Stock Exchange Releases

SRV Group Plc issues EUR 58.4 million capital notes

SRV GROUP PLC     STOCK EXCHANGE RELEASE     16 MAY 2019, AT 18.00 EET

SRV Group Plc issues EUR 58.4 million capital notes

Not for release, publication or distribution, in whole or in part, directly or indirectly, in or into the United States, Australia, Canada, Hong Kong, Japan, Singapore or any other countries or otherwise in such circumstances in which the release, publication or distribution would be unlawful.

SRV Group Plc (“SRV” or the “Company”) issues a EUR 58.4 million capital notes. The capital notes bear interest at a fixed interest rate of 12 percent until the reset date and thereafter, the interest rate will be determined on each fourth (4) anniversary of the issue date. The capital notes do not have a specified maturity date, but SRV is entitled to redeem the capital notes for the first time on the fourth (4) anniversary of the issue date, and subsequently, on each annual coupon interest payment date. The issue date of the capital notes is 23 May 2019. The capital notes will strengthen the Company’s capital structure and financial position.

The net proceeds of the issuance will be used for tendering the EUR 45 million 8.750 percent notes issued on 22 March 2016 (ISIN: FI40004198114) and the EUR 100 million 6.875 percent notes due on 23 March 2021 (ISIN: FI4000198122) (the “Notes”) (the “Tender Offer”).

“Strengthening the financial position will help the company to develop its operational operations, profitability and manage the company’s other financing. The arrangement improves the company’s comparable equity ratio by about 5 percentage points (29.7% on 31 March 2019) and lowers gearing by about 32 percentage points (132.7% on 31 March 2019),” says Ilkka Pitkänen, CFO of SRV.

Capital notes are subordinated to certain other debt obligations and are treated as equity on SRV’s consolidated financial statements prepared in accordance with IFRS. Capital notes do not confer their holder the rights of a shareholder nor do they dilute the holdings of the current shareholders.

Capital notes amounting to EUR 22.5 million were allocated, pursuant to its subscription, to AS Pontos Baltic, which is a wholly-owned subsidiary of Pontos Ltd, a related party of Ilpo Kokkila and Timo Kokkila, members of the board of directors of SRV.

A key information document relating to the capital notes, prepared in accordance with the PRIIPs Regulation ((EU) 1286/2014, as amended), will be revised to include final pricing information and made available on SRV’s website as soon as possible.

OP Corporate Bank plc acts as the Lead Manager for the capital notes issue. White & Case LLP acts as legal counsel to the Company and Castrén & Snellman Attorneys Ltd acts as legal counsel to the Lead Manager in the capital notes issue.


For further information, please contact:
Ilkka Pitkänen, CFO, tel. +358 (0)40 667 0906, ilkka.pitkanen@srv.fi 
Maija Karhusaari, SVP, Communications and Marketing, tel. +358 (0)45 218 3772, maija.karhusaari@srv.fi

www.srv.fi


SRV in Brief
SRV is a bold developer and innovator in the construction industry. We want to offer the best customer experience as a constructor of urban city centres, while also being the most attractive employer in the industry. Our genuine cooperation and enthusiasm for our work comes across in every encounter. Sustainability is reflected in all our activities.

Established in 1987, we are a publicly listed company since 2007 in Helsinki Nasdaq stock exchange that operates in selected growth centres in Finland and Russia. Our revenue in 2018 was EUR 960 million. Over 1,000 people work for us and we employ a network of almost 4,000 subcontractors in our projects.

SRV – Building for life

IMPORTANT INFORMATION

This announcement must be read in conjunction with the tender offer memorandum dated 2 May 2019 (the “Tender Offer Memorandum”), which may be obtained from OP Corporate Bank plc by, and is only available to, the qualifying noteholders. This announcement and the Tender Offer Memorandum contain important information that should be read by the qualifying noteholders carefully before any decision is made with respect to the Tender Offer. If any holder is in any doubt as to the contents of this announcement or the Tender Offer Memorandum or the action it should take, it is recommended to seek its own financial and legal advice, including in respect of any tax consequences, from its broker, bank manager, solicitor, accountant or other independent financial, tax or legal adviser. Neither the OP Corporate Bank plc nor SRV makes any recommendation whether holders should tender Notes pursuant to the Tender Offer.

None of SRV or any of its directors, officers, employees, agents or affiliates assumes any responsibility for the accuracy or completeness of the information concerning SRV, the Notes or the Tender Offer contained in this announcement or in the Tender Offer Memorandum. None of SRV or any of its directors, officers, employees, agents or affiliates is acting for any holder or will be responsible to any holders for providing the protections afforded to its clients or for advising any other person in connection with the Tender Offer.

MiFID II product governance / Professional Investors, ECPs and retail clients target market

Solely for the purposes of the manufacturer’s product approval process, the target market assessment in respect of the capital notes has led to the conclusion that:

1) the target market for the capital notes is:

(a) eligible counterparties, professional clients and retail clients, each as defined in Directive 2014/65/EU (as amended, “MiFID II”);

(b) informed investors, having average knowledge of relevant financial products (an informed investor can make an informed investment decision based on the regulated and authorised offering documentation, together with knowledge and understanding of the specific factors/risks highlighted with them only) and advanced investors, having one, or more, of the following characteristics; (i) good knowledge of relevant financial products and transactions, or (ii) financial industry experience or accompanied by professional investment advice or included in a discretionary portfolio service;

(c) clients that have the ability to bear losses of up to 100% of the capital invested in the product, and who have a high risk tolerance and therefore do not need a fully guaranteed income or return profile;

(d) clients whose investment objective is to generate growth of the invested capital and have a medium- to long-term investment horizon.

2) all channels for distribution of the capital notes to eligible counterparties and professional clients are appropriate; and

3) the following channels for distribution of the capital notes to retail clients are appropriate: investment advice, portfolio management and non-advised sales or execution with appropriateness test, subject to the distributor’s suitability and appropriateness obligations under MiFID II, as applicable.

Any person subsequently offering, selling or recommending the capital notes (a “distributor”) should take into consideration the manufacturer’s target market assessment; however, a distributor subject to MiFID II is responsible for undertaking its own target market assessment in respect of the  capital notes (by either adopting or refining the manufacturers’ target market assessment) and determining appropriate distribution channels. OP Corporate Bank plc is the manufacturer of the capital notes for the purposes of MiFID II product governance rules.

Offer and Distribution Restrictions

The information contained herein is not for release, publication or distribution, in whole or in part, directly or indirectly, in or into the United States, Australia, Canada, Hong Kong, Japan, Singapore or any other countries or otherwise in such circumstances in which the release, publication or distribution would be unlawful. The information contained herein does not constitute an invitation to participate in the Tender Offer, or an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, the capital notes in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration, exemption from registration or qualification under the securities laws of any such jurisdiction. Persons into whose possession this announcement may come are required to inform themselves of and observe all such restrictions. None of SRV and OP Corporate Bank plc or their respective representatives accept any legal responsibility for any violation by any person, whether or not the persons contemplating investing in or divesting SRV’s securities, including the capital notes, are aware of such restrictions.

United States

The Tender Offer is not being made, and will not be made, directly or indirectly in or into, and cannot be accepted, directly or indirectly, from, or by use of the mails of, or by any means or instrumentality of interstate or foreign commerce of or of any facilities of a national securities exchange of, the United States or to any U.S. Person (as defined in Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”) (each a “U.S. Person”)). This includes, but is not limited to, facsimile transmission, electronic mail, telex, telephone, the internet and other forms of electronic communication. The Notes may not be tendered in the Tender Offer by any such use, means, instrumentality or facility from or within the United States or by persons located or resident in the United States or by, or by any person acting for the account or benefit of, a U.S. Person. Accordingly, copies of the Tender Offer Memorandum and any other documents or materials relating to the Tender Offer are not being, and must not be, directly or indirectly mailed or otherwise sent, transmitted, distributed or forwarded (including, without limitation, by custodians, nominees, trustees or agents) in, into or from the United States or to any persons located or resident in the United States or to any U.S. Person and persons receiving the Tender Offer Memorandum must not mail, send, transmit, distribute or forward it or any other documents or materials relating to the Tender Offer in, into or from the United States. Any person accepting the Tender Offer shall be deemed to represent to SRV such person’s compliance with these restrictions. Any purported acceptance of Notes in the Tender Offer resulting directly or indirectly from a breach or violation of these restrictions will be invalid and any purported tender of Notes made by, or by any person acting for the account or benefit of, a U.S. Person or by a person located in the United States or any agent, fiduciary or other intermediary acting on a nondiscretionary basis for a principal giving instructions from within the United States will be invalid and will not be accepted.

Each holder of Notes participating in the Tender Offer will represent that it is not a U.S. Person, it is not located in the United States and is not participating in the Tender Offer from the United States, or it is acting on a non-discretionary basis for a principal located outside the United States that is not giving an order to participate in the Tender Offer from the United States and is not a U.S. Person.

This announcement does not constitute an offer of securities for sale in the United States. The capital notes have not been and will not be registered under the Securities Act or under the applicable securities laws of any state of the United States and may not be offered or sold, directly or indirectly, within the United States or to, or for the account or benefit of, U.S. persons except pursuant to an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act.

United Kingdom

The communication of this announcement, the Tender Offer Memorandum and any other documents or materials relating to the Tender Offer is not being made, and such documents and/or materials have not been approved, by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000, as amended. Furthermore, this announcement does not constitute an offer of capital notes to the public in the United Kingdom. No prospectus has been or will be approved in the United Kingdom in respect of the capital notes. Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or materials as a financial promotion may only be 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 companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons in (i), (ii) and (iii) above together being referred to as “Relevant Persons”). Any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, Relevant Persons. Any person who is not a Relevant Person should not act or rely on such documents and/or materials or any of their contents.

European Economic Area (including Finland)

This announcement has been prepared on the basis that any offers of the capital notes in the EEA, if and when made, will be made pursuant to an exemption under the Directive 2003/71/EC (as amended) (the “Prospectus Directive”), as implemented in the member states of the EEA, from the requirement to produce a prospectus under the Prospectus Directive for offers of securities, and in particular, any offer of the capital notes will be made pursuant to an exemption set out in Article 3(2) of the Prospectus Directive (in Finland pursuant to an exemption under Chapter 4, Section 3 of the Finnish Securities Markets Act). Accordingly, any person making or intending to make any offer of the capital notes within the EEA should only do so in circumstances in which no obligation arises for SRV or OP Corporate Bank plc to publish a prospectus under the Prospectus Directive for such offer. Neither SRV nor OP Corporate Bank plc has authorized, nor do they authorize, the making of any offer of securities through any financial intermediary.

In relation to each member state of the EEA which has implemented the Prospectus Directive (each a “Relevant Member State”), an offer to the public of any capital notes may not be made in that Relevant Member State, except that an offer of the capital notes to the public in that Relevant Member State may be made at any time under the following exemptions from the Prospectus Directive, if they have been implemented in that Relevant Member State:

1. to any legal entity which is a qualified investor as defined in the Prospectus Directive;

2. to investors who acquire the capital notes for a total consideration of at least EUR 100,000 per investor; and/or

3. in any other circumstances falling within Article 3(2) of the Prospectus Directive,

in each case provided that no such offer of the capital notes shall result in a requirement for the publication of a prospectus pursuant to Article 3 of the Prospectus Directive or the preparation of a key information document in any language other than Finnish pursuant to the PRIIPs Regulation by SRV or OP Corporate Bank plc.

For the purposes of this provision, the expression an “offer to the public” in relation to the capital notes in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer of the capital notes to be offered so as to enable an investor to decide to purchase capital notes, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State.

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