotte Gaarn Hansson ......... Board Member
2014
AGM 2017
3,000
Niklas Nikita Sloutski1 .............. Board Member
2011
AGM 2017
0
Penelope Kate Briant2 .............. Board Member
2011
AGM 2017
42,000
Ingvild Huseby........................ Board Member
2016
AGM 2017
0
Johan Eriksson ........................ Board Member
2016
AGM 2017
0
Markus Metyas........................ Board Member
2016
AGM 2017
0
75
RenoNorden ASA - Prospectus
1
Sloutski is not independent of the Company's main shareholder, Accent.
2
Briant holds Shares in the Company through Drayton 2000, a trust under which Briant is a beneficiary. Briant is not independent of the
Company's main shareholder, CapVest.
11.2.3
Brief biographies of the Board Members
Set out below are brief biographies of the current Board Members and the additional Board Members, including
their relevant management expertise and experience, an indication of any significant principal activities
performed by them outside the Company and names of companies and partnerships of which a Board Member
is or has been a member of the administrative, management or supervisory bodies or partner in the previous
five years (not including directorships and executive management positions in subsidiaries of the Company).
Erik Thorsen, Chairman
Erik Thorsen is chairman of the board of directors of Metallkraft AS, Biotec Pharmacon ASA, Ålø AB and
Northstar AB. Mr. Thorsen has over 25 years of experience in Norwegian and international trade and industry.
Previously, Mr. Thorsen held the position as President & chief executive officer of REC ASA for four years, after
nine years as President and chief executive officer of Tomra Systems ASA. Mr. Thorsen holds a BSc in
Economics from the University of Karlstad, along with studies in mathematics and naval engineering from the
University of Oslo and the Royal Norwegian Naval Academy. Mr. Thorsen is a Norwegian citizen, and resides in
Norway.
Current directorships and senior management positions .... Metallkraft
AS
International
(managing
AS
director
(board
and
member),
chairman),
Biotec
Metallkraft
Pharmacon
ASA
(chairman), Ålø AB (chairman), Northstar AB (chairman), Envipco AS
(board member), Evinco AB (board member) and Toleko AS
(founder, managing director and chairman).
Previous directorships and senior management positions
last five years .............................................................. Eltek ASA (chairman) and Zeropex AS (chairman).
Charlotte G. Hansson, Board Member
Charlotte Hansson is managing director at MTD KB (MorgonTidigDistribution) and member of the board of
directors of Orio AB, DistIT AB (listed), B&B Tools AB (listed), BE Group AB (listed) and Formpipe Software AB
(listed), as well as the founder of Scandinavian Insight Consulting AB. Hansson has more than 15 years of
industrial experience from the transportation and logistics industry and ten years' experience from bio tech and
life sciences. In addition to holding a MSc in Market Economics from IHM in Stockholm, Charlotte Hansson holds
a Cand. Scient. in Biochemistry from the University of Copenhagen. Mrs. Hansson is a Danish and Swedish
citizen, and resides in Sweden.
Current directorships and senior management positions .... Orio AB (board member), B&B Tools AB (listed) (board member), BE
Group AB (board member), DistIT AB (listed) (board member),
Formpipe
Distribution
Software
AB
AB
(board
(managing
member),
MTD
Morgontidig
director) and Scandinavian
Insight
Consulting AB (founder and owner).
Previous directorships and senior management positions
last five years .............................................................. Co-Pilot Bygg & Projektledning (chairman) and Jetpak Group AB
(commercial director and managing director).
Niklas Nikita Sloutski, Board Member
Mr. Sloutski is chairman of the board of directors of Hoist Group AB, as well as member of the board of
directors of Accent Equity Partners AB and Scandic Hotels Holding AB. Mr. Sloutski is also managing director
and Partner of Accent Equity Partners AB, the investment advisor of the general partners of Accent Equity
Funds. Mr. Sloutski holds an MSc in Business and Economics from the Stockholm School of Economics, a
Certificate in Business Administration from Edinburgh Business School and course diplomas in finance from
Harvard University and law from Stockholm University. Mr. Sloutski is a Swedish citizen, and resides in Sweden.
Current directorships and senior management positions .... Hoist Group AB (board member),, Scandic Hotels Holding AB (board
member), Southpaw CEP AB (board member), Northpaw Capital AB
(board member) and Accent Equity Partners AB (managing director,
board member and partner).
Previous directorships and senior management positions
last five years .............................................................. Aviator Airport Alliance Europe AB (board member), Candyking
Holding AB (board member) and Eurowrap A/S (board member).
76
RenoNorden ASA - Prospectus
Penelope Kate Briant, Board Member
Kate Briant is chairman of the boards of directors of the IBA Molecular Group (GLO Holdco SCA and various
other subsidiaries), as well as a member of the Board of Directors of the Company, Mater Private Healthcare
and Valeo Foods. Kate Briant is a partner of CapVest Associates LLP and a partner of CapVest Partners LLP, as
well as a limited partner of CapVest Equity Partners II LP and CapVest Equity Partners III LP and affiliated
partnerships and co-investment vehicles. Kate Briant holds a Bachelor of Commerce and an Accounting Honours
from the University of Cape Town, South Africa. Kate Briant is a Chartered Accountant (CA(SA)), registered
with the South African Institute of Chartered Accountants and she is registered with the Financial Conduct
Authority United Kingdom. Kate Briant is a South African and British citizen, and resides in the UK.
Current directorships and senior management positions .... Partner of CapVest Partners LLP and CapVest Associates LLP, Limited
partner of CapVest Equity Partners II LP and CapVest Equity
Partners III LP, affiliated partnerships and co-investment vehicles,
MP Healthcare Holdings and various other group companies (board
member), Ukuthemba Foundation Limited (board member), Valeo
Foods Group Limited and various other subsidiaries of Valeo Foods
(board member) and GLO Holdco SCA and various other group
companies (board member).
Previous directorships and senior management positions
last five years .............................................................. Vaasan & Vaasan Oy (board member), Scandi Standard AB (publ.)
(board member and chairman) and IP Powerhouse (board member).
Ingvild Huseby, Board Member
Ingvild Huseby has 20 years as responsible for business operations in growth and market entry cross Europe,
and
13
years
as
an
independent
board
member
(NED).
Huseby's
industry
experience
covers
telecom/IT/broadband, utility and security. Huseby holds an MSc in Physics Science/Chaos Theory, Nuclear
Physics from the University of Oslo and has several master of management programs in International Business
(Babson, BI, IMD, INSEAD). Huseby is a member of ecoDa (Europe), Norwegian Board Institute (NO) and Board
Networks (DK), organizations working for best practises corporate governance in listed companies. Ingvild
Huseby is a Norwegian citizen, and resides in Norway.
Current directorships and senior management positions .... Opegarden
AS
(managing
director),
Renonorden
ASA
(board
member), inApril AS (chairman), Connect Østlandet (chairman) and
Berggård Amundsen & Co AS (board member).
Previous directorships and senior management positions
last five years .............................................................. Nokas Cash Handling AS (managing director of CMS Norway and
business unit director of CMS International), Pearl Consulting AS
(board member) and Komplett Group ASA (board member).
Johan Eriksson, Board Member
Mr. Eriksson is President & Chief Executive Officer at Transcom Worldwide AB (publ.) since 2011. Before joining
Transcom, he has been President & Chief Executive Officer of Poolia AB, Chief Operating Officer of Loomis AB
(publ.) and Divisional President of Securitas Cash Handling Services. Mr. Eriksson holds a BSc in Business
Administration and Economics from Karlstad University. Mr. Erikson is a Swedish citizen, and resides in
Sweden.
Current directorships and senior management positions ............ Transcom World Wide AB (publ.) (managing director and
president), incl. subsidiaries.
Previous directorships and senior management positions last
five years ............................................................................ Scan Coin Holding AB (board member).
77
RenoNorden ASA - Prospectus
Markus Metyas, Board Member
Mr. Metyas is co-founder and managing director of Caldec Holding, a privately owned investment holding based
in Hamburg, Germany. He has over 27 years of experience as a private equity investor in business service
companies, as a manager and as a banker. Previous experience includes 9 years as Chief Financial Officer of
QSC AG, Germany, a publicly quoted IT/telecom-infrastructure and service company and 11 years as
Investment Banker in European M&A and German equity capital markets. Metyas holds a business degree (Lic.
Oec.) from St. Gallen Graduate School of Business, Switzerland. Markus Metyas is a German citizen and resides
in Germany.
Current directorships and senior management positions ............ Caldec Holding GmbH (managing director) and Caldec Consult
GmbH (managing director).
Previous directorships and senior management positions last
five years ............................................................................ Caldec Holding GmbH Hamburg Germany (managing director)
and Caldec Consult GmbH (managing director), Cologne.
11.3
Management
11.3.1
Overview
The Group's management team consists of seven individuals. The names of the members of the Management
as at the date of this Prospectus, and their respective positions, are presented in the table below:
Employed
with
the Group
Name
since
Current position within the Group
Performance
share rights1
Shares
Harald Rafdal................. Chief Executive Officer
2016
0
0
Øystein Disch Olsrød ...... Chief Financial Officer
2015
0
0
2016
6,000
0
Peter Ekholm ................. Country Manager Sweden
2011
29,061
13,375
Torben Lindholm ............ Country Manager Denmark
2010
80,742
18,786
Jukka Koivisto ............... Country Manager Finland
2002
165,814
17,221
Andreas Westin .............. Head of Business Development
2014
0
13,375
Ingrid Therese Tjøsvold .. Chief
Operations
Officer
and
Country
Manager Norway
1
Please see Section 11.4 "Long-term incentive program" for more information on performance based rights
The Company's registered business address, Lindebergvegen 3, N-2016 Frogner, Norway, serves as the
business address for the members of the Management in relation to their employment with the Group.
Except from the above mentioned performance based rights, and as of the date of this Prospectus, none of the
members of the Management holds any options for Shares in the Company.
11.3.2
Brief biographies of the members of the Management
Set out below are brief biographies of the members of the Management, including their relevant management
expertise and experience, an indication of any significant principal activities performed by them outside the
Company and names of companies and partnerships of which a member of the Management is or has been a
member of the administrative, management or supervisory bodies or partner the previous five years (not
including directorships and executive management positions in subsidiaries of the Company).
Harald Rafdal, Chief Executive Officer
Harald Rafdal has been the Chief Executive Officer of RenoNorden ASA since 1 April 2016. Prior to his
appointment as CEO, he held the position as CEO of Mesta AS from 2008 to 2015. Mesta is a Norwegian
government enterprise delivering services within construction, modification and operation of roads. Prior to the
position as CEO of Mesta AS, Rafdal had a broad international experience within several industry sectors, such
as oil & gas, shipbuilding, shipping and project-related businesses, mainly for Kvaerner and Aker. Rafdal holds a
Master of Business and Marketing from the Norwegian School of Management (BI). Rafdal is a Norwegian
citizen and resides in Norway.
Current directorships and senior management positions ............ None.
78
RenoNorden ASA - Prospectus
Previous directorships and senior management positions last
five years ............................................................................ Mesta AS (managing director) and chairman of several
companies within the Mesta group.
Øystein Disch Olsrød, Chief Financial Officer
Øystein Disch Olsrød has been the CFO of RenoNorden ASA since November 2015. Prior to this, he worked as
chief financial officer for Tide ASA and Green Reefers ASA. He has held several different positions in
accounting/finance, consultancy and as managing director. Mr. Olsrød holds a Master in Accounting and
Auditing and is State Authorised Public Accountant. Mr. Olsrød is a Norwegian citizen, and resides in Norway.
Current directorships and senior management positions ............ None.
Previous directorships and senior management positions last
five years ............................................................................ Tide ASA (chief financial officer), Tide Verksted AS (board
member), Tide Bus Danmark A/S (board member) and Green
Refers ASA (chief financial officer).
Ingrid Therese Tjøsvold, Chief Operations Officer and Country Manager
Ingrid Therese Tjøsvold has been the country manager of RenoNorden AS in Norway since May 2016, and was
appointed COO from September 2016. Prior to her appointment, Ms. Tjøsvold held the position as Director
Business support at Mesta AS, a Norwegian state owned company within construction, modifications and
operations of roads. She has formerly held a number of management position within logistic and project related
businesses. Ms. Tjøsvold is a Norwegian citizen, and resides in Norway.
Current directorships and senior management positions ............ W. Giertsen Tunnel AS (board member).
Previous directorships and senior management positions last
five years ............................................................................ Entra ASA (board member), Builder AS (managing director),
Mesta Drift AS (managing director) and Rieber & Søn ASA
(Director Business Unit Norway).
Peter Ekholm, Country Manager Sweden
Peter Ekholm has been the country manager of RenNorden AB in Sweden since 2011. Prior to his appointment,
Mr. Ekholm held various managing positions within the Schenker logistics group, including regional manager.
Mr. Ekholm is a Swedish citizen, and resides in Sweden.
Current directorships and senior management positions .... Ekholm Invest AS (chairman) and Matsim AB (chairman).
Previous directorships and senior management positions
last five years .............................................................. None.
Torben Lindholm, Country Manager Denmark
Torben Lindholm has been country manager of RenoNorden A/S in Denmark since 2010, but had worked in the
Renoflex group since 1998 which was acquired by the Group in 2010. Mr. Lindholm has worked more than 23
years within the household-waste management industry, including holding positions with Renholdningsselskabet
af 1898 and Renoflex. Mr. Lindholm holds an MSc in business from Copenhagen Business School and an MSc in
Product Engineering from the Technical University of Denmark. Mr. Lindholm is a Danish citizen, and resides in
Denmark. His employment agreement expires no later than 30 April 2017.
Current directorships and senior management positions .... None.
Previous directorships and senior management positions
last five years .............................................................. None.
Jukka Koivisto, Country Manager Finland
Jukka Koivisto has been country manager of RenoNorden Finland Holding OY in Finland since 2014, but had
worked in HFT Environment OY since 2002 which was acquired by the Group in 2014. Mr. Koivisto has more
than 25 years of experience within the environmental business industry and has helped start up and develop
numerous waste handling companies, such as HFT Network OY and CCR Nordic OY. Mr. Koivisto holds a BSc in
Engineering from Arcada-Nylands Svenska yrkeshökskolan. Mr. Koivisto is a Finish citizen, and resides in
Finland.
Current directorships and senior management positions .... Lindbohm & Partners Oy (board member).
79
RenoNorden ASA - Prospectus
Previous directorships and senior management positions
last five years .............................................................. Environet Oy (board member).
Andreas Westin, Head of Development
Andreas Westin has been Head of Business Development of the Company since 2014. Prior to joining the
Company, Mr. Westin worked as a management consultant with A. T. Kearney, focusing on strategy
development and cost reduction initiatives. Mr. Westin holds an MSc in Industrial Engineering from Linköping
University and an MSc in Business Administration from Stockholm University. Mr. Westin is a Swedish citizen,
and resides in Sweden.
Current directorships and senior management positions .... Westindustries AB (owner) and WestInvest AS (owner).
Previous directorships and senior management positions
last five years .............................................................. None.
11.4
Long-term incentive program
The Board of Directors has, in order to strengthen the common interests between the Management and other
key employees and the shareholders, implemented a long-term incentive program for its Management and
other key employees (as defined by the CEO and approved by the Board of Directors) by granting shares to
such persons.
The shares will be granted annually, and the Board of Directors will determine the maximum number of shares
to be granted each year. The participants in the program will at each grant receive shares worth from one to six
months' base salary, calculated on the basis of the market value of the shares at the time of grant and a
purchase price equal to the nominal value of the shares (NOK 1). The Board of Directors will annually decide to
whom shares shall be granted and the number of shares to be granted to each individual employee. The first
time of grant was approved at the General Meeting held 13 May 2015, whereby it was resolved to grant
180,288 shares to key employees of the Group. The shares are granted without consideration. The shares will
vest three years after grant, subject to key performance criteria being met, and subject to the holder being an
employee of the Group at the vesting date. Employees whose employment terminates prior to the vesting date
due to death, disability or termination by the Group without cause, shall be entitled to a pro rata portion of the
shares (subject to the key performance criteria being met).
Vested shares will be delivered in the period starting on the day following the date of the Company's release of
its annual results and for 15 business days thereafter. The Company may honour vested shares in the form of
shares or by an equivalent amount in cash.
11.5
Conflicts of interests etc.
Charlotte Hansson acted as a Board Member of BE Group AB (publ) when the company in January 2016
received a disciplinary sanction from the Swedish Securities Council. In connection with a rights issue
completed by BE Group AB (publ), the Swedish Securities Council found the company's actions to be in noncompliance with generally acceptable practice in the Swedish stock market. The Swedish Securities Council
sanctioned the company for such breach, a fine equal to two times the annual stock exchange fee.
Except for the above, none of the Board Members and members of the Management has nor had, during the
five years preceding the date of this Prospectus:
•
any convictions in relation to indictable offences or convictions in relation to fraudulent offences;
•
received any official public incrimination and/or sanctions by any statutory or regulatory authorities
(including designated professional bodies) or was disqualified by a court from acting as a member of
the administrative, management or supervisory bodies of a company or from acting in the
management or conduct of the affairs of any company; or
•
been declared bankrupt or been associated with any bankruptcy, receivership or liquidation in his or
her capacity as a founder, member of the administrative body or supervisory body, director or senior
manager of a company.
80
RenoNorden ASA - Prospectus
To the Company's knowledge, there are currently no other actual or potential conflicts of interest between the
Company and the private interests or other duties of any of the Board Members and members of the
Management, including any family relationships between such persons.
81
RenoNorden ASA - Prospectus
12
CORPORATE INFORMATION AND DESCRIPTION OF THE SHARE CAPITAL
The following is a summary of certain corporate information and material information relating to the Shares and
share capital of the Company and certain other shareholder matters, including summaries of certain provisions
of the Company’s Articles of Association and applicable Norwegian law in effect as of the date of this
Prospectus. The summary does not purport to be complete and is qualified in its entirety by the Company’s
Articles of Association, included in Appendix A to this Prospectus, and applicable law.
12.1
Company corporate information
The Company's registered and commercial name is RenoNorden ASA. The Company is a public limited liability
company organised and existing under the laws of Norway pursuant to the Norwegian Public Limited Liability
Companies Act. The Company's registered office is in the municipality of Sørum, Norway. The Company was
incorporated in Norway on 17 March 2011 as a private limited company. The Company was converted into a
public limited liability company on 25 November 2014 and at the same time the Company's name was changed
from Asta Group AS to RenoNorden ASA. The Company's registration number in the Norwegian Register of
Business Enterprises is 996 755 215, and the Shares are registered in book-entry form with the VPS under ISIN
NO0010723141. The Company's register of shareholders in the VPS is administrated by DNB. The Company's
registered office is at Lindebergvegen 3, N-2016 Frogner, Norway, telephone: +47 63 86 60 80 and telefax:
+47 63 82 36 70. The Company's website is www.renonorden.com. The content of www.renonorden.com is not
incorporated by reference into or otherwise forms part of this Prospectus.
12.2
Legal structure
The Company, the parent company of the Group, is a holding company and the operations of the Group are
carried out through the operating subsidiaries of the Company.
The following table sets out information about the Company's subsidiaries as at the date of this Prospectus:
Country of
Company
incorporation
Field of activity
Holding (%)
RenoNorden AS
Norway
Waste collection services
100%
RenoNorden AB
Sweden
Waste collection services
100%
RenoNorden A/S
Denmark
Waste collection services
100%
RenoNorden Oy
Finland
Waste collection services
100%
As at the date of this Prospectus, the Group is of the opinion that its holdings in the entities specified above are
likely to have a significant effect on the assessment of its own assets and liabilities, financial condition or profits
and losses.
The following chart sets out the Group's legal group structure as at the date of this Prospectus:
RenoNorden ASA
(Norway)
RenoNorden AS
(Norway)
12.3
RenoNorden AB
(Sweden)
RenoNorden A/S
(Denmark)
RenoNorden Oy
(Finland)
Share capital and share capital history
As of the date of this Prospectus, the Company's share capital is NOK 27,247,948 divided into 27,247,948
Shares, each having a par value of NOK 1.00. All the Shares have been created under the Norwegian Public
Limited Liability Companies Act, and are validly issued and fully paid.
The Company has one class of shares. There are no share options or other rights to subscribe for or acquire
Shares from the Company. Neither the Company nor any of its subsidiaries directly or indirectly owns Shares in
the Company.
82
RenoNorden ASA - Prospectus
There has not been any changes in the Company's share capital for the period covered by the historical
financial information.
12.4
Listing on the Oslo Stock Exchange
The Shares are, and the Offer Shares will be, admitted to trading on the Oslo Stock Exchange. The Company
currently expects commencement of trading in the Offer Shares on the Oslo Stock Exchange on or around 27
February 2017. The Company has not applied for admission to trading of the Shares on any other stock
exchange or regulated market.
12.5
Ownership structure
As of 27 January 2017, the Company had 1,438 shareholders. The Company's 20 largest shareholders as of the
same date are shown in the table below.
#
Shareholder Name
No. shares
%
1
Asta Netherlands B.V
3,284,742
12.06%
2
Folketrygdfondet
2,500,000
9.18%
3
Accentfourteen Holding Limited
2,078,607
7.63%
4
Danske Bank A/S (nominee)
1,479,102
5.43%
5
SEB Nordenfond
1,457,896
5.35%
6
Nordnet Bank AB (nominee)
1,388,579
5.10%
7
Skandinaviska Enskilda Banken AB (nominee)
1,100,252
4.04%
8
Carnegie AS Egenhandelskonto
682,824
2.51%
9
UBS Switzerland AG (nominee)
624,786
2.29%
10
Canaccord Genuity Non US RESA
595,000
2.18%
11
ALM. Brand Bank A/S (nominee)
550,083
2.02%
12
Waage Johan Petter
400,000
1.47%
13
Avanza Bank AB (nominee)
366,891
1.35%
14
Skandinaviska Enskilda Banken S.A. (nominee)
362,162
1.33%
15
The Bank of New York Mellon N.V. (nominee)
277,418
1.02%
16
UBS AG, London Branch
264,973
0.97%
17
UBS Switzerland AG (nominee)
260,877
0.96%
18
Bergen Kommunale Pensjonskasse
250,000
0.92%
19
Danske Invest Norge Vekst
205,000
0.75%
20
JPMorgan Chase Bank, N.A., London (nominee)
185,700
0.68%
18,314,892
67.22%
Total number owned by top 20
Shareholders owning 5% or more of the Shares have an interest in the Company's share capital which is
notifiable pursuant to the Norwegian Securities Trading Act. See Section 13.7 "Disclosure obligations" for a
description of the disclosure obligations under the Norwegian Securities Trading Act. As of the date of this
Prospectus, no shareholder, other than Asta Netherlands B.V (approximately 12%), Folketrygdfondet
(approximately 9.2%), Accentfourteen Holding Limited (approximately 7.6%), Danske Bank A/S (nominee)
(approximately 5.4%), SEB Nordenfond (approximately 5.4%) and Nordnet Bank AB (approximately 5.1%)
holds 5% or more of the total issued Shares.
Following the completion of the Rights Issue, the Company is not aware of any persons or entities who, directly
or indirectly, jointly or severally, will exercise or could exercise control over the Company. The Company is not
aware of any arrangements the operation of which may at a subsequent date result in a change of control of
the Company. The Shares have not been subject to any public takeover bids.
12.6
Authorisation to increase the share capital and to issue Shares
In the annual General Meeting held on 25 May 2016, the Board of Directors was granted an authorisation to
increase the share capital of the Company by up to NOK 497,905, corresponding to less than 10% of the
Company’s share capital. The authorisation can be used in connection with share based incentive programs for
the employees.
83
RenoNorden ASA - Prospectus
The authorisation is valid until the Company's annual General Meeting in 2017, but no longer than to 30 June
2017. The preferential rights of the existing shareholders to subscribe to the new shares pursuant to Section
10-4 of the Norwegian Public Limited Liability Companies Act may be deviated from. The authorisation does
comprise potential share capital increases against contribution in kind, but it does not comprise share capital
increases in connection with mergers.
Furthermore, in the annual General Meeting held on 25 May 2016, the Board of Directors was granted an
authorisation to increase the share capital of the Company by up to NOK 2,724,794, corresponding to less than
10% of the Company's share capital. The authorisation can be used at the discretion of the Board of Directors,
including without limitations in connection with acquisitions.
The authorisation is valid until the Company's annual General Meeting in 2017, but no longer than to 30 June
2017. The preferential rights of the existing shareholders to subscribe to the new shares pursuant to Section
10-4 of the Norwegian Public Limited Liability Companies Act may be deviated from. The authorisation does
comprise potential share capital increases against contribution in kind and share capital increases in connection
with mergers.
Notice to the shareholders regarding the extraordinary General Meeting held on 30 January 2017 was published
on 9 January 2017. In accordance with the Company's Board of Directors' proposal, the General Meeting
resolved to increase the Company's share capital with NOK 350,000,000 by issuing 350,000,000 new Shares by
way of an underwritten Rights Issue. See Section 15 "THE TERMS OF THE RIGHTS ISSUE" for further
information on this resolution.
12.7
Authorisation to acquire treasury shares
In the annual General Meeting held on 25 May 2016, the Board of Directors was granted an authorisation to
acquire the Company's own shares within a total par value of NOK 497,905, corresponding to less than 10% of
the Company's share capital. The Board of Directors is authorised to acquire and sell shares at its discretion,
but not at prices higher than NOK 80 or lower than NOK 20. Acquisition can nevertheless not be done by
issuance of shares. The authorisation is valid until the Company's annual General Meeting in 2017, but no
longer than to 30 June 2017.
12.8
Other financial instruments
Other than the long-term incentive program described in Section 11.4 "Long-term incentive program", neither
the Company nor any of its subsidiaries has issued any options, warrants, convertible loans or other
instruments that would entitle a holder of any such instrument to subscribe for any shares in the Company or
its subsidiaries. Further, neither the Company nor any of its subsidiaries has issued subordinated debt or
transferable securities other than the Shares and the shares in its subsidiaries which will be held, directly or
indirectly, by the Company.
12.9
Shareholder rights
The Company has one class of Shares in issue, and in accordance with the Norwegian Public Limited Liability
Companies Act, all Shares in that class provide equal rights in the Company, including the right to any
dividends. Each of the Shares carries one vote. The rights attaching to the Shares are described in Section
12.10 "The Articles of Association and certain aspects of Norwegian law".
12.10
The Articles of Association and certain aspects of Norwegian law
12.10.1
The Articles of Association
The Company's Articles of Association are set out in Appendix A to this Prospectus. Below is a summary of
certain provisions of the Articles of Association.
12.10.1.1 Objective of the Company
The objective of the Company is to operate transport services, waste management and all matters related
thereto, as well as owning companies operating such activities.
12.10.1.2 Registered office
The Company's registered office is in the municipality of Sørum, Norway. The Company may also hold its
General Meetings in Oslo.
84
RenoNorden ASA - Prospectus
12.10.1.3 Share capital and par value
The Company's share capital as of this Prospectus is NOK 27,247,948 divided into 27,247,948 Shares, each
having a par value of NOK 1.00. The Shares are registered with the Norwegian Central Securities Depository
(VPS).
12.10.1.4 Board of Directors
The Company's Board of Directors shall consist of a minimum of three and a maximum of seven members.
12.10.1.5 Restrictions on transfer of Shares
The Articles of Association do not provide for any restrictions on the transfer of Shares, or a right of first refusal
for the Company. Share transfers are not subject to approval by the Board of Directors.
12.10.1.6 General Meetings
Documents relating to matters to be dealt with by the Company's General Meeting, including documents which
by law shall be included in or attached to the notice of the General Meeting, do not need to be sent to the
shareholders if such documents have been made available on the Company's website. A shareholder may
nevertheless request that documents which relate to matters to be dealt with at the General Meeting are sent
to him/her. The shareholders may cast their votes in writing, including by electronic means, in a period prior to
the general meeting. The Board of Directors may provide guidelines for such voting. The notice of the General
Meeting shall include the guidelines adopted by the Board of Directors.
12.10.1.7 Nomination committee
The Company shall have a nomination committee.
12.10.2
Certain aspects of Norwegian corporate law
12.10.2.1 General meetings
Through the general meeting, shareholders exercise supreme authority in a Norwegian company. In accordance
with Norwegian law, the annual general meeting of shareholders is required to be held each year on or prior to
30 June. Norwegian law requires that written notice of annual general meetings setting forth the time of, the
venue for and the agenda of the meeting be sent to all shareholders with a known address no later than 21
days before the annual general meeting of a Norwegian public limited liability company listed on a stock
exchange or a regulated market shall be held, unless the articles of association stipulate a longer deadline,
which is not currently the case for the Company.
A shareholder may vote at the general meeting either in person or by proxy appointed at their own discretion.
Although Norwegian law does not require the Company to send proxy forms to its shareholders for General
Meetings, the Company plans to include a proxy form with notices of General Meetings. All of the Company's
shareholders who are registered in the register of shareholders maintained with the VPS as of the date of the
General Meeting, or who have otherwise reported and documented ownership to Shares, are entitled to
participate at General Meetings, without any requirement of pre-registration.
Apart from the annual general meeting, extraordinary general meetings of shareholders may be held if the
Board of Directors considers it necessary. An extraordinary general meeting of shareholders must also be
convened if, in order to discuss a specified matter, the auditor or shareholders representing at least 5% of the
share capital demands this in writing. The requirements for notice and admission to the annual general meeting
also apply to extraordinary general meetings. However, the annual general meeting of a Norwegian public
limited liability company may with a majority of at least two-thirds of the aggregate number of votes cast as
well as at least two-thirds of the share capital represented at a general meeting resolve that extraordinary
general meetings may be convened with a 14 days' notice period until the next annual general meeting
provided the company has procedures in place allowing shareholders to vote electronically.
12.10.2.2 Voting rights–amendments to the Articles of Association
85
RenoNorden ASA - Prospectus
Each of the Company's Shares will carry one vote. In general, decisions that shareholders are entitled to make
under Norwegian law or the Company’s Articles of Association may be made by a simple majority of the votes
cast. In the case of elections or appointments, the person(s) who receive(s) the greatest number of votes cast
are elected. However, as required under Norwegian law, certain decisions, including resolutions to waive
preferential rights to subscribe in connection with any share issue in the Company, to approve a merger or
demerger of the Company, to amend the Articles of Association, to authorise an increase or reduction in the
share capital, to authorise an issuance of convertible loans or warrants by the Company or to authorise the
Board of Directors to purchase Shares and hold them as treasury shares or to dissolve the Company, must
receive the approval of at least two-thirds of the aggregate number of votes cast as well as at least two-thirds
of the share capital represented at a general meeting. Norwegian law further requires that certain decisions,
which have the effect of substantially altering the rights and preferences of any shares or class of shares,
receive the approval by the holders of such shares or class of shares as well as the majority required for
amending the Articles of Association.
Decisions that (i) would reduce the rights of some or all of the Company's shareholders in respect of dividend
payments or other rights to assets or (ii) restrict the transferability of the Shares, require that at least 90% of
the share capital represented at the general meeting in question vote in favour of the resolution, as well as the
majority required for amending the Articles of Association.
In general, only a shareholder registered in the VPS is entitled to vote for such Shares. Beneficial owners of the
Shares that are registered in the name of a nominee are generally not entitled to vote under Norwegian law,
nor is any person who is designated in the VPS register as the holder of such Shares as nominees. Investors
should note that there are varying opinions as to the interpretation of the right to vote on nominee registered
shares. In the Company’s view, a nominee may not meet or vote for Shares registered on a nominee account
("NOM-account"). A shareholder must, in order to be eligible to register, meet and vote for such Shares at the
General Meeting, transfer the Shares from such NOM-account to an account in the shareholder's name.
There are no quorum requirements that apply to the general meetings.
12.10.2.3 Additional issuances and preferential rights
If the Company issues any new Shares, including bonus share issues, the Company's Articles of Association
must be amended, which requires the same vote as other amendments to the Articles of Association. In
addition, under Norwegian law, the Company's shareholders have a preferential right to subscribe for new
Shares issued by the Company. Preferential rights may be derogated from by resolution in a General Meeting
passed by the same vote required to amend the Articles of Association. A derogation of the shareholders'
preferential rights in respect of bonus issues requires the approval of all outstanding Shares.
The General Meeting may, by the same vote as is required for amending the Articles of Association, authorise
the Board of Directors to issue new Shares, and to derogate from the preferential rights of shareholders in
connection with such issuances. Such authorisation may be effective for a maximum of two years, and the par
value of the Shares to be issued may not exceed 50% of the registered par share capital when the
authorisation is registered with the Norwegian Register of Business Enterprises.
Under Norwegian law, the Company may increase its share capital by a bonus share issue, subject to approval
by the Company's shareholders, by transfer from the Company's distributable equity or from the Company's
share premium reserve and thus the share capital increase does not require any payment of a subscription
price by the shareholders. Any bonus issues may be affected either by issuing new shares to the Company's
existing shareholders or by increasing the par value of the Company’s outstanding Shares.
Issuance of new Shares to shareholders who are citizens or residents of the United States upon the exercise of
preferential rights may require the Company to file a registration statement in the United States under United
States securities laws. Should the Company in such a situation decide not to file a registration statement, the
Company's U.S. shareholders may not be able to exercise their preferential rights. If a U.S. shareholder is
ineligible to participate in a rights offering, such shareholder would not receive the rights at all and the rights
would be sold on the shareholder's behalf by the Company.
86
RenoNorden ASA - Prospectus
12.10.2.4 Minority rights
Norwegian law sets forth a number of protections for minority shareholders of the Company, including, but not
limited to, those described in this paragraph and the description of General Meetings as set out above. Any of
the Company's shareholders may petition Norwegian courts to have a decision of the Board of Directors or the
Company's shareholders made at the General Meeting declared invalid on the grounds that it unreasonably
favours certain shareholders or third parties to the detriment of other shareholders or the Company itself. The
Company's shareholders may also petition the courts to dissolve the Company as a result of such decisions to
the extent particularly strong reasons are considered by the court to make necessary dissolution of the
Company.
Minority shareholders holding 5% or more of the Company’s share capital have a right to demand in writing
that the Company’s Board of Directors convene an extraordinary general meeting to discuss or resolve specific
matters. In addition, any of the Company’s shareholders may in writing demand that the Company place an
item on the agenda for any General Meeting as long as the Company is notified in time for such item to be
included in the notice of the meeting. If the notice has been issued when such a written demand is presented, a
renewed notice must be issued if the deadline for issuing notice of the General Meeting has not expired.
12.10.2.5 Rights of redemption and repurchase of Shares
The share capital of the Company may be reduced by reducing the par value of the Shares or by cancelling
Shares. Such a decision requires the approval of at least two-thirds of the aggregate number of votes cast and
at least two-thirds of the share capital represented at a General Meeting. Redemption of individual Shares
requires the consent of the holders of the Shares to be redeemed.
The Company may purchase its own Shares provided that the Board of Directors has been granted an
authorisation to do so by a General Meeting with the approval of at least two-thirds of the aggregate number of
votes cast and at least two-thirds of the share capital represented at the meeting. The aggregate par value of
treasury shares so acquired, and held by the Company must not exceed 10% of the Company’s share capital,
and treasury shares may only be acquired if the Company’s distributable equity, according to the latest adopted
balance sheet, exceeds the consideration to be paid for the Shares. The authorisation by the General Meeting of
the Company’s shareholders cannot be granted for a period exceeding 18 months.
12.10.2.6 Shareholder vote on certain reorganisations
A decision of the Company’s shareholders to merge with another company or to demerge requires a resolution
by the General Meeting passed by at least two-thirds of the aggregate votes cast and at least two-thirds of the
share capital represented at the General Meeting. A merger plan, or demerger plan signed by the Board of
Directors along with certain other required documentation, would have to be sent to all the Company’s
shareholders, or if the Articles of Association stipulate that, made available to the shareholders on the
Company’s website, at least one month prior to the General Meeting to pass upon the matter.
12.10.2.7 Liability of Board Members
Board Members owe a fiduciary duty to the Company and its shareholders. Such fiduciary duty requires that the
Board Members act in the best interests of the Company when exercising their functions and exercise a general
duty of loyalty and care towards the Company. Their principal task is to safeguard the interests of the
Company.
Board Members may each be held liable for any damage they negligently or wilfully cause the Company.
Norwegian law permits the General Meeting to discharge any such person from liability, but such discharge is
not binding on the Company if substantially correct and complete information was not provided at the General
Meeting passing upon the matter. If a resolution to discharge the Company’s Board Members from liability or
not to pursue claims against such a person has been passed by a General Meeting with a smaller majority than
that required to amend the Articles of Association, shareholders representing more than 10% of the share
capital or, if there are more than 100 shareholders, more than 10% of the shareholders may pursue the claim
on the Company’s behalf and in its name. The cost of any such action is not the Company’s responsibility but
can be recovered from any proceeds the Company receives as a result of the action. If the decision to discharge
any of the Company’s Board Members from liability or not to pursue claims against the Company’s Board
Members is made by such a majority as is necessary to amend the Articles of Association, the minority
shareholders of the Company cannot pursue such claim in the Company’s name.
87
RenoNorden ASA - Prospectus
12.10.2.8 Indemnification of Board Members
Neither Norwegian law nor the Articles of Association contains any provision concerning indemnification by the
Company of the Board of Directors. The Company has purchased insurance for the Board Members against
certain liabilities that they may incur in their capacity as such, see Section 8.13 "Insurance" for more
information.
12.10.2.9 Distribution of assets on liquidation
Under Norwegian law, the Company may be wound-up by a resolution of the Company’s shareholders at the
General Meeting passed by at least two-thirds of the aggregate votes cast and at least two-thirds of the share
capital represented at the meeting. In the event of liquidation, the Shares rank equally in the event of a return
on capital.
12.10.3
Shareholders' agreement
To the knowledge of the Company, there are no shareholders' agreements related to the Shares.
88
RenoNorden ASA - Prospectus
13
SECURITIES TRADING IN NORWAY
Set out below is a summary of certain aspects of securities trading in Norway. The summary is based on the
rules and regulations in force in Norway as at the date of this Prospectus, which may be subject to changes
occurring after such date. The summary does not purport to be a comprehensive description of securities
trading in Norway. Shareholders who wish to clarify the aspects of securities trading in Norway should consult
with and rely upon their own advisors.
13.1
Introduction
The Oslo Stock Exchange was established in 1819 and is the principal market in which shares, bonds and other
financial instruments are traded in Norway. As of 31 December 2016, the total capitalisation of companies listed
on the Oslo Stock Exchange amounted to approximately NOK 2,121 billion. Shareholdings of non-Norwegian
investors as a percentage of total market capitalisation as at 31 December 2016 amounted to approximately
36.6%.
The Oslo Stock Exchange has entered into a strategic cooperation with the London Stock Exchange group with
regards to, inter alia, trading systems for equities, fixed income and derivatives.
13.2
Trading and settlement
Trading of equities on the Oslo Stock Exchange is carried out in the electronic trading system Millennium
Exchange. This trading system is in use by all markets operated by the London Stock Exchange, including the
Borsa Italiana, as well as by the Johannesburg Stock Exchange.
Official trading on the Oslo Stock Exchange takes place between 09:00 hours (CET) and 16:20 hours (CET)
each trading day, with pre-trade period between 08:15 hours (CET) and 09:00 hours (CET), closing auction
from 16:20 hours (CET) to 16:25 hours (CET) and a post-trade period from 16:25 hours (CET) to 17:30 hours
(CET). Reporting of after exchange trades can be done until 17:30 hours (CET).
The settlement period for trading on the Oslo Stock Exchange is two trading days (T+2). This means that
securities will be settled on the investor's account in the VPS two days after the transaction, and that the seller
will receive payment after two days.
Oslo Clearing ASA, a wholly-owned subsidiary of SIX x-clear AG, a company in the SIX group, has a license
from the Norwegian FSA to act as a central clearing service, and has from 18 June 2010 offered clearing and
counterparty services for equity trading on the Oslo Stock Exchange.
Investment services in Norway may only be provided by Norwegian investment firms holding a license under
the Norwegian Securities Trading Act, branches of investment firms from an EEA member state or investment
firms from outside the EEA that have been licensed to operate in Norway. Investment firms in an EEA member
state may also provide cross-border investment services into Norway.
It is possible for investment firms to undertake market-making activities in shares listed in Norway if they have
a license to this effect under the Norwegian Securities Trading Act, or in the case of investment firms in an EEA
member state, a license to carry out market-making activities in their home jurisdiction. Such market-making
activities will be governed by the regulations of the Norwegian Securities Trading Act relating to brokers'
trading for their own account. However, such market-making activities do not as such require notification to the
Norwegian FSA or the Oslo Stock Exchange except for the general obligation of investment firms that are
members of the Oslo Stock Exchange to report all trades in stock exchange listed securities.
13.3
Information, control and surveillance
Under Norwegian law, the Oslo Stock Exchange is required to perform a number of surveillance and control
functions. The Surveillance and Corporate Control unit of the Oslo Stock Exchange monitors all market activity
on a continuous basis. Market surveillance systems are largely automated, promptly warning department
personnel of abnormal market developments.
The Norwegian FSA controls the issuance of securities in both the equity and bond markets in Norway and
evaluates whether the issuance documentation contains the required information and whether it would
otherwise be unlawful to carry out the issuance.
89
RenoNorden ASA - Prospectus
Under Norwegian law, a company that is listed on a Norwegian regulated market, or has applied for listing on
such market, must promptly release any inside information directly concerning the company. Inside information
means precise information about financial instruments, the issuer thereof or other matters which are likely to
have a significant effect on the price of the relevant financial instruments or related financial instruments, and
which are not publicly available or commonly known in the market. A company may, however, delay the release
of such information in order not to prejudice its legitimate interests, provided that it is able to ensure the
confidentiality of the information and that the delayed release would not be likely to mislead the public. The
Oslo Stock Exchange may levy fines on companies violating these requirements.
13.4
The VPS and transfer of Shares
The Company's principal share register is operated through the VPS. The VPS is the Norwegian paperless
centralised securities register. It is a computerised book-keeping system in which the ownership of, and all
transactions relating to, Norwegian listed shares must be recorded. The VPS and the Oslo Stock Exchange are
both wholly-owned by Oslo Børs VPS Holding ASA.
All transactions relating to securities registered with the VPS are made through computerised book entries. No
physical share certificates are, or may be, issued. The VPS confirms each entry by sending a transcript to the
registered shareholder irrespective of any beneficial ownership. To give effect to such entries, the individual
shareholder must establish a share account with a Norwegian account agent. Norwegian banks, Norges Bank
(being, Norway's central bank), authorised securities brokers in Norway and Norwegian branches of credit
institutions established within the EEA are allowed to act as account agents.
As a matter of Norwegian law, the entry of a transaction in the VPS is prima facie evidence in determining the
legal rights of parties as against the issuing company or any third party claiming an interest in the given
security. A transferee or assignee of shares may not exercise the rights of a shareholder with respect to such
shares unless such transferee or assignee has registered such shareholding or has reported and shown
evidence of such share acquisition, and the acquisition is not prevented by law, the relevant company's articles
of association or otherwise.
The VPS is liable for any loss suffered as a result of faulty registration or an amendment to, or deletion of,
rights in respect of registered securities unless the error is caused by matters outside the VPS' control which
the VPS could not reasonably be expected to avoid or overcome the consequences of. Damages payable by the
VPS may, however, be reduced in the event of contributory negligence by the aggrieved party.
The VPS must provide information to the Norwegian FSA on an ongoing basis, as well as any information that
the Norwegian FSA requests. Further, Norwegian tax authorities may require certain information from the VPS
regarding any individual's holdings of securities, including information about dividends and interest payments.
13.5
Shareholder register – Norwegian law
Under Norwegian law, shares are registered in the name of the beneficial owner of the shares. As a general
rule, there are no arrangements for nominee registration and Norwegian shareholders are not allowed to
register their shares in the VPS through a nominee. However, foreign shareholders may register their shares in
the VPS in the name of a nominee (bank or other nominee) approved by the Norwegian FSA. An approved and
registered nominee has a duty to provide information on demand about beneficial shareholders to the company
and to the Norwegian authorities. In case of registration by nominees, the registration in the VPS must show
that the registered owner is a nominee. A registered nominee has the right to receive dividends and other
distributions, but cannot vote in general meetings on behalf of the beneficial owners.
13.6
Foreign investment in shares listed in Norway
Foreign investors may trade shares listed on the Oslo Stock Exchange through any broker that is a member of
the Oslo Stock Exchange, whether Norwegian or foreign.
90
RenoNorden ASA - Prospectus
13.7
Disclosure obligations
If a person's, entity's or consolidated group's proportion of the total issued shares and/or rights to shares in a
company listed on a regulated market in Norway (with Norway as its home state, which will be the case for the
Company) reaches, exceeds or falls below the respective thresholds of 5%, 10%, 15%, 20%, 25%, 1/3, 50%,
2/3 or 90% of the share capital or the voting rights of that company, the person, entity or group in question
has an obligation under the Norwegian Securities Trading Act to notify the Oslo Stock Exchange and the issuer
immediately. The same applies if the disclosure thresholds are passed due to other circumstances, such as a
change in the company's share capital.
13.8
Insider trading
According to Norwegian law, subscription for, purchase, sale or exchange of financial instruments that are
listed, or subject to the application for listing, on a Norwegian regulated market, or incitement to such
dispositions, must not be undertaken by anyone who has inside information, as defined in Section 3-2 of the
Norwegian Securities Trading Act. The same applies to the entry into, purchase, sale or exchange of options or
futures/forward contracts or equivalent rights whose value is connected to such financial instruments or
incitement to such dispositions.
13.9
Mandatory offer requirement
The Norwegian Securities Trading Act requires any person, entity or consolidated group that becomes the
owner of shares representing more than one-third of the voting rights of a company listed on a Norwegian
regulated market (with the exception of certain foreign companies not including the Company) to, within four
weeks, make an unconditional general offer for the purchase of the remaining shares in that company. A
mandatory offer obligation may also be triggered where a party acquires the right to become the owner of
shares that, together with the party's own shareholding, represent more than one-third of the voting rights in
the company and the Oslo Stock Exchange decides that this is regarded as an effective acquisition of the shares
in question.
The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells the portion of
the shares that exceeds the relevant threshold within four weeks of the date on which the mandatory offer
obligation was triggered.
When a mandatory offer obligation is triggered, the person subject to the obligation is required to immediately
notify the Oslo Stock Exchange and the company in question accordingly. The notification is required to state
whether an offer will be made to acquire the remaining shares in the company or whether a sale will take place.
As a rule, a notification to the effect that an offer will be made cannot be retracted. The offer and the offer
document required are subject to approval by the Oslo Stock Exchange before the offer is submitted to the
shareholders or made public.
The offer price per share must be at least as high as the highest price paid or agreed by the offeror for the
shares in the six-month period prior to the date the threshold was exceeded. If the acquirer acquires or agrees
to acquire additional shares at a higher price prior to the expiration of the mandatory offer period, the acquirer
is obliged to restate its offer at such higher price. A mandatory offer must be in cash or contain a cash
alternative at least equivalent to any other consideration offered.
In case of failure to make a mandatory offer or to sell the portion of the shares that exceeds the relevant
threshold within four weeks, the Oslo Stock Exchange may force the acquirer to sell the shares exceeding the
threshold by public auction. Moreover, a shareholder who fails to make an offer may not, as long as the
mandatory offer obligation remains in force, exercise rights in the company, such as voting in a general
meeting, without the consent of a majority of the remaining shareholders. The shareholder may, however,
exercise his/her/its rights to dividends and pre-emption rights in the event of a share capital increase. If the
shareholder neglects his/her/its duty to make a mandatory offer, the Oslo Stock Exchange may impose a
cumulative daily fine that runs until the circumstance has been rectified.
91
RenoNorden ASA - Prospectus
Any person, entity or consolidated group that owns shares representing more than one-third of the votes in a
company listed on a Norwegian regulated market (with the exception of certain foreign companies not including
the Company) is obliged to make an offer to purchase the remaining shares of the company (repeated offer
obligation) if the person, entity or consolidated group through acquisition becomes the owner of shares
representing 40%, or more of the votes in the company. The same applies correspondingly if the person, entity
or consolidated group through acquisition becomes the owner of shares representing 50% or more of the votes
in the company. The mandatory offer obligation ceases to apply if the person, entity or consolidated group sells
the portion of the shares which exceeds the relevant threshold within four weeks of the date on which the
mandatory offer obligation was triggered.
Any person, entity or consolidated group that has passed any of the above mentioned thresholds in such a way
as not to trigger the mandatory bid obligation, and has therefore not previously made an offer for the
remaining shares in the company in accordance with the mandatory offer rules is, as a main rule, obliged to
make a mandatory offer in the event of a subsequent acquisition of shares in the company.
13.10
Compulsory acquisition
Pursuant to the Norwegian Public Limited Liability Companies Act and the Norwegian Securities Trading Act, a
shareholder who, directly or through subsidiaries, acquires shares representing 90% or more of the total
number of issued shares in a Norwegian public limited liability company, as well as 90% or more of the total
voting rights, has a right, and each remaining minority shareholder of the company has a right to require such
majority shareholder, to effect a compulsory acquisition for cash of the shares not already owned by such
majority shareholder. Through such compulsory acquisition the majority shareholder becomes the owner of the
remaining shares with immediate effect.
If a shareholder acquires shares representing more than 90% of the total number of issued shares, as well as
more than 90% of the total voting rights, through a voluntary offer in accordance with the Securities Trading
Act, a compulsory acquisition can, subject to the following conditions, be carried out without such shareholder
being obliged to make a mandatory offer: (i) the compulsory acquisition is commenced no later than four weeks
after the acquisition of shares through the voluntary offer, (ii) the price offered per share is equal to or higher
than what the offer price would have been in a mandatory offer, and (iii) the settlement is guaranteed by a
financial institution authorised to provide such guarantees in Norway.
A majority shareholder who effects a compulsory acquisition is required to offer the minority shareholders a
specific price per share, the determination of which is at the discretion of the majority shareholder. However,
where the offeror, after making a mandatory or voluntary offer, has acquired more than 90% of the voting
shares of a company and a corresponding proportion of the votes that can be cast at the general meeting, and
the offeror pursuant to Section 4-25 of the Norwegian Public Limited Liability Companies Act completes a
compulsory acquisition of the remaining shares within three months after the expiry of the offer period, it
follows from the Norwegian Securities Trading Act that the redemption price shall be determined on the basis of
the offer price for the mandatory/voluntary offer unless specific reasons indicate another price.
Should any minority shareholder not accept the offered price, such minority shareholder may, within a specified
deadline of not less than two months, request that the price be set by a Norwegian court. The cost of such
court procedure will, as a general rule, be the responsibility of the majority shareholder, and the relevant court
will have full discretion in determining the consideration to be paid to the minority shareholder as a result of the
compulsory acquisition.
Absent a request for a Norwegian court to set the price or any other objection to the price being offered, the
minority shareholders would be deemed to have accepted the offered price after the expiry of the specified
deadline.
13.11
Foreign exchange controls
There are currently no foreign exchange control restrictions in Norway that would potentially restrict the
payment of dividends to a shareholder outside Norway, and there are currently no restrictions that would affect
the right of shareholders of a company that has its shares registered with the VPS who are not residents in
Norway to dispose of their shares and receive the proceeds from a disposal outside Norway. There is no
maximum transferable amount either to or from Norway, although transferring banks are required to submit
reports on foreign currency exchange transactions into and out of Norway into a central data register
92
RenoNorden ASA - Prospectus
maintained by the Norwegian customs and excise authorities. The Norwegian police, tax authorities, customs
and excise authorities, the National Insurance Administration and the Norwegian FSA have electronic access to
the data in this register.
93
RenoNorden ASA - Prospectus
14
TAXATION
Set out below is a summary of certain Norwegian tax matters related to an investment in the Company. The
summary regarding Norwegian taxation are based on the laws in force in Norway as of the date of this
Prospectus, which may be subject to any changes in law occurring after such date. Such changes could possibly
be made on a retrospective basis.
The following summary does not purport to be a comprehensive description of all the tax considerations that
may be relevant to a decision to purchase, own or dispose of the shares in the Company. Shareholders who
wish to clarify their own tax situation should consult with and rely upon their own tax advisors. Shareholders
resident in jurisdictions other than Norway and shareholders who cease to be resident in Norway for tax
purposes (due to domestic tax law or tax treaty) should specifically consult with and rely upon their own tax
advisors with respect to the tax position in their country of residence and the tax consequences related to
ceasing to be resident in Norway for tax purposes.
Please note that for the purpose of the summary below, a reference to a Norwegian or non-Norwegian
shareholder refers to the tax residency rather than the nationality of the shareholder.
14.1
Norwegian taxation
14.1.1
Taxation of dividends
Norwegian Personal Shareholders
Dividends distributed to shareholders who are individuals resident in Norway for tax purposes ("Norwegian
Personal Shareholders") are taxable in Norway for such shareholders at an effective tax rate of 29.76% to
the extent the dividend exceeds a tax-free allowance; i.e. dividends received, less the tax free allowance, shall
be multiplied by 1.24 which are then included as ordinary income taxable at a flat rate of 24%, increasing the
effective tax rate on dividends received by Norwegian Personal Shareholders to 29.76%.
The allowance is calculated on a share-by-share basis. The allowance for each share is equal to the cost price of
the share multiplied by a risk free interest rate based on the effective rate after tax of interest on treasury bills
(Nw.: statskasseveksler) with three months' maturity. The allowance is calculated for each calendar year, and
is allocated solely to Norwegian Personal Shareholders holding shares at the expiration of the relevant calendar
year.
Norwegian Personal Shareholders who transfer shares will thus not be entitled to deduct any calculated
allowance related to the year of transfer. Any part of the calculated allowance one year exceeding the dividend
distributed on the share ("excess allowance") may be carried forward and set off against future dividends
received on, or gains upon realisation of, the same share. Any excess allowance will also be included in the
basis for calculating the allowance on the same share in the following years.
Norwegian Corporate Shareholders
Dividends distributed to shareholders who are limited liability companies (and certain similar entities) resident
in Norway for tax purposes ("Norwegian Corporate Shareholders"), are effectively taxed at rate of 0.72%
(3% of dividend income from such shares is included in the calculation of ordinary income for Norwegian
Corporate Shareholders and ordinary income is subject to tax at a flat rate of 24%).
Non-Norwegian Personal Shareholders
Dividends distributed to shareholders who are individuals not resident in Norway for tax purposes ("NonNorwegian Personal Shareholders"), are as a general rule subject to withholding tax at a rate of 25%. The
withholding tax rate of 25% is normally reduced through tax treaties between Norway and the country in which
the shareholder is resident. The withholding obligation lies with the company distributing the dividends and the
Company assumes this obligation.
Non-Norwegian Personal Shareholders resident within the EEA for tax purposes may apply individually to
Norwegian tax authorities for a refund of an amount corresponding to the calculated tax-free allowance on each
individual share (please refer to "Taxation of dividends – Norwegian Personal Shareholders" above). However,
the deduction for the tax-free allowance does not apply in the event that the withholding tax rate, pursuant to
an applicable tax treaty, leads to a lower taxation on the dividends than the withholding tax rate of 25% less
the tax-free allowance.
94
RenoNorden ASA - Prospectus
If a Non-Norwegian Personal Shareholder is carrying on business activities in Norway and the shares are
effectively connected with such activities, the shareholder will be subject to the same taxation of dividends as a
Norwegian Personal Shareholder, as described above.
Non-Norwegian Personal Shareholders who have suffered a higher withholding tax than set out in an applicable
tax treaty may apply to the Norwegian tax authorities for a refund of the excess withholding tax deducted.
Non-Norwegian Corporate Shareholders
Dividends distributed to shareholders who are limited liability companies (and certain other entities) not
resident in Norway for tax purposes ("Non-Norwegian Corporate Shareholders"), are as a general rule
subject to withholding tax at a rate of 25%. The withholding tax rate of 25% is normally reduced through tax
treaties between Norway and the country in which the shareholder is resident.
Dividends distributed to Non-Norwegian Corporate Shareholders resident within the EEA for tax purposes are
exempt from Norwegian withholding tax provided that the shareholder is the beneficial owner of the shares and
that the shareholder is genuinely established and performs genuine economic business activities within the
relevant EEA jurisdiction.
If a Non-Norwegian Corporate Shareholder is carrying on business activities in Norway and the shares are
effectively connected with such activities, the shareholder will be subject to the same taxation of dividends as a
Norwegian Corporate Shareholder, as described above.
Non-Norwegian Corporate Shareholders who have suffered a higher withholding tax than set out in an
applicable tax treaty may apply to the Norwegian tax authorities for a refund of the excess withholding tax
deducted.
Nominee registered shares will be subject to withholding tax at a rate of 25% unless the nominee has obtained
approval from the Norwegian Tax Directorate for the dividend to be subject to a lower withholding tax rate. To
obtain such approval the nominee is required to file a summary to the tax authorities including all beneficial
owners that are subject to withholding tax at a reduced rate.
The withholding obligation in respect of dividends distributed to Non-Norwegian Corporate Shareholders and on
nominee registered shares lies with the company distributing the dividends and the Company assumes this
obligation.
14.1.2
Taxation of capital gains on realisation of shares
Norwegian Personal Shareholders
Sale, redemption or other disposal of shares is considered a realisation for Norwegian tax purposes. A capital
gain or loss generated by a Norwegian Personal Shareholder through a disposal of shares is taxable or tax
deductible in Norway. The effective tax rate on gain or loss related to shares realised by Norwegian Personal
Shareholders is currently 29.76%; i.e. capital gains (less the tax free allowance) and losses shall be multiplied
by 1.24 which are then included in or deducted from the Norwegian Personal Shareholder's ordinary income in
the year of disposal. Ordinary income is taxable at a flat rate of 24%, increasing the effective tax rate on
gains/losses realised by Norwegian Personal Shareholders to 29.76%.
The gain is subject to tax and the loss is tax deductible irrespective of the duration of the ownership and the
number of shares disposed of.
The taxable gain/deductible loss is calculated per share as the difference between the consideration for the
share and the Norwegian Personal Shareholder's cost price of the share, including costs incurred in relation to
the acquisition or realisation of the share. From this capital gain, Norwegian Personal Shareholders are entitled
to deduct a calculated allowance provided that such allowance has not already been used to reduce taxable
dividend income. Please refer to "Taxation of dividends — Norwegian Personal Shareholders" above for a
description of the calculation of the allowance. The allowance may only be deducted in order to reduce a
taxable gain, and cannot increase or produce a deductible loss, i.e. any unused allowance exceeding the capital
gain upon the realisation of a share will be annulled.
95
RenoNorden ASA - Prospectus
If the Norwegian Personal Shareholder owns shares acquired at different points in time, the shares that were
acquired first will be regarded as the first to be disposed of, on a first-in first-out basis.
Norwegian Corporate Shareholders
Norwegian Corporate Shareholders are exempt from tax on capital gains derived from the realisation of shares
qualifying for participation exemption, including shares in the Company. Losses upon the realisation and costs
incurred in connection with the purchase and realisation of such shares are not deductible for tax purposes.
Non-Norwegian Personal Shareholders
Gains from the sale or other disposal of shares by a Non-Norwegian Personal Shareholder will not be subject to
taxation in Norway unless the Non-Norwegian Personal Shareholder holds the shares in connection with
business activities carried out or managed from Norway.
Non-Norwegian Corporate Shareholders
Capital gains derived by the sale or other realisation of shares by Non-Norwegian Corporate Shareholders are
not subject to taxation in Norway.
14.1.3
Taxation of subscription rights
Norwegian Personal Shareholders
A Norwegian Personal Shareholder's subscription for shares pursuant to a subscription right is not subject to
taxation in Norway. Costs related to the subscription for the shares will be added to the cost price of the shares.
Sale and other transfer of subscription rights are considered a realisation for Norwegian tax purposes. A capital
gain or loss generated by a Norwegian Personal Shareholders through a realisation of subscription rights is
taxable or tax deductible in Norway and subject to the same taxation as a capital gain or loss generated
through realisation of shares, please refer "Taxation of capital gains on realisation of shares— Norwegian
Personal Shareholders" above.
Norwegian Corporate shareholders
A Norwegian Corporate Shareholder's subscription for shares pursuant to a subscription right is not subject to
taxation in Norway. Costs related to the subscription for the shares will be added to the cost price of the shares.
Sale and other transfer of subscription rights are considered a realisation for Norwegian tax purposes.
Norwegian Corporate Shareholders are exempt from tax on capital gains derived from the realisation of
subscription rights qualifying for the Norwegian participation exemption. Losses upon the realisation and costs
incurred in connection with the purchase and realisation of such subscription rights are not deductible for tax
purposes.
Non-Norwegian Shareholders
A Non-Norwegian (Personal or Corporate) Shareholder's subscription for shares pursuant to a subscription right
is not subject to taxation in Norway.
Capital gains derived by the sale or other transfer of subscription rights by Non-Norwegian Shareholders are not
subject to taxation in Norway unless the Non-Norwegian Shareholder holds the subscription rights in connection
with business activities carried out or managed from Norway. Such taxation may be limited according to an
applicable tax treaty or other specific regulations.
14.1.4
Net wealth tax
The value of shares is included in the basis for the computation of net wealth tax imposed on Norwegian
Personal Shareholders. Currently, the marginal net wealth tax rate is 0.85% of the value assessed. The value
for assessment purposes for listed shares is currently equal to ninety percent of the listed value as of 1 January
in the year of assessment (i.e. the year following the relevant fiscal year). The value of debt allocated to the
listed shares is reduced correspondingly (i.e. to ninety percent) for assessment purposes.
Norwegian Corporate Shareholders are not subject to net wealth tax.
96
RenoNorden ASA - Prospectus
Shareholders not resident in Norway for tax purposes are not subject to Norwegian net wealth tax. NonNorwegian Personal Shareholders can, however, be taxable if the shareholding is effectively connected to the
conduct of trade or business in Norway.
14.1.5
VAT and transfer taxes
No VAT, stamp or similar duties are currently imposed in Norway on the transfer or issuance of shares.
14.1.6
Inheritance tax
A transfer of shares through inheritance or as a gift does not give rise to inheritance or gift tax in Norway.
97
RenoNorden ASA - Prospectus
15
THE TERMS OF THE RIGHTS ISSUE
15.1
Overview
The Rights Issue consists of an offer by the Company to issue 350,000,000 Offer Shares at a Subscription Price
of NOK 1.00 per Offer Share, thereby raising gross proceeds of NOK 350 million.
Existing Shareholders will be granted tradable Subscription Rights that, subject to certain limitations based on
applicable laws and regulations, provide preferential right to subscribe for, and be allocated, Offer Shares at the
Subscription Price in the Rights Issue. Over-subscription and subscription without Subscription Rights is
permitted; however, there can be no assurance that Offer Shares will be allocated for such subscriptions.
The Rights Issue is underwritten by the Underwriters pursuant to, and subject to the limitations in, the
Underwriting Agreement, as further described in Section 15.21 "The Underwriting" below.
The Offer Shares allocated in the Rights Issue are expected to be traded on the Oslo Stock Exchange as soon as
the share capital pertaining to the Rights Issue has been registered in the Norwegian Register of Business
Enterprises, expected on or about 24 February 2017.
Completion of the Rights Issue is subject to certain conditions, see Section 15.4 "Conditions for completion of
the Rights Issue".
The Subscription Rights and the Offer Shares have not been, and will not be, registered under the U.S.
Securities Act or with any securities regulatory authority of any state or other jurisdiction in the United States,
and are being offered and sold: (i) in the United States only to QIBs as defined in Rule 144A pursuant to
transactions exempt from, or not subject to, the registration requirements of the U.S. Securities Act; and (ii)
outside the United States in compliance with Regulation S and on exemptions provided by the Prospectus
Directive in a Relevant Member State in each case, in compliance with any applicable laws and regulations.
This Prospectus does not constitute an offer of, or an invitation to purchase or subscribe, the Offer Shares in
any jurisdiction in which such offer or sale would be unlawful. For further details, see "Important information"
and Section 16 "Selling and transfer restrictions".
15.2
Use of proceeds
The net proceeds from the Rights Issue are expected to be NOK 330 million and assuming expenses related to
the Rights Issue charged to the Company in the amount of approximately NOK 20 million. The net proceeds will
be used to strengthen the Company's balance sheet and create headroom with respect to its maximum
NIBD/EBIDTA covenant, thus providing a better platform for the business going forward and increased
refinancing flexibility.
15.3
Resolution to increase the share capital and to issue the Offer Shares
On 30 January 2017, an Extraordinary General Meeting in the Company passed the following resolution to issue
the Offer Shares and increase the share capital of the Company in connection with the Rights Issue (translated
from Norwegian):
(i)
The share capital is increased with NOK 350,000,000 from NOK 27,247,948 to NOK 377,247,948 by
the issuance of 350,000,000 new shares, each with a nominal value of NOK 1.
(ii)
The subscription price is NOK 1 per share. The subscription amount shall be paid in cash.
(iii)
The shareholders of the Company as of the expiry of 30 January 2017 (as registered in the
Company's shareholder register in the VPS as of the expiry of 1 February 2017) shall have
preferential rights to subscribe for the new shares, and will receive subscription rights, corresponding
to their pro rata holdings of shares in the Company, cf. the Norwegian Public Limited Liability
Companies Act Section 10-4 (1). The subscription rights shall be tradable and the Company will aim
to have the subscription rights listed on the Oslo Stock Exchange. Oversubscription and subscription
without subscription rights is permitted. Subscription rights will not be issued in respect of any
existing shares held in treasury by the Company.
98
RenoNorden ASA - Prospectus
(iv)
The Company shall prepare a prospectus that shall be approved by the Financial Supervisory
Authority of Norway in connection with the rights issue. Unless the Board of Directors decides
otherwise, the prospectus shall not be registered with or approved by any foreign stock exchange or
securities regulatory authority. The new shares cannot be subscribed for by investors in jurisdictions
in which it is not permitted to offer the new shares to such investors. With respect to any shareholder
that in the Company's view is not entitled to subscribe for new shares due to limitations imposed by
laws or regulations of the jurisdiction where such shareholder is a resident or citizen, the Company or
someone appointed or instructed by it may (but shall not be obliged to) sell such shareholder's
subscription rights against transfer of the net proceeds from such sale to the shareholder.
(v)
Allocation of the new shares shall be made as follows, and Section 10-4 (3) of the Norwegian Public
Limited Liability Companies Act shall thus be deviated from:
a.
Allocation of new shares to subscribers will be made in accordance with granted and acquired
subscription rights which have been validly exercised during the subscription period. Each
subscription right will give the right to subscribe for, and be allocated, one new share in the
rights issue.
b.
If not all subscription rights are validly exercised during the subscription period, new shares will
be allocated to members of the management of the RenoNorden group who are underwriters
(and companies controlled by such management members) having oversubscribed and
subscribed without use of subscription rights.
c.
New shares not allocated pursuant to criteria a. and b. above will be allocated to subscribers who
are underwriters (other than the underwriters mentioned in criterion b. above) and who have
oversubscribed and subscribed without use of subscription rights.
d.
New shares not allocated pursuant to criteria a., b. and c. above will be allocated to subscribers
who have oversubscribed based on the number of subscription rights used by them.
e.
New shares not allocated pursuant to criteria a., b., c. and d. above will be allocated to
subscribers not holding subscription rights and who do not receive allocations pursuant to
criteria b. or c. above.
f.
New shares not allocated pursuant to the above criteria will be subscribed by, and allocated to,
the underwriters based on, and in accordance with, the underwriting obligation of the respective
underwriters.
(vi)
The subscription period shall commence on 2 February 2017 at 09:00 hours (CET) and end on 16
February 2017 at 16:30 (CET). However, if the prospectus is not approved in time to maintain this
subscription period, the subscription period shall commence at 09:00 hours (CET) on the first trading
day on the Oslo Stock Exchange after such approval has been obtained and end at 16:30 hours
(CET) two weeks thereafter. The subscription of shares shall either take place on a separate
subscription form or, for subscribers who are residents of Norway with a Norwegian personal identity
number, through the VPS online subscription system, within the subscription period. Shares that are
not subscribed for at the end of the subscription period, and which therefore are allocated to the
participants in the Underwriting Syndicate, shall be subscribed for by these within three trading days
after the expiry of the subscription period.
(vii)
The due date for payment for the new shares is 23 February 2017 or the second trading day on the
Oslo Stock Exchange after the expiry of the subscription period, if the subscription period is
postponed in accordance with item vi) above. When subscribing for shares, each subscriber with a
Norwegian bank account must by completion of the subscription form grant Carnegie AS a one-time
power of attorney to debit a stated Norwegian bank account for the subscription amount
corresponding to the number of allocated shares. Upon allocation, the allocated amount will be
debited from the subscriber's account. The debit will take place on or around the due date for
payment. Payment of the subscription amount by subscribers without a Norwegian bank account
shall be made pursuant to the terms set out in the subscription form.
99
RenoNorden ASA - Prospectus
(viii)
The new shares will give full shareholder rights in the Company, including the right to dividends,
from the time the share capital increase pertaining to the rights issue is registered with the
Norwegian Register of Business Enterprises.
(ix)
Section 4 of the Company's Articles of Association shall be amended to reflect the new share capital
and new number of shares following the share capital increase.
(x)
Shares which have not been subscribed by and allocated to other subscribers in the rights issue
pursuant to the allotment criteria set out in item (v) above shall pursuant to the underwriting
agreement be allocated to the members of the Underwriting Syndicate, who have committed
themselves, subject to certain conditions (including a material adverse change (MAC) condition and
other customary conditions), to subscribe for new shares for an aggregate amount of up to NOK
350,000,000. As underwriting commission for the underwriting, the underwriters shall receive an
amount equal to 2.5% of the amount underwritten by each of them. The Underwriters are not
guaranteeing payment of the subscription amount by other subscribers.
(xi)
Expenses in connection with the rights issue, including underwriting commissions, are expected to be
around NOK 20 million.
15.4
Conditions for completion of the Rights Issue
The completion of the Rights Issue is conditional upon that, unless the Rights Issue is fully subscribed, the
Underwriting Agreement remain in full force and effect. See Section 15.21 "The Underwriting" below for a
description of the underwriting and the Underwriting Agreement, including the conditions and termination rights
to which the underwriting is subject.
If it becomes clear that the above condition will not be satisfied, the Rights Issue will be withdrawn. If the
Rights Issue is withdrawn, all Subscription Rights will lapse without value, any subscriptions for, and allocations
of, Offer Shares that have been made will be disregarded and any payments for Offer Shares made will be
returned to the subscribers without interest or any other compensation. The lapsing of Subscription Rights shall
be without prejudice to the validity of any trades in Subscription Rights, and investors will not receive any
refund or compensation in respect of purchased Subscription Rights. The Company and the Manager do not
accept any responsibility or liability with respect to the withdrawal of the Rights Issue or any related effects on
any trades in Subscription Rights or Offer Shares.
15.5
Timetable
The timetable set out below provides certain indicative key dates for the Rights Issue:
Last day of trading in the Shares including Subscription Rights ......................
30 January 2017
First day of trading in the Shares excluding Subscription Rights .....................
31 January 2017
Record Date ............................................................................................
1 February 2017
Subscription Period commences .................................................................
2 February 2017 at 09:00 hours (CET)
Subscription Period ends ...........................................................................
16 February at 16:30 hours (CET)
Trading in Subscription Rights commences on the Oslo Stock Exchange ..........
2 February 2017 at 09:00 hours (CET)
Trading in Subscription Rights on the Oslo Stock Exchange ends ....................
16 February 2017 at 16:30 hours (CET)
Allocation of the Offer Shares ....................................................................
Expected on or about 21 February 2017
Distribution of allocation letters .................................................................
Expected on or about 21 February2017
Payment Date ..........................................................................................
23 February 2017
Registration of the share capital increase with the Norwegian Register of
Business Enterprises.................................................................................
Expected on or about 24 February 2017
Delivery of the Offer Shares ......................................................................
Expected on or about 27 February 2017
Listing and commencement of trading in the Offer Shares on the Oslo Stock
Exchange ................................................................................................
15.6
Expected on or about 27 February 2017
Subscription Price
The Subscription Price in the Rights Issue is NOK 1.00 per Offer Share. The Subscription Price represents a
discount of approximately 81.1% to the closing price of NOK 5.30 per Share as quoted on the Oslo Stock
Exchange on 24 January 2017, and a discount of approximately 23.7% to the theoretical price of the Shares
following the Rights Issue of NOK 1.31 (TERP), calculated on the basis of the closing price per Share of
NOK 5.30 on 24 January 2017.
100
RenoNorden ASA - Prospectus
15.7
Subscription Period
The Subscription Period will commence at 09:00 hours (CET) on 2 February 2017 and end at 16:30 hours (CET)
on 16 February 2017. The Subscription Period may not be extended or shortened.
15.8
Record Date for Existing Shareholders
Existing Shareholders who are registered in the Company's shareholder register in the VPS as of the Record
Date (1 February 2017) will receive Subscription Rights.
Provided that the delivery of traded Shares was made with ordinary T+2 settlement in the VPS, Shares that
were acquired until and including 30 January 2017 will give the right to receive Subscription Rights, whereas
Shares that were acquired from and including 31 January 2017 will not give the right to receive Subscription
Rights.
15.9
Subscription Rights
Existing Shareholders will be granted tradable Subscription Rights giving, subject to certain limitations based on
applicable laws and regulations, a preferential right to subscribe for, and be allocated, Offer Shares in the
Rights Issue. Each Existing Shareholder will be granted 12.845 Subscription Rights for every existing Share
registered as held by such Existing Shareholder on the Record Date. The number of Subscription Rights granted
to each Existing Shareholder will be rounded down to the nearest whole Subscription Right. Each Subscription
Right will, subject to certain limitations based on applicable laws and regulations, give the right to subscribe for,
and be allocated, one Offer Share in the Rights Issue. Subscription Rights will not be issued in respect of any
existing Shares held in treasury by the Company.
The Subscription Rights will be credited to and registered on each Existing Shareholder's VPS account on or
about 2 February 2017 under ISIN NO0010783012. The Subscription Rights will be distributed free of charge to
Existing Shareholders.
The Subscription Rights, including acquired Subscription Rights, must be used to subscribe for Offer
Shares or be sold before the end of the Subscription Period (i.e. 16 February 2017 at 16:30 hours
(CET)). Subscription Rights that are not exercised or sold before 16 February 2017 at 16:30 hours
(CET) will have no value and will lapse without compensation to the holder. Holders of Subscription
Rights (whether granted or acquired) should note that subscriptions for Offer Shares must be made
in accordance with the procedures set out in this Prospectus and that the acquisition of Subscription
Rights does not in itself constitute a subscription for Offer Shares.
Subscription Rights of Existing Shareholders resident in jurisdictions where the Prospectus may not be
distributed and/or with legislation that, according to the Company's assessment, prohibits or otherwise restricts
subscription for Offer Shares (the "Ineligible Shareholders") will initially be credited to such Ineligible
Shareholders' VPS accounts. Such credit specifically does not constitute an offer of the Subscription Rights or
Offer Shares to Ineligible Shareholders. The Company will instruct the Manager to, as far as possible, withdraw
the Subscription Rights from such Ineligible Shareholders' VPS accounts, and may sell them from 09:00 hours
(CET) on 2 February 2017 to 16:30 hours (CET) on 16 February 2017 for the account and risk of such Ineligible
Shareholders, unless the relevant Subscription Rights are held through a financial intermediary. See Section
15.13 "Financial intermediaries" below for a description of the procedures applicable to Subscription Rights held
by Ineligible Shareholders through financial intermediaries.
101
RenoNorden ASA - Prospectus
The Manager will use commercially reasonable efforts to procure that the Subscription Rights are withdrawn
from the VPS accounts of Ineligible Shareholders (and that Subscription Rights are not held through financial
intermediaries) are sold on behalf of, and for the benefit of, such Ineligible Shareholders during such period,
provided that (i) the Manager is able to sell the Subscription Rights at a price at least equal to the anticipated
costs related to the sale of such Subscription Rights, and (ii) the relevant Ineligible Shareholder has not by
09:00 hours (CET) on 2 February 2017 documented to the Company through the Manager the right to receive
the Subscription Rights withdrawn from its VPS account, in which case the Manager shall re-credit the
withdrawn Subscription Rights to the VPS account of the relevant Ineligible Shareholder. The proceeds from the
sale of the Subscription Rights (if any), after deduction of customary sales expenses, will be credited to the
Ineligible Shareholder's bank account registered in the VPS for payment of dividends, provided that the net
proceeds attributable to such Ineligible Shareholder amount to or exceed NOK 100. If an Ineligible Shareholder
does not have a bank account registered in the VPS, the Ineligible Shareholder must contact the Manager to
claim the proceeds. If the net proceeds attributable to an Ineligible Shareholder are less than NOK 100, such
amount will be retained for the benefit of the Company. There can be no assurance that the Manager will be
able to withdraw and/or sell the Subscription Rights at a profit or at all. Other than as explicitly stated above,
neither the Company nor the Manager will conduct any sale of Subscription Rights not utilised before the end of
the Subscription Period.
15.10
Trading in Subscription Rights
The Subscription Rights will be fully tradable and listed on the Oslo Stock Exchange with ticker code "RENO T"
from and including 09:00 hours (CET) on 2 February 2017 to 16:30 hours (CET) on 16 February 2017.
Persons intending to trade in Subscription Rights should be aware that the trading in, and exercise of,
Subscription Rights by holders who are located in jurisdictions outside Norway may be restricted or prohibited
by applicable securities laws. See Section 16 "Selling and transfer restrictions" for a description of such
restrictions and prohibitions.
15.11
Subscription procedures
Subscriptions for Offer Shares must be made by submitting a correctly completed Subscription Form (as defined
below) to the Manager during the Subscription Period, or may, for subscribers who are resident of Norway with
a Norwegian personal identification number, be made online as further described below.
Existing Shareholders will receive Subscription Forms that include information about the number of Subscription
Rights allocated to the relevant Existing Shareholder and certain other matters relating to its shareholding.
Subscriptions for Offer Shares by subscribers who are not Existing Shareholders must be made on a
Subscription Form in the form included in Appendix B "Subscription form for the Rights Issue" (the
"Subscription Form"). Existing Shareholders may also choose to use such Subscription Form.
Correctly completed Subscription Forms must be received by the Manager at the following address or email
address by, or in the case of online subscriptions be registered by, no later than 16:30 hours (CET) on 16
February 2017:
Carnegie AS
Fjordalléen 16, Aker Brygge
N-0160 Oslo, Norway
Tel: + 47 22 00 93 60
E-mail: [email protected]
Subscribers who are residents of Norway with a Norwegian personal identification number may also
subscribe for Offer Shares through the VPS online subscription system (or by following the link on
www.carnegie.no which will redirect the subscriber to the VPS online subscription system). All online
subscribers must verify that they are Norwegian residents by entering their national identity number (Nw.:
personnummer). In addition, the VPS online subscription system is only available for individual persons and is
not available for legal entities; legal entities must thus submit a Subscription Form in order to subscribe for
Offer Shares.
102
RenoNorden ASA - Prospectus
None of the Company or the Manager may be held responsible for postal delays, unavailable internet lines or
servers or other logistical or technical problems that may result in subscriptions not being received in time or at
all by the Manager. Subscription Forms received after the end of the Subscription Period and/or incomplete or
incorrect Subscription Forms and any subscription that may be unlawful may be disregarded at the sole
discretion of the Company and/or the Manager without notice to the subscriber.
Subscriptions are binding and irrevocable, and cannot be withdrawn, cancelled or modified by the subscriber
after having been received by the Manager or, in the case of applications through the VPS online subscription
system, upon registration of the subscription. The subscriber is responsible for the correctness of the
information filled into the Subscription Form or, in the case of applications through the VPS online subscription
system, the online subscription registration. By signing and submitting a Subscription Form, or by registration
of a subscription in the VPS online subscription system, the subscribers confirm and warrant that they have
read this Prospectus and are eligible to subscribe for Offer Shares under the terms set forth herein.
There is no minimum subscription amount for which subscriptions in the Rights Issue must be made. Oversubscription (i.e. subscription for more Offer Shares than the number of Subscription Rights held by the
subscriber entitles the subscriber to be allocated) and subscription without Subscription Rights is permitted.
However, in each case, there can be no assurance that Offer Shares will be allocated for such subscriptions.
Multiple subscriptions (i.e. subscriptions on more than one Subscription Form) are allowed. Please note,
however, that two separate Subscription Forms submitted by the same subscriber with the same number of
Offer Shares subscribed for on both Subscription Forms will only be counted once unless otherwise explicitly
stated in one of the Subscription Forms. In the case of multiple subscriptions through the VPS online
subscription system or subscriptions made both on a Subscription Form and through the VPS online subscription
system, all subscriptions will be counted.
All subscriptions in the Rights Issue will be treated in the same manner regardless of whether the subscription
is made by delivery of a Subscription Form to the Manager or through the VPS online subscription system.
15.12
Mandatory Anti-Money Laundering Procedures
The Rights Issue is subject to applicable anti-money laundering legislation, including the Norwegian Money
Laundering Act of 6 March 2009 no. 11 and the Norwegian Money Laundering Regulations of 13 March 2009 no.
302 (collectively, the "Anti-Money Laundering Legislation").
Subscribers who are not registered as existing customers of the Manager must verify their identity to the
Manager in accordance with the requirements of the Anti-Money Laundering Legislation, unless an exemption is
available. Subscribers who have designated an existing Norwegian bank account and an existing VPS account
on the Subscription Form are exempted, unless verification of identity is requested by the Manger. Subscribers
who have not completed the required verification of identity prior to the expiry of the Subscription Period will
not be allocated Offer Shares.
Furthermore, participation in the Rights Issue is conditional upon the subscriber holding a VPS account. The
VPS account number must be stated in the Subscription Form. VPS accounts can be established with authorised
VPS registrars, who can be Norwegian banks, authorised securities brokers in Norway and Norwegian branches
of credit institutions established within the EEA. However, non-Norwegian investors may use nominee VPS
accounts registered in the name of a nominee. The nominee must be authorised by the NFSA. Establishment of
a VPS account requires verification of identification to the VPS registrar in accordance with the Anti-Money
Laundering Legislation.
15.13
Financial intermediaries
15.13.1
General
All persons or entities holding Shares or Subscription Rights through financial intermediaries (i.e. brokers,
custodians and nominees) should read this Section 15.13 "Financial intermediaries". All questions concerning
the timeliness, validity and form of instructions to a financial intermediary in relation to the exercise of
Subscription Rights should be determined by the financial intermediary in accordance with its usual customer
relations procedure or as it otherwise notifies each beneficial shareholder. Neither the Company nor the
Manager is liable for any action or failure to act by a financial intermediary through which Shares are held.
103
RenoNorden ASA - Prospectus
15.13.2
Subscription Rights
If an Existing Shareholder holds Shares registered through a financial intermediary on the Record Date, the
financial intermediary will customarily give the Existing Shareholder details of the aggregate number of
Subscription Rights to which it will be entitled. The relevant financial intermediary will customarily supply each
Existing Shareholder with this information in accordance with its usual customer relations procedures. Existing
Shareholders holding Shares through a financial intermediary should contact the financial intermediary if they
have received no information with respect to the Rights Issue.
Subject to applicable law, Existing Shareholders holding Shares through a financial intermediary may instruct
the financial intermediary to sell some or all of their Subscription Rights, or to purchase additional Subscription
Rights on their behalf. See Section 16 "Selling and transfer restrictions" for a description of certain restrictions
and prohibitions applicable to the sale and purchase of Subscription Rights in certain jurisdictions outside
Norway.
Existing Shareholders who hold their Shares through a financial intermediary and who are Ineligible
Shareholders will not be entitled to exercise their Subscription Rights but may, subject to applicable law,
instruct their financial intermediary to sell their Subscription Rights transferred to the financial intermediary. As
described in Section 15.9 "Subscription Rights", neither the Company nor the Manager will sell any Subscription
Rights transferred to financial intermediaries.
15.13.3
Subscription Period and period for trading in Subscription Rights
The time by which notification of exercise instructions for subscription of Offer Shares must validly be given to a
financial intermediary may be earlier than the expiry of the Subscription Period. The same applies for
instructions pertaining to trading in Subscription Rights and the last day of trading in such rights on the Oslo
Stock Exchange (which accordingly will be a deadline earlier than 16 February 2017 at 16:30 hours (CET)).
Such deadlines will depend on the financial intermediary. Existing Shareholders who hold their Shares through
a financial intermediary should contact their financial intermediary if they are in any doubt with respect to
deadlines.
15.13.4
Subscription
Any Existing Shareholder who is not an Ineligible Shareholder and who holds its Subscription Rights through a
financial intermediary and wishes to exercise its Subscription Rights, should instruct its financial intermediary in
accordance with the instructions received from such financial intermediary. The financial intermediary will be
responsible for collecting exercise instructions from the Existing Shareholders and for informing the Manager of
their exercise instructions.
A person or entity who has acquired Subscription Rights that are held through a financial intermediary should
contact the relevant financial intermediary for instructions on how to exercise the Subscription Rights.
See Section 16 "Selling and transfer restrictions" below for a description of certain restrictions and prohibitions
applicable to the exercise of Subscription Rights in certain jurisdictions.
15.13.5
Method of payment
Any Existing Shareholder who holds its Subscription Rights through a financial intermediary should pay the
Subscription Price for the Offer Shares that are allocated to it in accordance with the instructions received from
the financial intermediary. The financial intermediary must pay the Subscription Price in accordance with the
instructions in the Prospectus. Payment by the financial intermediary for the Offer Shares must be made to the
Manager no later than the Payment Date (as defined below). Accordingly, financial intermediaries may require
payment to be provided to them prior to the Payment Date.
15.14
Allocation of Offer Shares
Allocation of the Offer Shares will take place on or about 21 February 2017 in accordance with the following
criteria:
104
RenoNorden ASA - Prospectus
(i)
Allocation of Offer Shares to subscribers will be made in accordance with granted and acquired
Subscription Rights which have been validly exercised during the Subscription Period. Each
Subscription Right will give the right to subscribe for, and be allocated, one Offer Share in the Rights
Issue.
(ii)
If not all Subscription Rights are validly exercised during the Subscription Period, Offer Shares will be
allocated to members of the Management of the Group who are Underwriters (and companies
controlled by such Management members) having over-subscribed and subscribed without use of
subscription rights.
(iii)
Offer Shares not allocated pursuant to criteria (a) and (b) above will be allocated to subscribers who
are Underwriters (other than the Underwriters mentioned in criterion (b) above) and who have oversubscribed and subscribed without use of Subscription Rights.
(iv)
Offer Shares not allocated pursuant to criteria (a), (b) or (c) above will be allocated to subscribers
who have over-subscribed based on the number of Subscription Rights used by them.
(v)
Offer Shares not allocated pursuant to criteria (a), (b), (c) or (d) above will be allocated to
subscribers not holding Subscription Rights and who do not receive allocations pursuant to criteria
(b) or (c) above.
(vi)
Offer Shares not allocated pursuant to the above criteria will be subscribed by, and allocated to, the
Underwriters based on, and in accordance with, the underwriting obligation of the respective
Underwriters.
No fractional Offer Shares will be allocated. The Company reserves the right to round off, reject or reduce any
subscription for Offer Shares not covered by Subscription Rights. Allocation of fewer Offer Shares than
subscribed for by a subscriber will not impact on the subscriber's obligation to pay for the number of Offer
Shares allocated.
The result of the Rights Issue is expected to be published on or about 21 February 2017 in the form of a stock
exchange notification from the Company through the Oslo Stock Exchange's information system and at the
Company's website (www.renonorden.com). Notifications of allocated Offer Shares and the corresponding
subscription amount to be paid by each subscriber are expected to be distributed in a letter from the VPS on or
about 21 February 2017. Subscribers having access to investor services through their VPS account manager will
be able to check the number of Offer Shares allocated to them from 12:00 hours (CET) on 21 February 2017.
Subscribers who do not have access to investor services through their VPS account manager may contact the
Manager (tel: +47 22 00 93 60) from 12:00 hours (CET) on 21 February 2017 to obtain information about the
number of Offer Shares allocated to them.
15.15
Payment for the Offer Shares
The payment for Offer Shares allocated to a subscriber falls due on 23 February 2017 (the "Payment Date").
Payment must be made in accordance with the requirements set out in Sections 15.15.1 "Subscribers who have
a Norwegian bank account" or 15.15.2 "Subscribers who do not have a Norwegian bank account".
15.15.1
Subscribers who have a Norwegian bank account
Subscribers who have a Norwegian bank account must, and will by signing the Subscription Form, provide the
Manager with a one-time irrevocable authorisation to debit a specified Norwegian bank account for the amount
payable for the Offer Shares which are allocated to the subscriber.
The specified bank account is expected to be debited on or after the Payment Date. The Manager is only
authorised to debit such account once, but reserves the right to make up to three debit attempts, and the
authorisation will be valid for up to seven working days after the Payment Date.
The subscriber furthermore authorises the Manager to obtain confirmation from the subscriber's bank that the
subscriber has the right to dispose over the specified account and that there are sufficient funds in the account
to cover the payment.
105
RenoNorden ASA - Prospectus
If there are insufficient funds in a subscriber's bank account or if it for other reasons is impossible to debit such
bank account when a debit attempt is made pursuant to the authorisation from the subscriber, the subscriber's
obligation to pay for the Offer Shares will be deemed overdue.
Payment by direct debiting is a service that banks in Norway provide in cooperation. In the relationship
between the subscriber and the subscriber's bank, the standard terms and conditions for "Payment by Direct
Debiting – Securities Trading", which are set out on page 2 of the Subscription Form, will apply, provided,
however, that subscribers who subscribe for an amount exceeding NOK 5 million by signing the Subscription
Form provide the Manager with a one-time irrevocable authorisation to manually debit the specified bank
account for the entire subscription amount.
15.15.2
Subscribers who do not have a Norwegian bank account
Subscribers who do not have a Norwegian bank account must ensure that payment with cleared funds for the
Offer Shares allocated to them is made on or before the Payment Date.
Prior to any such payment being made, the subscriber must contact the Manager's settlement department on
telephone number +47 22 00 93 60 for further details and instructions.
15.15.3
Overdue payments
Overdue payments will be charged with interest at the applicable rate from time to time under the Norwegian
Act on Interest on Overdue Payment of 17 December 1976 No. 100, currently 8.50% per annum as of the date
of this Prospectus. If a subscriber fails to comply with the terms of payment, the Offer Shares will, subject to
the restrictions in the Norwegian Public Limited Liability Companies Act, not be delivered to such subscriber. In
such case the Company and the Manager reserve the right to, at any time and at the risk and cost of the
subscriber, re-allot, cancel or reduce the subscription and the allocation of the allocated Offer Shares, or, if
payment has not been received by the third day after the Payment Date, without further notice to the
subscriber in question sell, assume ownership to or otherwise dispose of the allocated Offer Shares in
accordance with applicable law. If Offer Shares are sold on behalf of the subscriber, such sale will be for the
subscriber's account and risk and the subscriber will be liable for any loss, costs, charges and expenses suffered
or incurred by the Company and/or the Manager as a result of, or in connection with, such sales. The Company
and/or the Manager may enforce payment for any amount outstanding in accordance with applicable law.
15.16
Delivery of the Offer Shares
Subject to timely payment of the entire subscription amount in the Rights Issue, the Company expects that the
share capital increase pertaining to the Rights Issue will be registered with the Norwegian Register of Business
Enterprises on or about 24 February 2017 and that the Offer Shares will be delivered to the VPS accounts of the
subscribers to whom they are allocated on or about the same day. The final deadline for registration of the
share capital increase pertaining to the Rights Issue with the Norwegian Register of Business Enterprises, and
hence for the subsequent delivery of the Offer Shares, is, pursuant to the Norwegian Public Limited Liability
Companies Act, three months from the expiry of the Subscription Period, i.e. on 16 May 2017.
15.17
Listing of the Offer Shares
The Shares are listed on the Oslo Stock Exchange under ISIN NO0010723141 and ticker code "RENO". The
Offer Shares will be listed on the Oslo Stock Exchange as soon as the share capital increase pertaining to the
Rights Issue has been registered with the Norwegian Register of Business Enterprises and the Offer Shares
have been registered in the VPS. This is expected to take place on or about 27 February 2017.
The Offer Shares may not be transferred or traded before they are fully paid and the registration of the Offer
Shares with the Norwegian Register of Business Enterprises and the VPS has taken place.
15.18
The rights conferred by the Offer Shares
The Offer Shares issued in the Rights Issue will be ordinary Shares in the Company each having a nominal
value of NOK 1.00. The Offer Shares will be issued electronically in registered form in accordance with the
Norwegian Public Limited Liability Companies Act.
106
RenoNorden ASA - Prospectus
The Offer Shares will rank pari passu in all respects with the existing Shares and will carry full shareholder
rights in the Company from the time of registration of the share capital increase pertaining to the Rights Issue
with the Norwegian Register of Business Enterprises. The Offer Shares will be eligible for any dividends that the
Company may declare after such registration. All Shares, including the Offer Shares, will have voting rights and
other rights and obligations which are standard under the Norwegian Public Limited Liability Companies Act,
and are governed by Norwegian law. See Section 12 "Corporate information and description of the share
capital" for a more detailed description of the Shares.
15.19
VPS registration
The Subscription Rights will be registered in the VPS under ISIN NO0010783012. The Offer Shares will be
registered in the VPS with the same ISIN as the existing Shares, i.e. ISIN NO0010723141.
The Company's registrar with the VPS is DNB (the "VPS Registrar"), Dronning Eufemias gate 30, 0191 Oslo,
Norway, telephone number +47 23 26 80 17.
15.20
Dilution
The Rights Issue will result in an immediate dilution of approximately 93% for Existing Shareholders who do not
participate in the Rights Issue.
15.21
The Underwriting
The Company and the Underwriters have entered into the Underwriting Agreement dated 18 December 2016,
pursuant to which the Underwriters have undertaken, severally and not jointly, to underwrite an aggregate
amount of NOK 350 million in the Rights Issue. Subject to the terms and conditions of the Underwriting
Agreement, the Underwriters have, on a pro rata basis and limited to their respective underwritten amounts as
set out in the table below, undertaken to subscribe and pay for the Offer Shares not subscribed for during the
Subscription Period on or prior to the Payment Date.
The table below shows the subscription amount each Underwriter has undertaken to underwrite.
Underwritten
amount
%
(NOK)
(approximately)
Name
Address
Skips AS Tudor
Strandveien 20, 1366 Lysaker, Norway
40,000,000
11.4%
Folketrygdfondet
Haakon VII's gate 2, 0161 Oslo, Norway
35,000,000
10.0%
MP Pensjon
Lakkegata 23, 0187 Oslo, Norway
35,000,000
10.0%
Alfred Berg Norge
P.B. 1294 Vika, 0111 Oslo, Norway
30,000,000
8.6%
KLP
P.B. 400 Sentrum, 0103 Oslo, Norway
27,000,000
7.7%
Tigerstaden AS
Sørkedalsveien 10, 039 Oslo, Norway
25,000,000
7.1%
25,000,000
7.1%
Tour Oden, 34 Avenue De L'Annonciade,
Apollo Asset Ltd
98000 Monaco
Asta Netherlands B.V.
Luna Arena, Herikerbergweg 238, 1101 CM,
Amsterdam, the Netherlands
21,000,000
6.0%
AS Tanja
Stortingsgata 21, 0161 Oslo, Norway
18,000,000
5.1%
Cosimo AS
Arnebråtveien 3, 0376 Oslo, Norway
15,000,000
4.3%
Viola AS
P.B. 37, 4661 Kristiansand, Norway
15,000,000
4.3%
Alpine Capital AS
Østre Holmensvingen 3, 0774 Oslo, Norway
10,000,000
2.9%
Danske Capital
P.B. 1170 Sentrum, 0107 Oslo, Norway
10,000,000
2.9%
Ludvig Lorentzen AS
Postboks A Bygdøy, 0211 Oslo, Norway
10,000,000
2.9%
Torstein Tvenge
P.B. 515 Skøyen, 0214 Oslo, Norway
10,000,000
2.9%
SJ Investments Ltd.
c/o Luxembourg SA, P.O. Box 487, L-2014
10,000,000
2.9%
Skøien AS
Luxembourg
Haakon VII's gate 6, 0161 Oslo, Norway
8,000,000
2.3%
Caaby AS
Stortingsgata 21, 0161 Oslo, Norway
2,000,000
0.6%
Formue Nord
Nytorv 11, 2nd Floor, 9000 Aalborg,
Markedsneutral A/S
Denmark
1,000,000
0.3%
VJ Invest AS
Tjuvholmen (InWester) Olav Selvaags plass
1,000,000
0.3%
107
RenoNorden ASA - Prospectus
5, 0252 Oslo, Norway
Harald Rafdal
Øverbergveien 28C, 1397 Nesøya
1,000,000
0.3%
Øystein Disch Olsrød
Ringshaugveien 131C, 3150 Tolvsrød
500,000
0.1%
Ingrid Therese Tjøsvold
Torstrups gate 29, 0264 Oslo
500,000
0.1%
350,000,000
100%
The Underwriters' obligations to subscribe and pay for the Offer Shares allocated to them in accordance with
the Underwriting Agreement are conditional upon the following conditions: (i) the Underwriters having
underwritten a number of Offer Shares that in aggregate provides gross proceeds of NOK 350 million, (ii) the
General Meeting of the Company validly approving the Rights Issue, (iii) the Company having published a
prospectus in relation to the Rights Issue approved by the Norwegian FSA, and (iv) no change, event, effect, or
condition having occurred that has or would have, individually or in the aggregate, an effect on the current or
future business, assets, liabilities, liquidity, solvency or funding position or condition (financial or otherwise) or
results of the Company, 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 Offer Shares on the terms
and in the manner contemplated in the Prospectus. All of the conditions, except for the condition included in
(iv) above, have been fulfilled at the time of publication of this Prospectus.
The Underwriters' obligations expire in the event that they have not been notified of any allotment under the
Underwriting Agreement within 24:00 hours (CET) on 31 March 2017. In such event, the Rights Issue will be
withdrawn unless it is fully subscribed. See Section 15.4 "Conditions for completion of the Rights Issue" for a
description of the consequences of a withdrawal of the Rights Issue.
Pursuant to the Underwriting Agreement, each Underwriter will upon completion of the Rights Issue receive an
underwriting fee of 2.5% of its respective underwritten amount.
15.22
Net proceeds and expenses related to the Rights Issue
The Manager will receive a fee of 2% of the gross amount underwritten by existing shareholders and 3% of the
gross amount underwritten by new shareholders. The total costs and expenses of, and incidental to, the Rights
Issue are estimated to amount to approximately NOK 20 million. No expenses or taxes will be charged by the
Company or the Manager to the subscribers in the Rights Issue.
Total net proceeds from the Rights Issue are estimated to amount to approximately NOK 330 million. For a
description of the use of such proceeds, see Section 15.2 "Use of proceeds".
15.23
Interest of natural and legal persons involved in the Rights Issue
The Manager or its affiliates have provided from time to time, and may provide in the future, investment and
commercial banking services to the Company and its affiliates in the ordinary course of business, for which they
may have received and may continue to receive customary fees and commissions. The Manager, its employees
and any affiliate may currently own Shares in the Company. Further, in connection with the Rights Issue, the
Manager, its employees and any affiliate acting as an investor for its own account may receive Subscription
Rights (if they are Existing Shareholders) and may exercise its right to take up such Subscription Rights and
acquire Offer Shares, and, in that capacity, may retain, purchase or sell Offer Shares or Subscription Rights and
any other securities of the Company or other investments for its own account and may offer or sell such
securities (or other investments) otherwise than in connection with the Rights Issue. The Manager does not
intend to disclose the extent of any such investments or transactions otherwise than in accordance with any
legal or regulatory obligation to do so.
Further, the Manager will receive fees in connection with the Rights Issue and, as such, have an interest in the
Rights Issue. See Section 15.22 "Net proceeds and expenses related to the Rights Issue", for information on
the fees to the Manager.
The Underwriters will receive an underwriting fee of 2.5% of its respective underwritten amount. See Section
15.21 "The Underwriting" for information on the fees to the Underwriters.
108
RenoNorden ASA - Prospectus
15.24
Participation of major Existing Shareholders and members of the Company's management,
supervisory and administrative bodies in the Rights Issue
Except for the underwriting commitment by certain members of Management, certain major existing
shareholders (see Section 12.5 "Ownership structure") and other Underwriters subscribing for more than 5% of
the Rights Issue pursuant to the Underwriting Agreement (see Section 15.21 "The Underwriting" above), the
Company is not aware of whether any major shareholders of the Company or members of the Company's
management, supervisory or administrative bodies intend to subscribe for Offer Shares in the Rights Issue, or
whether any person intends to subscribe for more than 5% of the Rights Issue.
15.25
Publication of information relating to the Rights Issue
In addition to press releases which will be posted on the Company's website, the Company will use the Oslo
Stock Exchange information system to publish information relating to the Rights Issue.
15.26
Governing law and jurisdiction
The Subscription Forms and the terms and conditions of the Rights Issue shall be governed by, and construed
in accordance with, and the Offer Shares will be issued pursuant to, Norwegian law. Any dispute arising out of,
or in connection with, the Subscription Forms or the Rights Issue shall be subject to the exclusive jurisdiction of
the courts of Norway, with Oslo District Court as legal venue.
109
RenoNorden ASA - Prospectus
16
SELLING AND TRANSFER RESTRICTIONS
16.1
General
The grant of Subscription Rights and issue of the Offer Shares upon exercise of Subscription Rights and the
offer of unsubscribed Offer Shares to persons resident in, or who are citizens of countries other than Norway,
may be affected by the laws of the relevant jurisdiction. Investors should consult their professional advisers as
to whether they require any governmental or other consent or need to observe any other formalities to enable
them to exercise Subscription Rights or purchase Offer Shares.
The Company is not taking any action to permit a public offering of the Subscription Rights and Offer Shares in
any jurisdiction other than Norway. Receipt of this Prospectus will not constitute an offer in those jurisdictions
in which it would be illegal to make an offer and, in those circumstances, this Prospectus is for information only
and should not be copied or redistributed. Except as otherwise disclosed in this Prospectus, if an investor
receives a copy of this Prospectus in any territory other than Norway, the investor may not treat this
Prospectus as constituting an invitation or offer to it, nor should the investor in any event deal in the Offer
Shares and Subscription Rights, unless, in the relevant jurisdiction, such an invitation or offer could lawfully be
made to that investor, or the Offer Shares and Subscription Rights could lawfully be dealt in without
contravention of any unfulfilled registration or other legal requirements. Accordingly, if an investor receives a
copy of this Prospectus, the investor should not distribute or send the same, or transfer the Offer Shares and
Subscription Rights to any person or in or into any jurisdiction where to do so would or might contravene local
securities laws or regulations. If the investor forwards this Prospectus into any such territories (whether under a
contractual or legal obligation or otherwise), the investor should direct the recipient's attention to the contents
of this Section 16 "Selling and transfer restrictions".
Except as otherwise noted in this Prospectus and subject to certain exceptions: (i) the Subscription Rights and
Offer Shares being granted or offered, respectively, in the Rights Issue may not be offered, sold, resold,
transferred or delivered, directly or indirectly, in or into, member states of the EEA that have not implemented
the Prospectus Directive, the United States, Australia, Canada, the Hong Kong Special Administrative Region of
the People's Republic of China, South Africa or Japan or any other jurisdictions in which it would not be
permissible to grant the Subscription Rights and/or offer the Offer Shares (the "Ineligible Jurisdictions"); (ii)
this Prospectus may not be sent to any person in any Ineligible Jurisdiction; and (iii) the crediting of
Subscription Rights to an account of an Ineligible Shareholder or other person in an Ineligible Jurisdiction or a
citizen of an Ineligible Jurisdiction does not constitute an offer to such persons of the Subscription Rights or the
Offer Shares. Ineligible Shareholders or a person to whom the Rights Issue cannot be lawfully made
(collectively, "Ineligible Persons") may not exercise Subscription Rights.
If an investor takes up, delivers or otherwise transfers Subscription Rights, exercises Subscription Rights to
obtain Offer Shares or trades or otherwise deals in the Offer Shares and Subscription Rights, that investor will
be deemed to have made or, in some cases, be required to make, the following representations and warranties
to the Company and any person acting on the Company's or its behalf:
•
the investor is not an Ineligible Person;
•
the investor is not acting, and has not acted, for the account or benefit of an Ineligible Person;
•
unless the investor is a QIB, the investor is located outside the United States and any person for
whose account or benefit it is acting on a non-discretionary basis is located outside the United States
and, upon acquiring Offer Shares, the investor and any such person will be located outside the United
States;
•
the investor understands that the Subscription Rights and Offer Shares have not been and will not be
registered under the U.S. Securities Act and may not be offered, sold, pledged, resold, granted,
delivered, allocated, taken up or otherwise transferred within the United States except pursuant to
an exemption from, or in a transaction not subject to, registration under the U.S. Securities Act; and
•
the investor may lawfully be offered, take up, subscribe for and receive Subscription Rights and Offer
Shares in the jurisdiction in which it resides or is currently located.
110
RenoNorden ASA - Prospectus
The Company and any persons acting on behalf of the Company, including the Manager, will rely upon the
investor's representations and warranties. Any provision of false information or subsequent breach of these
representations and warranties may subject the investor to liability.
If a person is acting on behalf of a holder of Subscription Rights (including, without limitation, as a nominee,
custodian or trustee), that person will be required to provide the foregoing representations and warranties to
the Company with respect to the exercise of Subscription Rights on behalf of the holder. If such person cannot
or is unable to provide the foregoing representations and warranties, the Company will not be bound to
authorise the allocation of any of the Subscription Rights and Offer Shares to that person or the person on
whose behalf the other is acting. Subject to the specific restrictions described below, if an investor (including,
without limitation, its nominees and trustees) is outside Norway and wishes to exercise Subscription Rights
and/or deal in the Offer Shares, the investor must satisfy itself as to full observance of the applicable laws of
any relevant territory including obtaining any requisite governmental or other consents, observing any other
requisite formalities and paying any issue, transfer or other taxes due in such territories.
The information set out in this Section is intended as a general guide only. If the investor is in any
doubt as to whether it is eligible to exercise its Subscription Rights or subscribe for the Offer
Shares, that investor should consult its professional adviser without delay.
Subscription Rights will initially be credited to financial intermediaries for the accounts of all shareholders who
hold Shares registered through a financial intermediary on the Record Date. Subject to certain exceptions,
financial intermediaries, which include brokers, custodians and nominees, may not exercise any Subscription
Rights on behalf of any person in the Ineligible Jurisdictions or any Ineligible Person and may be required in
connection with any exercise of Subscription Rights to provide certifications to that effect.
Financial intermediaries may sell any and all Subscription Rights held for the benefit of Ineligible Persons to the
extent permitted under their arrangements with such Ineligible Persons and applicable law and remit the net
proceeds to the accounts of such Ineligible Persons.
Subject to certain exceptions, financial intermediaries are not permitted to send this Prospectus or any other
information about the Rights Issue into any Ineligible Jurisdiction or to any Ineligible Person. Subject to certain
exceptions, exercise instructions or certifications sent from or postmarked in any Ineligible Jurisdiction will be
deemed to be invalid and Offer Shares will not be delivered to an addressee in any Ineligible Jurisdiction. The
Company reserves the right to reject any exercise (or revocation of such exercise) in the name of any person
who provides an address in an Ineligible Jurisdiction for acceptance, revocation of exercise or delivery of such
Subscription Rights and Offer Shares, who is unable to represent or warrant that such person is not in an
Ineligible Jurisdiction and is not an Ineligible Person, who is acting on a non-discretionary basis for such
persons, or who appears to the Company or its agents to have executed its exercise instructions or
certifications in, or dispatched them from, an Ineligible Jurisdiction. Furthermore, the Company reserves the
right, with sole and absolute discretion, to treat as invalid any exercise or purported exercise of Subscription
Rights which appears to have been executed, effected or dispatched in a manner that may involve a breach or
violation of the laws or regulations of any jurisdiction.
Notwithstanding any other provision of this Prospectus, the Company reserves the right to permit a holder to
exercise its Subscription Rights if the Company, in its absolute discretion, is satisfied that the transaction in
question is exempt from or not subject to the laws or regulations giving rise to the restrictions in question.
Applicable exemptions in certain jurisdictions are described further below. In any such case, the Company does
not accept any liability for any actions that a holder takes or for any consequences that it may suffer as a result
of the Company accepting the holder's exercise of Subscription Rights.
No action has been or will be taken by the Company or the Manager to permit the possession of this Prospectus
(or any other offering or publicity materials or application form(s) relating to the Rights Issue) in any
jurisdiction where such distribution may lead to a breach of any law or regulatory requirement.
111
RenoNorden ASA - Prospectus
Neither the Company nor the Manager, nor any of their respective representatives, is making any
representation to any offeree, subscriber or purchaser of Offer Shares and/or holder of Subscription Rights
regarding the legality of an investment in the Subscription Rights and/or the Offer Shares by such offeree,
subscriber or purchaser under the laws applicable to such offeree, subscriber or purchaser. Each investor should
consult its own advisers before subscribing for or purchasing Subscription Rights and/or Offer Shares. Investors
are required to make their independent assessment of the legal, tax, business, financial and other
consequences of a subscription for or purchase of Subscription Rights and/or Offer Shares.
A further description of certain restrictions in relation to the Subscription Rights and the Offer Shares in certain
jurisdictions is set out below.
16.2
United States
The Subscription Rights and Offer Shares have not been and will not be registered under the U.S. Securities Act
or with any securities regulatory authority of any state or other jurisdiction of the United States and may not be
offered, sold, taken up, exercised, resold, transferred or delivered, directly or indirectly, within the United
States except pursuant to an applicable exemption from the registration requirements of the U.S. Securities Act
and in compliance with the securities laws of any state or other jurisdiction of the United States. There will be
no public offer of the Subscription Rights and Offer Shares in the United States. A notification of exercise of
Subscription Rights and subscription of Offer Shares in contravention of the above may be deemed to be
invalid.
The Subscription Rights and Offer Shares are being offered and sold outside the United States in reliance on
Regulation S. Any offering of the Subscription Rights and Offer Shares by the Company to be made in the
United States will be made only to a limited number of QIBs pursuant to an exemption from registration under
the U.S. Securities Act who have executed and returned an investor letter to the Company prior to exercising
their Subscription Rights. Prospective purchasers are hereby notified that sellers of Subscription Rights and
Offer Shares may be relying on an exemption from the provisions of Section 5 of the U.S. Securities Act
provided by Rule 144A.
Accordingly, subject to certain limited exceptions, this Prospectus will not be sent to any shareholder with a
registered address in the United States. In addition, the Company and the Manager reserve the right to reject
any instruction sent by or on behalf of any account holder with a registered address in the United States in
respect of the Subscription Rights and/or the Offer Shares.
Any recipient of this Prospectus in the United States is hereby notified that this Prospectus has been furnished
to it on a confidential basis and is not to be reproduced, retransmitted or otherwise redistributed, in whole or in
part, under any circumstances. Furthermore, recipients are authorised to use it solely for the purpose of
considering an investment in the Subscription Rights and/or Offer Shares in the Rights Issue and may not
disclose any of the contents of this document or use any information herein for any other purpose. This
Prospectus is personal to each offeree and does not constitute an offer to any other person or to the public
generally to subscribe for, or otherwise acquire, Subscription Rights and/or Offer Shares. Any recipient of this
document agrees to the foregoing by accepting delivery of this Prospectus.
Until 40 days after the commencement of the Rights Issue, any offer or sale of Subscription Rights and Offer
Shares within the United States by any dealer (whether or not participating in the Rights Issue) may violate the
registration requirements of the U.S. Securities Act.
The Subscription Rights and the Offer Shares have not been approved or disapproved by the U.S. Securities
and Exchange Commission, any state securities commission in the United States or any other United States
regulatory authority nor have any of the foregoing authorities passed upon or endorsed the merits of the
offering of the Subscription Rights and Offer Shares or the accuracy or adequacy of this document. Any
representation to the contrary is a criminal offense in the United States.
Each person to which Subscription Rights and/or Offer Shares are distributed, offered or sold in the United
States, by accepting delivery of this Prospectus or by its subscription for Offer Shares or purchase of
Subscription Rights, will be deemed to have represented and agreed, on its behalf and on behalf of any investor
accounts for which it is subscribing for Offer Shares or purchasing Subscription Rights, as the case may be,
that:
112
RenoNorden ASA - Prospectus
•
it is a "qualified institutional buyer" as defined in Rule 144A of the U.S. Securities Act, and that it has
executed and returned an investor letter to the Company prior to exercising their Subscription
Rights;
•
it understands that such Offer Shares are "restricted securities" for purposes of the U.S. securities
laws and may not be offered, sold, pledged or otherwise transferred except (i)(A) in accordance with
Rule 144A to a person that it and any person acting on its behalf reasonably believe is a QIB
purchasing for its own account or for the account of a QIB, (B) in an offshore transaction in
accordance with Rule 903 or Rule 904 of Regulation S under the U.S. Securities Act, (C) pursuant to
an exemption from registration under the U.S. Securities Act provided by Rule 144 thereunder (if
available), (D) pursuant to any other available exemption from registration under the U.S. Securities
Act or (E) pursuant to an effective registration statement under the U.S. Securities Act, and (ii) in
accordance with all applicable federal and state securities laws of the United States; and
•
the Subscription Rights and Offer Shares have not been offered to it by the Company by means of
any form of "general solicitation" or "general advertising" (within the meaning of Regulation D under
the U.S. Securities Act).
Each person to which Subscription Rights and/or Offer Shares are distributed, offered or sold outside the United
States will be deemed, by accepting delivery of the Prospectus or by its subscription for Offer Shares or
purchase of Subscription Rights and/or Offer Shares, will be deemed to have represented and agreed, on its
behalf and on behalf of any investor accounts for which it is subscribing for Offer Shares or purchasing
Subscription Rights and/or Offer Shares, as the case may be, that:
•
it is acquiring the Subscription Rights and/or the Offer Shares from the Company or the Manager in
an "offshore transaction" as defined in Regulation S; and
•
the Subscription Rights and/or the Offer Shares have not been offered to it by the Company or the
Manager by means of any "directed selling efforts" as defined in Regulation S.
16.3
United Kingdom
This Prospectus is only being distributed to and is only directed at (i) persons who are outside the United
Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act
2000 (Financial Promotion) Order 2005 (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 Offer 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 Prospectus or any of its
contents.
The Manager has represented, warranted and agreed (i) that it has only communicated or caused to be
communicated and will only communicate or cause to be communicated an invitation or inducement to engage
in investment activity (within the meaning of section 21 of the FSMA) received by it in connection with the issue
or sale of the Offer Shares in circumstances in which section 21(1) of the FSMA does not apply to the Company
and (ii) that it has complied and will comply with all applicable provisions of the FSMA with respect to anything
done by it in relation to the Offer Shares in, from or otherwise involving the United Kingdom.
16.4
European Economic Area
In relation to each Relevant Member State, with effect from and including the date on which the EU Prospectus
Directive is implemented in that Relevant Member State (the "Relevant Implementation Date"), an offer to
the public of any Offer Shares which are the subject of the Rights Issue contemplated by this Prospectus may
not be made in that Relevant Member State, other than the offering in Norway as described in this Prospectus,
once the Prospectus has been approved by the competent authority in Norway and published in accordance
with the EU Prospectus Directive (as implemented in Norway), except that an offer to the public in that
Relevant Member State of any Offer Shares may be made at any time with effect from and including the
Relevant Implementation Date under the following exemptions under the EU Prospectus Directive, if they have
been implemented in that Relevant Member State:
113
RenoNorden ASA - Prospectus
o
to legal entities which are qualified investors as defined in the EU Prospectus Directive;
o
to fewer than 100, or, if the Relevant Member State has implemented the relevant provisions of the
2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined
in the EU Prospectus Directive), as permitted under the EU Prospectus Directive, subject to obtaining
the prior consent of the Manager for any such offer; or
o
in any other circumstances falling within Article 3(2) of the EU Prospectus Directive;
provided that no such offer of Offer Shares shall require the Company or any Manager to publish a prospectus
pursuant to Article 3 of the EU Prospectus Directive or supplement a prospectus pursuant to Article 16 of the EU
Prospectus Directive.
For the purposes of this provision, the expression an "offer to the public" in relation to any Offer Shares in any
Relevant Member State means the communication in any form and by any means of sufficient information on
the terms of the offer and any securities to be offered so as to enable an investor to decide to purchase any
Offer Shares, as the same may be varied in that member state by any measure implementing the EU
Prospectus Directive in that Member State the expression "EU Prospectus Directive" means Directive
2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented
in the Relevant Member State), and includes any relevant implementing measure in each Relevant Member
State and the expression "2010 PD Amending Directive" means Directive 2010/73/EU.
This EEA selling restrictions is in addition to any other selling restrictions set out in this Prospectus.
114
RenoNorden ASA - Prospectus
17
ADDITIONAL INFORMATION
17.1
Auditor and advisors
The Company's independent auditor is KPMG AS with registration number 935 174 627, and business address
at Sørkedalsveien 6, N-0369 Oslo, Norway. KPMG AS is a member of Den Norske Revisorforeningen (The
Norwegian Institute of Public Accountants).
Carnegie AS (Fjordalléen 16, Aker Brygge, N-0106 Oslo, Norway) is acting as Sole Manager and Bookrunner in
connection with the Rights issue.
Advokatfirmaet Thommessen AS (Haakon VIIs gate 10, N-0161 Oslo, Norway) is acting as Norwegian legal
counsel to the Company.
17.2
Documents on display
Copies of the following documents will be available for inspection at the Company's offices at Lindebergvegen 3,
N-2016 Frogner, Norway, during normal business hours from Monday to Friday each week (except public
holidays) for a period of twelve months from the date of this Prospectus:
•
The Company's certificate of incorporation and Articles of Association;
•
All reports, letters, and other documents, historical financial information, valuations and statements
prepared by any expert at the Company's request any part of which is included or referred to in this
Prospectus; and
•
This Prospectus.
17.3
Incorporation by reference herein
The information incorporated by reference in this Prospectus should be read in connection with the cross
reference table set out below. Except as provided in this Section, no information is incorporated by reference in
this Prospectus.
The Company incorporates by reference the Group's unaudited consolidated Interim Financial Statements as of,
and for the three and nine month periods ended, 30 September 2016 and the Group's audited consolidated
financial statements as of, and for the year ended, 31 December 2015 (the Financial Statements), as well as
certain other documents set out below.
Section in
the
Prospectus
Section 10
Section 10
Section 9 and
10
Disclosure
requirement
Reference document and link
Audited historical
financial information
(Annex XXIII,
Section 15.1 and
15.3)
Financial Statements 2015:
http://www.newsweb.no/newsweb/search.do?messageId=399997
Audit report (Annex
XXIII, Section 15.4)
Interim financial
information (Annex
XXIII, section 15.6)
Page (P) in
reference
document
P 33 - 77
Auditor's report 2015:
http://www.newsweb.no/newsweb/search.do?messageId=399997
P 79 - 80
Interim Financial Statements as of and for the three and nine
month period ending 30 September 2016:
http://www.newsweb.no/newsweb/search.do?messageId=416351
P 11 - 22
Interim Financial Statements as of and for the three and nine
month period ending 30 September 2015:
http://www.newsweb.no/newsweb/search.do?messageId=389375
P 11 - 19
115
RenoNorden ASA - Prospectus
18
DEFINITIONS AND GLOSSARY
In the Prospectus, the following defined terms have the following meanings:
2010 PD Amending Directive .............. Directive 2010/73/EU amending the EU Prospectus Directive.
APMs ............................................... Alternative performance measures.
Anti-Money Laundering Legislation ...... The Norwegian Money Laundering Act of 6 March 2009 no. 11 and the Norwegian
Money Laundering Regulations of 13 March 2009 no. 302, collectively.
Articles of Association ........................ The Company’s articles of association.
Board of Directors ............................. The board of directors of the Company.
Board Members ................................ The members of the Board of Directors.
CAGR .............................................. Compound annual growth rate.
Carnegie .......................................... Carnegie AS.
CET ................................................. Central European Time.
Company ......................................... RenoNorden ASA.
Corporate Governance Code ............... The Norwegian Code of Practice for Corporate Governance, dated 30 October 2014.
DKK ................................................ Danish Kroner, the lawful currency of Denmark.
DNB ................................................ DNB Bank ASA.
EBIT ............................................
Operating profit (loss).
EBITDA ............................................ Operating profit (loss) before depreciation, amortisation, write down of assets,
impairment losses and loss on onerous contracts.
EBITDA Margin ................................. EBITDA as a percent of total operating revenue.
EEA ................................................. The European Economic Area.
EU .................................................. The European Union.
EUR................................................. The lawful common currency of the EU member states who have adopted the Euro
as their sole national currency.
EU Prospectus Directive ..................... Directive
2003/71/EC
of
the
European
Parliament
and
of
the
Council
of
4 November 2003, and amendments thereto, including the 2010 PD Amending
Directive to the extent implemented in the Relevant Member State.
Family Member ................................. Spouse, cohabitee or child (including such child by adoption or step child) of a
Selling Shareholder or member of Senior Management.
Financial Information ......................... The Financial Statements and the Interim Financial Statements.
Financial Statements ......................... The Group's audited consolidated financial statements as of, and for the year ended,
31 December 2015.
FSMA............................................... The UK Financial Services and Markets Act 2000.
General Meeting ............................... The Company’s general meeting of shareholders.
Group .............................................. The Company and its consolidated subsidiaries.
IAS 34 ............................................. International Accounting Standard 34 “Interim Financial Reporting” as adopted by
the EU.
IFRS ................................................ International Financial Reporting Standards as adopted by the EU.
Ineligible Jurisdictions ..................
Member states of the EEA that have not implemented the Prospectus Directive or
any other jurisdiction in which it would not be permissible to offer the Subscription
Rights and/or the Offer Shares.
Ineligible Persons .........................
Ineligible Shareholders or a person to whom the Rights Issue cannot be lawfully
made.
Ineligible Shareholders .................
Existing Shareholders resident in jurisdictions where the Prospectus may not be
distributed and/or with legislation that, according to the Company's assessment,
prohibits or otherwise restricts subscription for Offer Shares and Existing
Shareholders located in the United States who the Company does not reasonably
believe to be a QIB.
Interim Financial Statements .............. The Group’s unaudited interim condensed consolidated financial statements as of,
and for the three and nine month periods ended, 30 September 2016, issued on 19
December 2016. The Interim Financial Statements replace previously issued interim
financial statements as of, and for the three and nine month periods ended, 30
September 2016 which was dated on 8 November 2016 and published 9 November
2016, as it contained errors, as described in note 5 to the Interim Financial
Statements.
KPI .............................................
Key Performance Indicator
116
LTM ................................................. Last twelve months from 30 September 2016.
LNG ................................................ Liquefied natural gas.
Management .................................... The senior management team of the Group.
Manager .......................................... The Sole Global Coordinator and the Sole Bookrunner, collectively.
Net Interest Bearing Debt ("NIBD")
Total bank borrowings and Non-current / current finance lease obligation less Cash
and cash equivalents
NOK ................................................ Norwegian Kroner, the lawful currency of Norway.
NOM-account.................................... Nominee account.
Non-Norwegian Corporate
Shareholders .................................... Shareholders who are limited liability companies (and certain other entities) not
resident in Norway for tax purposes.
Non-Norwegian Personal
Shareholders .................................... Shareholders who are individuals not resident in Norway for tax purposes.
Norwegian Act on Interest on
Overdue Payment ............................. The Norwegian Act on Interest on Overdue Payment of 17 December 1976 no. 100.
Norwegian Corporate Shareholders ..... Shareholders who are limited liability companies (and certain similar entities)
resident in Norway for tax purposes.
Norwegian FSA ................................. The Financial Supervisory Authority of Norway (Nw.: Finanstilsynet).
Norwegian Personal Shareholders ....... Shareholders who are individuals resident in Norway for tax purposes.
Norwegian Public Limited Liability
Companies Act ................................. The Norwegian Public Limited Liability Companies Act of 13 June 1997 no. 45 (Nw.:
allmennaksjeloven).
Norwegian Securities Trading Act ........ The
Norwegian
Securities
Trading
Act
of
29
June
2007
no.
75
(Nw.:
verdipapirhandelloven).
Offer Shares ..................................... 350,000,000 new shares in the Company with a par value of NOK 1.00 each.
Order .............................................. The UK Financial Services and Markets Act 2000 (Financial Promotion) Order 2005,
as amended.
Oslo Børs ......................................... A Norwegian regulated market operated by the Oslo Stock Exchange.
Oslo Stock Exchange ......................... Oslo Børs ASA.
Payment Date................................... 23 February 2017.
Prior Senior Facility ........................... The former senior facility with DNB Bank ASA and Nordea Bank Norge ASA.
Prospectus ....................................... This Prospectus, dated 30 January 2017.
QIBs................................................ Qualified institutional buyers in the United States as defined in Rule 144A.
Record Date..................................
The shareholders of the Company as of 30 January 2017 (and being registered as
such in the VPS on 1 February 2017 pursuant to the two days' settlement procedure.
Regulation S ..................................... Regulation S under the U.S. Securities Act.
Relevant Implementation Date ........... In relation to each Relevant Member State, with effect from and including the date
on which the EU Prospectus Directive is implemented in that Relevant Member State.
Relevant Member State ..................... Each member state of the EEA which has implemented the EU Prospectus Directive.
Relevant Persons .............................. Persons in the UK that are (i) investment professionals falling within Article 19(5) of
the Order or (ii) high net worth entities, and other persons to whom the Prospectus
may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order.
RenoNorden ..................................... The Company and its consolidated subsidiaries.
RenoNorden Finland .......................... RenoNorden Finland Holding OY.
Rights Issue ................................
The offering of Offer Shares at a Subscription Price of NOK 1.00 per Offer Share with
Subscription Rights for Existing Shareholders, as further described in Section 15
"The terms of the Rights Issue".
Rule 144A ........................................ Rule 144A under the U.S. Securities Act.
SEC ................................................. U.S. Securities and Exchange Commission.
SEK ................................................. Swedish Kroner, the lawful currency of Sweden.
Senior Facility................................... Agreement between the Company as borrower and DNB Bank ASA and Danske Bank
A/S as lenders, dated 10 November 2014, that provides for a senior facility
comprising a NOK 620,000,000 multicurrency term loan facility and a NOK
350,000,000 multicurrency revolving credit facility.
Share(s) .......................................... Means the shares of the Company, each with a par value of NOK 1.00, or any one of
them, including the Offer Shares.
117
SIX ................................................. The Swiss Exchange.
Subscription Form ........................
The form for subscription of Offer Shares attached hereto as Appendix B.
Subscription Period ......................
From 2 February to 16:30 hours (CET) on 16 February 2017.
Subscription Price ........................
The subscription price for the Offer Shares, being NOK 1.00.
Subscription Rights ......................
Subscription rights that, subject to applicable law, provide preferential rights to
subscribe for and to be allocated Offer Shares at the Subscription Price.
UK .................................................. The United Kingdom.
Underwriters .................................... The underwriting syndicate consisting of existing shareholders of the Company and
new investors.
Underwriting Agreement .................... The
underwriting
agreement
entered
into
between
the
Company
Underwriters on 18 December 2016.
U.S. or United States ......................... The United States of America.
U.S. Exchange Act ............................ The U.S. Securities Exchange Act of 1934, as amended.
U.S. Securities Act ............................ The U.S. Securities Act of 1933, as amended.
USD ................................................ United States Dollars, the lawful currency in the United States.
VPS ................................................. The Norwegian Central Securities Depository (Nw.: Verdipapirsentralen).
VPS Account ..................................... An account with the VPS for the registration of holdings of securities.
VPS Registrar ..............................
DNB, Dronning Eufemias gate 30, 0191 Oslo.
WACC .........................................
Weighted average cost of capital.
118
and
the
APPENDIX A:
ARTICLES OF ASSOCIATION OF RENONORDEN ASA
ARTICLES OF ASSOCIATION
FOR
RENONORDEN ASA
(reg no 996 755 215)
UPDATED AS OF 11 DECEMBER 2014
§ 1 Name
The company's name is RenoNorden ASA. The company is a public limited company.
§ 2 Registered business address
The company's registered business address is in the municipality of Sørum. General Meetings may also be held
in Oslo municipality.
§ 3 Object
The object of the company is to operate transport services, waste management and all matters related thereto,
as well as owning companies operating such activities.
§ 4 Share capital
The share capital is NOK 27,247,948, divided into 27,247,948 shares, each with a nominal value of NOK 1. The
shares shall be registered with a securities register.
§ 5 Board
The company's Board of Directors shall consist of 3-7 members, according to the decision of the general
meeting.
§ 6 Nomination committee
The company shall have a nomination committee. The nomination committee shall consist of two or three
members, according to the decision of the general meeting. The members of the committee, including the
chairman, shall be elected by the general meeting. Unless otherwise resolved by the general meeting, the
elections shall be held every two years.
The nomination committee shall make recommendations to the general meeting for the election of shareholder
elected board members and members of the nomination committee, and the remuneration to the members of
the board of directors and the nomination committee. The remuneration to the members of the nomination
committee shall be resolved by the general meeting. The general meeting may establish guidelines for the
nomination committee.
§ 7 General meeting
Documents related to matters to be considered at the general meeting, including documents which shall,
according to law, be included in or attached to the notice of the general meeting, do not need to be sent to the
shareholders if the documents are made available on the company’s website. A shareholder may, nevertheless,
demand to receive the documents concerning matters which are to be discussed at the general meeting.
The shareholders shall be able to cast their votes in writing, including by electronic means, in a period prior to
the general meeting. The board of directors may provide guidelines for such voting. The notice of the general
meeting shall include the guidelines adopted by the board of directors.
The annual general meeting shall deal with and decide the following matters:
•
Approval of the annual accounts and the annual report, including distribution of dividend.
•
Any other business which according to law pertains to the annual general meeting.
APPENDIX B:
SUBSCRIPTION FORM FOR THE RIGHTS ISSUE
RenoNorden ASA
SUBSCRIPTION FORM
RIGHTS ISSUE
Securities number: ISIN NO0010783012
General information: The terms and conditions of the Rights Issue of 350,000,000 new shares (the
"Offer Shares") in RenoNorden ASA (the "Company") pursuant to a resolution by the Company's
extraordinary general meeting held on 30 January 2017, are set out in the prospectus dated 30 January
2017 (the "Prospectus"). Terms defined in the Prospectus shall have the same meaning in this
subscription form (the "Subscription Form"). The notice of, and minutes from, the extraordinary
general meeting (with enclosures), the Company's articles of association and the annual accounts and
directors' reports for the last two years are available at the Company's registered office at
Lindebergvegen 3, NO-2016 Frogner, Norway.
Subscription procedure: The subscription period is from 09:00 hours (CET) on 2 February 2017 to 16
February 2017 at 16:30 hours (CET) (the "Subscription Period"). Correctly completed Subscription
Forms must be received by the Manager no later than 16 February at 16:30 hours (CET) at the
following address or email address: Fjordalléen 16, Aker Brygge, N-0106 Oslo, Norway or email:
[email protected]. The subscriber is responsible for the correctness of the information inserted
on the Subscription Form. Subscription Forms received after the end of the Subscription Period and/or
incomplete or incorrect Subscription Forms and any subscription that may be unlawful may be
disregarded at the sole discretion of the Company and/or the Manager without notice to the subscriber.
Subscribers who are Norwegian residents with a Norwegian personal identity number (Nw.:
personnummer) are encouraged to subscribe for Offer Shares through the VPS online
subscription system (or by following the link on www.carnegie.no which will redirect the
subscriber to the VPS online subscription system).
None of the Company nor the Manager may be held responsible for postal delays, unavailable internet
lines or servers or other logistical or technical problems that may result in subscriptions not being
received in time or at all by the Manager. Subscriptions are binding and irrevocable, and cannot be
withdrawn, cancelled or modified by the subscriber after being received by the Manager or, in the case
of subscriptions through the VPS online subscription system, the online subscription registration. By
signing and submitting this Subscription Form, the subscriber confirms and warrants to have read the
Prospectus and to be eligible to subscribe for Offer Shares under the terms set forth therein.
Subscription Price: The subscription price in the Rights Issue is NOK 1.00 per Offer Share (the
"Subscription Price").
Subscription Rights: The shareholders of the Company as of 30 January 2017 (and being registered
as such in the VPS on 1 February 2017 pursuant to the two days' settlement procedure (the "Record
Date")) will be granted transferable subscription rights (the "Subscription Rights") in the Rights Issue that, subject to applicable law, provide preferential right to subscribe for, and
be allocated, Offer Share at the Subscription Price. The Subscription Rights will be listed and tradable on the Oslo Stock Exchange during the Subscription Period under the ticker code
"RENO T". Existing Shareholders will be granted 12.845 Subscription Right for each existing Share registered as held by such Existing Shareholder as of the Record Date, rounded
down to the nearest whole Subscription Right. Subscription Rights will not be issued in respect of the existing shares held in treasury by the Company. Subscription Rights acquired
during the Subscription Period carry the same right to subscription as the Subscription Rights held by Existing Shareholders. Each Subscription Right will, subject to applicable
securities laws, give the right to subscribe for, and be allocated, one Offer Share. Over-subscription and subscription without Subscription Rights is permitted. Subscription Rights
that are not used to subscribe for Offer Shares or sold before the expiry of the Subscription Period will have no value and will lapse without compensation to the
holder.
Allocation of Offer Shares: The Offer Shares will be allocated to the subscribers based on the allocation criteria set out in the Prospectus. The Company reserves the right to reject
or reduce any subscription for Offer Shares not covered by Subscription Rights. No fractional Offer Shares will be allocated. Allocation of fewer Offer Shares than subscribed for by a
subscriber will not impact on the subscriber's obligation to pay for the number of Offer Shares allocated. Notification of allocated Offer Shares and the corresponding subscription
amount to be paid by each subscriber are expected to be distributed in a letter from the VPS on or about 21 February 2017.
Payment: The payment for Offer Shares allocated to a subscriber falls due on 23 February 2017 (the "Payment Date"). By signing this Subscription Form, subscribers having a
Norwegian bank account irrevocably authorise the Manager (the "Settlement Agent") to debit the bank account specified below for the subscription amount payable for the Offer
Shares allocated to the subscriber. The Settlement Agent is only authorised to debit such account once, but reserves the right to make up to three debit attempts, and the
authorisation will be valid for up to seven working days after the Payment Date. The subscriber furthermore authorises the Settlement Agent to obtain confirmation from the
subscriber's bank that the subscriber has the right to dispose over the specified account and that there are sufficient funds in the account to cover the payment. If there are
insufficient funds in a subscriber's bank account or if it for other reasons is impossible to debit such bank account when a debit attempt is made pursuant to the authorisation from
the subscriber, the subscriber's obligation to pay for the Offer Shares will be deemed overdue. Payment by direct debiting is only available for investors that are allocated Offer
Shares for an amount below NOK 5 million and who have a Norwegian bank account. By signing the Subscription Form, subscribers who subscribe for an amount exceeding NOK 5
million provide the Settlement Agent with a one-time irrevocable authorisation to manually debit the specified bank account for the entire subscription amount. Subscribers who do
not have a Norwegian bank account must ensure that payment with cleared funds for the Offer Shares allocated to them is made on or before the Payment Date. Prior to any such
payment being made, the subscriber must contact the Settlement Agent (Carnegie AS) on telephone number +47 22 00 93 60 for further details and instructions.
PLEASE SEE PAGE 2 OF THIS SUBSCRIPTION FORM FOR OTHER PROVISIONS THAT ALSO APPLY TO THE SUBSCRIPTION
DETAILS OF THE SUBSCRIPTION
Subscriber's VPS account
Number of Subscription Rights
SUBSCRIPTION RIGHTS’ SECURITIES NUMBER: ISIN NO0010783012
Number of Offer Shares subscribed
(incl. over-subscription)
(For broker: Consecutive no.)
Subscription Price per Offer
Subscription amount to pay
Share
X NOK 1.00
= NOK
________________
IRREVOCABLE AUTHORISATION TO DEBIT ACCOUNT (MUST BE COMPLETED BY SUBSCRIBERS WITH A NORWEGIAN BANK ACCOUNT)
Norwegian bank account to be debited for the payment for Offer Shares
allocated (number of Offer Shares allocated x NOK 1.00).
(Norwegian bank account no.)
In accordance with the terms and conditions set out in the Prospectus and this Subscription Form, I/we hereby irrevocably subscribe for the number of Offer Shares specified above and
grant the Settlement Agent authorisation to debit (by direct debiting or manually as described above) the specified bank account for the payment of the Offer Shares allocated to
me/us. By signing this Subscription Form, subscribers subject to direct debiting accept the terms and conditions for “Payment by Direct Debiting – Securities Trading” set out on page 2
of this Subscription Form.
Place and date
Must be dated in the Subscription Period
Binding signature. The subscriber must have legal capacity. When signed on
behalf of a company or pursuant to an authorisation, documentation in the form
of a company certificate or power of attorney should be attached.
INFORMATION ON THE SUBSCRIBER
First name:
Surname/company:
Street address:
Post code/district/
Country:
Personal ID number/
Organisation number:
Nationality:
E-mail address:
Daytime telephone
number:
ADDITIONAL GUIDELINES FOR THE SUBSCRIBER
Regulatory Issues: In accordance with the Markets in Financial Instruments Directive (MiFID) of the European Union, Norwegian law imposes requirements in relation to business
investments. In this respect the Manager must categorise all new clients in one of three categories: eligible counterparties, professional and non-professional clients. All subscribers in
the Rights Issue who are not existing clients of the Manager will be categorised as non-professional clients. Subscribers can by written request to the Manager ask to be categorised as
a professional client if the subscriber fulfils the provisions of the Norwegian Securities Trading Act. For further information about the categorisation, the Subscriber may contact the
Manager. The subscriber represents that he/she/it is capable of evaluating the merits and risks of an investment decision to invest in the Company by subscribing
for Offer Shares, and is able to bear the economic risk, and to withstand a complete loss, of an investment in the Offer Shares.
Selling and Transfer Restrictions: The attention of persons who wish to subscribe for Offer Shares is drawn to Section 16 of the Prospectus "Selling and transfer restrictions". The
grant of Subscription Rights and issue of the Offer Shares upon exercise of Subscription Rights and the offer of unsubscribed Offer Shares to persons who are residents in, or citizens
of, countries outside Norway, may be affected by the laws of the relevant jurisdiction. Investors should consult their professional advisers as to whether they require any governmental
or other consent or need to observe any other formalities to enable them to subscribe for Offer Shares. It is the responsibility of any person outside Norway wishing to subscribe for
Offer Shares under the Rights Issue to satisfy himself/herself/itself as to the full observance of the laws of any relevant jurisdiction in connection therewith, including obtaining any
governmental or other consent which may be required, the compliance with other necessary formalities and the payment of any issue, transfer or other taxes due in such territories.
The Subscription Rights and the Offer Shares have not been registered and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities
Act"), or under the securities law of any state or other jurisdiction of the United States and may not be offered, sold, taken up, exercised, resold, delivered or transferred, directly or
indirectly, within the United States, except pursuant to an applicable exemption from the registration requirements of the U.S. Securities Act and in compliance with the securities laws
of any state or other jurisdiction of the United States. There will be no public offer of the Subscription Rights and Offer Shares in the United States. The Subscription Rights and the
Offer Shares have not been and will not be registered under the applicable securities laws of the United Kingdom or the European Economic Area and may not be offered, sold, resold
or delivered, directly or indirectly, in or into the United Kingdom or the European Economic Area except pursuant to an applicable exemption from applicable securities laws. This
Subscription Form does not constitute an offer to sell or a solicitation of an offer to buy Offer Shares in any jurisdiction in which such offer or solicitation is unlawful. Subject to certain
exceptions, the Prospectus will not be distributed in the United States, the United Kingdom or The European Economic Area Except as otherwise provided in the Prospectus, the
Subscription Rights and the Offer Shares may not be transferred, sold or delivered in the United States, the United Kingdom or the European Economic Area. A notification of exercise
of Subscription Rights and subscription of Offer Shares in contravention of the above restrictions may be deemed to be invalid.
Execution Only: The Manager will treat the Subscription Form as an execution-only instruction. The Manager is not required to determine whether an investment in the Offer Shares
is appropriate or not for the subscriber. Hence, the subscriber will not benefit from the protection of the relevant conduct of business rules in accordance with the Norwegian Securities
Trading Act.
Information Exchange: The subscriber acknowledges that, under the Norwegian Securities Trading Act and the Norwegian Commercial Banks Act and foreign legislation applicable to
the Manager there is a duty of secrecy between the different units of the Manager, as well as between the Manager and other entities in the Manager's respective groups. This may
entail that other employees of the Manager or the Manager's respective groups may have information that may be relevant to the subscriber, but which the Manager will not have
access to in their capacity as Manager for the Rights Issue.
Information Barriers: The Manager is a securities firms that offer a broad range of investment services. In order to ensure that assignments undertaken in the Manager's respective
corporate finance departments are kept confidential, the Manager's other activities, including analysis and stock broking, are separated from the Manager's corporate finance
departments by information walls. The subscriber acknowledges that the Manager's respective analysis and stock broking activity may conflict with the subscriber's interests with
regard to transactions of the Shares, including the Offer Shares, as a consequence of such information walls.
VPS Account and Mandatory Anti-Money Laundering Procedures: The Rights Issue is subject to the Norwegian Money Laundering Act No. 11 of March 6, 2009 and the
Norwegian Money Laundering Regulations No. 302 of March 13, 2009 (collectively, the "Anti-Money Laundering Legislation"). Subscribers who are not registered as existing
customers with the Manager must verify their identity to the Manager in accordance with the requirements of the Anti-Money Laundering Legislation, unless an exemption is available.
Subscribers who have designated an existing Norwegian bank account and an existing VPS account on the Subscription Form are exempted, unless verification of identity is requested
by the Manager. The verification of identity must be completed prior to the end of the Subscription Period. Subscribers that have not completed the required verification of identity may
not be allocated Offer Shares. Further, in participating in the Rights Issue, each subscriber must have a VPS account. The VPS account number must be stated on the Subscription
Form. VPS accounts can be established with authorised VPS registrars, which can be Norwegian banks, authorised securities brokers in Norway and Norwegian branches of credit
institutions established within the European Economic Area (the "EEA"). Non-Norwegian investors may, however, use nominee VPS accounts registered in the name of a nominee. The
nominee must be authorised by the Financial Supervisory Authority of Norway. Establishment of a VPS account requires verification of identity to the VPS registrar in accordance with
the Anti-Money Laundering Legislation.
Terms and Conditions for Payment by Direct Debiting - Securities Trading: Payment by direct debiting is a service the banks in Norway provide in cooperation. In the
relationship between the payer and the payer's bank the following standard terms and conditions will apply:
•
The service "Payment by direct debiting – securities trading" is supplemented by the account agreement between the payer and the payer's bank, in particular Section C of
the account agreement, General terms and conditions for deposit and payment instructions.
•
Costs related to the use of "Payment by direct debiting – securities trading" appear from the bank's prevailing price list, account information and/or information given by
other appropriate manner. The bank will charge the indicated account for costs incurred.
•
The authorisation for direct debiting is signed by the payer and delivered to the beneficiary. The beneficiary will deliver the instructions to its bank who in turn will charge
the payer's bank account.
•
In case of withdrawal of the authorisation for direct debiting the payer shall address this issue with the beneficiary. Pursuant to the Norwegian Financial Contracts Act, the
payer's bank shall assist if the payer withdraws a payment instruction that has not been completed. Such withdrawal may be regarded as a breach of the agreement
between the payer and the beneficiary.
•
The payer cannot authorise payment of a higher amount than the funds available on the payer's account at the time of payment. The payer's bank will normally perform a
verification of available funds prior to the account being charged. If the account has been charged with an amount higher than the funds available, the difference shall
immediately be covered by the payer.
•
The payer's account will be charged on the indicated date of payment. If the date of payment has not been indicated in the authorisation for direct debiting, the account will
be charged as soon as possible after the beneficiary has delivered the instructions to its bank. The charge will not, however, take place after the authorisation has expired
as indicated above. Payment will normally be credited the beneficiary's account between one and three working days after the indicated date of payment/delivery.
•
If the payer's account is wrongfully charged after direct debiting, the payer's right to repayment of the charged amount will be governed by the account agreement and the
Norwegian Financial Contracts Act.
Overdue Payment: Overdue payments will be charged with interest at the applicable rate from time to time under the Norwegian Act on Interest on Overdue Payment of 17 December
1976 No. 100, currently 8.50% per annum as of the date of the Prospectus. If a subscriber fails to comply with the terms of payment, the Offer Shares will, subject to the restrictions in
the Norwegian Public Limited Companies Act, not be delivered to such subscriber. In such case the Company and the Manager reserve the right to, at any time and at the risk and cost
of the subscriber, re-allot, cancel or reduce the subscription and the allocation of the allocated Offer Shares, or, if payment has not been received by the third day after the Payment
Date, without further notice to the subscriber in question sell, assume ownership to or otherwise dispose of the allocated Offer Shares in accordance with applicable law. If Offer Shares
are sold on behalf of the subscriber, such sale will be for the subscriber's account and risk and the subscriber will be liable for any loss, costs, charges and expenses suffered or
incurred by the Company and/or the Manager as a result of, or in connection with, such sales. The Company and/or the Manager may enforce payment for any amount outstanding in
accordance with applicable law.
RenoNorden ASA
Lindebergveien 3
N-2016 Frogner
Norway
Sole Manager and Bookrunner
Carnegie AS
Fjordalléen 16, Aker Brygge
N-0106 Oslo
Norway
Legal Adviser to the Company
(as to Norwegian law)
Advokatfirmaet Thommessen AS
Haakon VIIs gate 10
N-0161 Oslo
Norway