HKScan commences a directed share issue and publishes a prospectus

HKScan commences a directed share issue and publishes a prospectus

Not for publication or distribution, directly or indirectly, in or into Australia, South Africa, Hong Kong, Japan, Canada or the United States of America or in any other jurisdiction in which publishing or distributing would be prohibited by applicable law

HKScan Corporation ("HKScan" or "Company") announced on 8 May 2019 that it is planning a share issue to strengthen its financial position and capital structure.

Based on an authorisation given by the Extraordinary General Meeting convening on 29 May 2019, the Company's Board of Directors on 31 May 2019 passed a resolution on a directed share issue, where the Company offers in deviation of the pre-emptive right of shareholders up to 37,500,000 new series A shares to the public ("New Shares") (the "Offering"). The Board of Directors of the Company may, in the event of an oversubscription, increase the number of New Shares offered in the Offering by a maximum of 7,500,000 New Shares (the "Upsize Option"). If the Upsize Option is used in full, the number of New Shares offered may amount up to 45,000,000 shares in aggregate. The subscription for New Shares will commence on 3 June 2019.

The purpose of the Offering is to secure the Company's financial position and to strengthen its capital structure. The Offering is intended to enable the controlled stabilisation of the Company's business and provide a strong foundation for developing the Company's business portfolio and for building future growth. On these grounds there is a weighty financial reason for deviating from the pre-emptive right of shareholders.

The Offering in brief:

The Company offers in deviation of the pre-emptive right of shareholders up to 37,500,000 new series A shares to the public ("New Shares") (the "Offering").
The Board of Directors of the Company may, in the event of an oversubscription, increase the number of New Shares offered in the Offering by a maximum of 7,500,000 New Shares (the "Upsize Option"). If the Upsize Option is used in full, the number of New Shares offered may amount up to 45,000,000 shares in aggregate.
The Offering comprises (i) a public offering of New Shares to private individuals and legal entities in Finland (the "Public Offering") and (ii) an offering of New Shares to institutional investors in the European Economic Area (the "Institutional Offering").
The subscription price of each New Share is EUR 1.60.
The Company has received commitments from LSO Osuuskunta to subscribe for New Shares with EUR 17.0 million and from Lantmännen ek. för to subscribe for New Shares with maximum of EUR 6.8 million and to pay the subscription price in cash. In addition, Pharmacy Pension Fund, Special Mutual Fund UB Smart, Gerako Oy, Jarl Gripenberg estate, Elo Mutual Pension Insurance Company, Varma Mutual Pension Insurance Company, The Central Union of Agricultural Producers and Forest Owners (MTK), Petter and Margit Forsström's Foundation, Mutual Fund Phoenix, Taaleri Finland Value Equity Fund, Jyrki Suhonen, Finnish Cultural Foundation, certain clients of UB Asset Management Ltd, Finnish State Railways Pension Fund and certain other investors have each individually committed to subscribe for New Shares in the Offering and to pay the subscription price in cash and/or by setting off Notes (as defined below) at their nominal value and together with accrued interest. The subscription commitments cover approximately an aggregate amount of EUR 59.5 million of the New Shares offered in the Offering, corresponding approximately 37,192,000 New Shares and representing approximately 99.2 per cent of the aggregate number of the New Shares (presuming that the Upsize Option is not used).
In the Public Offering, the subscription price shall be paid in cash. In the Institutional Offering, the subscription price shall be paid either in cash or by way of setting off one or several of the following (together, the "Notes"):
- EUR 135 million 2.625 per cent. fixed rate notes due on 21 September 2022 (ISIN: FI4000278536)
- EUR 100 million 3.625 per cent. fixed rate notes due on 21 November 2019 (ISIN: FI4000115415)
- EUR 40 million 8.00 per cent. fixed rate undated capital securities issued on 10 September 2018 (ISIN: FI4000348818)
The Company aims to raise approximately EUR 60 million in gross proceeds from the Offering based on the number of New Shares offered (37,500,000 New Shares without the Upsize Option) and the Subscription Price (EUR 1.60). The Company aims to use the proceeds from the Offering to secure the financial position of the Company and to strengthen its capital structure as well as to general demands of the Company's business.
The New Shares issued in the share issue (without the Upsize Option) amount to approximately 68.1 per cent of the shares and 23.9 of the votes pertaining to the shares prior to the Offering and approximately 40.5 per cent of the shares and 19.3 per cent of the votes following the Offering, provided that provided that the New Shares preliminarily offered in the Offering are subscribed in full without the Upsize Option and approximately 45.0 per cent of the shares and 22.3 per cent of the votes provided that the Upsize Option is used in full.
In case of over-subscription, the Board of Directors of the Company may prioritise the allocation of New Shares to (i) subscribing shareholders of the Company who are registered in the shareholder register of the Company maintained by Euroclear Finland Oy as at 31 May 2019, to whom a pro rata allocation is intended to be provided, and thereafter to (ii) investors who have pre-committed to subscribe.
The Company has negotiated and received loan commitments from its financing banks to replace its existing standby lines of credit, which are maturing in 2020 and 2021, with a new stand-by line of credit maturing at the end of 2021 and a new fixed-term facility agreement maturing at the end of 2021, set to replace the existing bank facilities maturing in 2020 and 2021. The loan commitments are contingent inter alia on the completion of the Offering such that the Company raises at minimum EUR 50 million in gross proceeds, to which the commitments received by the Company suffice.

HKScan's CEO Tero Hemmilä comments:

"The share issue would significantly strengthen the Company's financial position. HKScan is in the middle of a turnaround, and we are focusing on improving the Company's cash flow and profitability according to plan. In addition to balancing the Company's financials in the short term, we are actively assessing the Company's business portfolio and updating HKScan’s strategy, with the help of which we aim to restore the Company's path towards profitable growth."

Publication of the prospectus

The Company has drawn up a prospectus regarding the Offering (the "Prospectus"), which the Finnish Financial Supervisory Authority has approved on 31 May 2019. The Prospectus will be available in the Finnish language on the Company's website on or about 31 May 2019 at www.hkscan.com/fi/osakeanti2019 and at the registered office of the Company at Lemminkäisenkatu 48, FI-20520 Turku on or about 3 June 2019. In addition, the Prospectus will be available in the Finnish language on the Lead Manager's website at www.alexander.fi/hkscan on or about 31 May 2019 and at the office of the Lead Manager at Pohjoisesplanadi 37 A, FI-00100 Helsinki on or about 3 June 2019 as well as at Helsinki Stock Exchange at Fabianinkatu 14, FI-00100 Helsinki. An unofficial English-language translation of the Prospectus has been prepared, which is expected to be available upon request from the Lead Manager from 3 June 2019.

Reasons for the Offering

The purpose of the Offering is to secure the Company's financial position and to strengthen its capital structure. The Offering is intended to enable the controlled stabilisation of the Company's business and provide a strong foundation for developing the Company's business portfolio and for building future growth. The Offering would significantly strengthen the Company’s financial position while the Company is in the middle of a turnaround.

Important dates

The subscription period for the Offering commences on 3 June 2019 at 9.30 am (Finnish time)
The subscription period for the Offering ends on 14 June 2019 at 4.30 pm (Finnish time) (estimated)
Announcement of the final results of the Offering on 17 June 2019 (estimated)
The New Shares offered in the Offering are registered in the book-entry accounts of the investors on 25 June 2019 (estimated)
Trading in the New Shares commences on the official list of the Helsinki Stock Exchange on 26 June 2019 (estimated)

Alexander Corporate Finance Ltd ("Lead Manager") acts as the subscription venue and the lead manager of the share issue. Krogerus Attorneys Ltd acts as the legal counsel to HKScan.

HKScan Corporation

Board of Directors

For more information please contact: HKScan Media Service Desk +358 10 570 5700 or by email to: communications@hkscan.com

HKScan is a Nordic meat and meals company. We employ nearly 7 200 professionals in striving to serve the world´s most demanding consumers, maintaining quality throughout the full chain of operations, From Farm to Fork. HKScan produces, markets and sells high-quality, sustainably produced pork, beef, poultry and lamb products, as well as charcuterie and meals, with strong consumer brands, including HK®, Scan®, Rakvere®, Kariniemen®, Rose®, Pärsons® and Tallegg®. Our customers are the retail, food service, industrial and export sectors, and our home market comprises of Finland, Sweden, Denmark and the Baltics. We export to close to 50 countries. In 2018, HKScan had net sales of EUR 1.7 billion.

Important Remark

This release is not a prospectus and not an offer relating to securities. No offer will be made in any such jurisdiction in which the offer or participation therein would be unlawful. No offer will be made in any such jurisdiction other than Finland in which the offer would require the preparation of a prospectus, registration or any other similar action. The lead manager is acting exclusively for the Company and no one else connected to the possible share issue. The lead manager will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for giving advice in relation to the contents of this release or the possible transaction pursuant to this release.

This release is directed only to (A) persons who are outside the United States of America; (B) (i) persons who are resident in a Member State of the European Economic Area (other than Finland) and are a qualified investor (within the meaning of Article 2(1)(e) of Directive 2003/71/EC and any relevant implementing measure in each Member State of the European Economic Area); or (ii) persons who are resident in Finland; and (C) as regards Great Britain, (i) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); (ii) high net worth entities; and (iii) and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order (all such persons together being referred to as "Relevant Persons"). Any shares offered in the possible share issue or requests, offers or agreements relating to the subscription for, purchase of or any other acquisition of such shares are intended to be made available to Relevant Persons only. No one who is not a Relevant Person shall act on the basis of this release.

This release does not constitute an offer for sale of securities in the United States. The shares may not be offered or sold within the United States absent of registration or an exemption under the U.S. Securities Act 1933 (as amended). The Company has not registered and it does not intend to register, any portion of the offering in the United States, and it does not intend to conduct a public offering in the United States.

This release contains forward-looking statements. These forward-looking statements are not based on historical facts, but are statements about future expectations. Statements included in this release which contain expressions "considers", "aims", "anticipates", "assumes", "believes", "estimates", "expects", "intends", "may", "plans", "should", and other similar expressions related to the Company or the possible share issue are examples of such forward-looking statements. Other forward-looking statements can be identified in the context in which the statements are made. Forward-looking statements contain information about future results, plans or expectations regarding the Company's business operations, including its strategy and growth plans and profitability, and the general economic situation. These forward-looking statements are based on current plans, estimates, prospects and expectations. They are based on certain currently valid expectations that may however turn out to be wrong. These forward-looking statements are based on assumptions and they contain several risks and uncertainties. Investors should not rely on these forward-looking statements. Several factors may result in a material deviation of the Company's actual business outcome or financial standing from the business outcome or financial standing that is indicated or referred to in forward-looking statements. The absence or occurrence of the aforementioned factors may cause a substantial deviation of the Company's actual business outcome or financial standing from what is directly or indirectly presented or described in the sections, which include forward-looking statements. Because of risks, uncertainties, assumptions and other factors, events described in forward-looking statements may not necessarily occur. Therefore, the accuracy and completeness or the occurrence of the predicted events of the forward-looking statements presented in this release cannot be guaranteed.

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