Com Hem €622m IPO prospectus
June 4, 2014
By Colin Mann
Following the May 23rd announcement of its intention to float, Swedish triple-play operator Com Hem has published its prospectus and revealed the price range for its Initial Public Offering of its shares and listing on NASDAQ OMX Stockholm.
• The Company is raising gross proceeds of SEK 5,670 million (€622m) (assuming the over-allotment option is not exercised) and the Offering values the equity of Com Hem at SEK 10,070 – 11,870 million
• The price in the Offering is expected to be set between SEK 44 – 62 per share (the ‘Price Range’) and given the gross proceeds being raised, this translates to the offering of between 91.4 – 128.9 million newly issued shares (the ‘New Shares’)
• The Company has also granted the joint global coordinators an over-allotment option to purchase additional newly issued shares of the Company (the ‘Additional Shares’) amounting to 10 per cent of the number of shares sold in the Offering. The over-allotment option is exercisable for a period of 30 days from the first day of listing of the shares on the NASDAQ OMX Stockholm
• Based on the Price Range in the Offering, and assuming that the over-allotment option is exercised in full, the Offering will amount to SEK 6,237 million, valuing the equity of Com Hem after the Offering at SEK 10,637 – 12,437 million
• NorCell S.à r.l. (the ‘Principal Shareholder’), a holding company through which Com Hem’s principal beneficial shareholders, funds advised by BC Partners Limited, hold their interests, will not sell any existing shares as part of the Offering
• The Offering consists of: (i) a public offering to investors in Sweden, and (ii) private placements to institutional investors in various jurisdictions, including a private placement in the United States to qualified institutional buyers
• The application period for the offering to the public in Sweden is expected to start on June 4, 2014 and close on June 13, 2014
• The application period for the institutional offering is expected to start on June 4, 2014 and close on June 16, 2014
• Trading is expected to begin on June 17, 2014 and the trading symbol of the Company’s share on NASDAQ OMX Stockholm will be ‘COMH’
Anders Nilsson, CEO of Com Hem said significant investments had been made in order to strengthen the business and he was convinced that the operator had a compelling value proposition to customers. “Together with the management team and all our employees we are ready to embark on this exciting journey. We have created a solid platform, now it’s about execution. We welcome new shareholders to take part in Com Hem’s future as a listed company,” he declared.
Nikos Stathopoulos, Managing Partner at private equity firm BC Partners, said that broadening the shareholder base marked a new and exciting phase in the history of Com Hem. “Additional financial flexibility coupled with the enhanced public profile will provide the appropriate platform for Com Hem’s future development,” he suggested.
On September 29, 2011, funds advised by BC Partners Limited acquired Com Hem from The Carlyle Group and Providence Equity Partners, who had owned the Company since 2006. After many years under private ownership, Com Hem’s shareholders and Board of Directors believe that now is an appropriate time to broaden the shareholder base and apply for a listing of the Company’s shares on NASDAQ OMX Stockholm. The Offering is expected to support Com Hem’s future growth and operational strategy, provide financial flexibility by reducing leverage through the repayment of certain outstanding indebtedness and provide the Company with improved access to public capital markets and a diversified base of new Swedish and international shareholders.
The listing of Com Hem’s shares on NASDAQ OMX Stockholm is also expected to increase the public profile of the Company and the business. These factors will further enhance Com Hem’s position in the Swedish market and provide the appropriate platform for future development.
The number of issued New Shares is determined to allow the Company to achieve a net leverage of approximately 4.15x net debt / LTM Underlying EBITDA (pro forma for the acquisition of Phonera Företag) as of June 30, 2014, assuming the over-allotment option is not exercised. If the over-allotment option is exercised in full, leverage would be approximately 3.9x net debt / LTM Underlying EBITDA (pro forma for the acquisition of Phonera Företag).
Com Hem will use the net proceeds of the Offering (gross proceeds after deducting underwriting commissions and estimated offering expenses), together with drawdowns under the 2014 Senior Facilities Agreement to refinance certain indebtedness and thereby reduce the Company’s leverage. Com Hem intends to:
• use a portion of the net proceeds of the Offering to redeem the Senior PIK Notes in full shortly following the completion of the Offering. As of March 31, 2014 the outstanding amount under the Senior PIK Notes was SEK 2,636 million (SEK 2,763 million (including accrued interest) expected as of June 30, 2014);
• use a portion of the net proceeds of the Offering to redeem up to 35 per cent of the amount outstanding under the Senior Notes within 180 days of the completion of the Offering as permitted by the indenture governing such notes. As of March 31, 2014 the outstanding amount under the Senior Notes was SEK 2,569 million (SEK 2,613 million (excluding interest) as of June 30, 2014); and
• use the remainder of the net proceeds of the Offering, together with drawdowns under the 2014 Senior Facilities Agreement, to repay the Senior Credit Facilities on or shortly following the completion of the Offering and to pay any fees associated with the 2014 Senior Facilities or costs that may arise from unwinding certain hedging contracts. As of March 31, 2014 the outstanding amount under the Senior Credit Facilities was SEK 5,882 million (SEK 6,229 million expected as of June 30, 2014).
• use net proceeds from the exercise of the Over-allotment Option for general corporate purposes
In addition, Com Hem may from time to time consider making an offer to purchase or refinance the Senior Secured Notes and the Senior Notes once such notes are callable in November 2014 and November 2015, respectively. Com Hem is offering such number of New Shares as to raise gross proceeds of SEK 5,670 million. The Company has also granted the joint global coordinators an over-allotment option to purchase up to 12.9 million Additional Shares of the Company, or 10 per cent of the number of shares sold in the Offering.
The Offering consists of: (i) a public offering of shares in Sweden pursuant to a separate Swedish prospectus; and (ii) private placements to international investors in various jurisdictions, including a private placement in the United States to QIBs in reliance on Rule 144A under the U.S. Securities Act. All offers and sales outside the United States will be made in compliance with Regulation S.
The offer price is expected to be between SEK 44 and SEK 62 per share. In no event will the offer price to retail investors in Sweden exceed SEK 62 per share. The offer price will be determined by a book-building process and will be announced on or about June 17, 2014.
Assuming the final offer price is set at the midpoint of the Price Range, the number of shares outstanding after the offering will amount to 207.0 million shares, of which the Principal Shareholder will hold 47.8 per cent (assuming that the over-allotment option is not exercised). If the over-allotment option is exercised, the number of shares outstanding will amount to 217.7 million shares of which the Principal Shareholder will hold 45.4 per cent. Furthermore, the Principal Shareholder will agree not to divest its shares for a period of 180 days, subject to certain exceptions, from the date on which the offer price is announced. The Principal Shareholder will not receive any proceeds in the Offering.
In connection with the listing of the Company’s shares on NASDAQ OMX Stockholm, all existing class B ordinary shares and preference shares will be converted into class A ordinary shares such that Com Hem will have only one class of shares following the Offering.
J.P. Morgan, Morgan Stanley and Nordea are acting as joint global coordinators and joint bookrunners and Carnegie is joint bookrunner. Rothschild is financial advisor to the Company and the owners.