Swiss Steel Holding AG plans capital increase

Swiss Steel Holding AG today invited to an Extraordinary General Meeting (EGM) on December 22, 2020. The single item on the agenda is the proposal by the Board of Directors to resolve on an ordinary capital increase through issuance of new registered shares while preserving shareholders' subscription rights. The capital increase to be resolved by the EGM targets gross proceeds of at least EUR 200 million.

The Company has been able to agree considerable reliefs with its lending banks under the existing syndicated loan. This concerns the contractual terms, the restructuring measures imposed and significant associated costs and risks for the Company. The aforementioned reliefs are subject to the condition that the Company raises the targeted minimum gross proceeds of EUR 200 million in the capital increase.

In the ordinary capital increase, each shareholder will be granted pro rata to its shareholding rights to subscribe for new registered shares at market conditions. In order to ensure the targeted minimum proceeds of EUR 200 million, the main shareholder BigPoint Holding AG has committed to exercise all of its subscription rights in the capital increase.

In addition, if and to the extent that any other shares offered in the capital increase are not taken up by other shareholders or investors at the price of at least CHF 0.21, BigPoint Holding AG has committed to also subscribe for these shares at said minimum price (backstop). Thereby, the targeted minimum gross proceeds of EUR 200 million will be secured. At the same time, shareholders who do not wish to exercise their subscription rights will be protected against excessive dilution because the subscription price for all shares from the capital increase will be at least CHF 0.21.

The subscription price for the new registered shares will be determined by the Board of Directors after the end of the subscription rights exercise period based on market conditions, taking into account the number of exercised subscription rights, the demand in the book building process and the backstop obligation of BigPoint Holding AG. If the subscription price, which will be determined by the Board of Directors, is above the backstop price, the Company may achieve gross proceeds of more than EUR 200 million. As usual for capital increases at market conditions, no subscription rights trading will take place.

The rights issue is expected to be executed in January 2021. Completion of the capital increase is also planned in January 2021.

The capital increase shall strengthen the balance sheet and improve the currently unsatisfactory equity ratio (10.9% as of September 30, 2020). It will also replace the current back-stop loan from BigPoint Holding AG of EUR 130 million and strengthen the financing position. At the same time, the Company will save considerable costs, reduce risks and regain entrepreneurial freedom as a result of the improved loan conditions. Overall, this will significantly strengthen the Company's resilience in what remains a challenging economic environment.

Now that the Board of Directors has decided to convene an Extraordinary General Meeting to approve the capital increase, Jens Alder considers his role as independent chairman to be fulfilled. During his term of office since April 2019, Swiss Steel Group has gone through deep crises, the markets for its products have shrunk and COVID-19 has led to a significant economic downturn. In addition, three shareholder groups had to be aligned in terms of their interest and targets relating to Swiss Steel Holding AG. Today our group has sufficient liquidity and with the capital increase it is expected to obtain sufficient equity to enable a healthy development of its business. With two strong shareholders holding at present in aggregate almost 75% of the capital, the shareholder base of the Company is stable. Jens Alder has therefore decided to step down as Chairman of the Board of Directors of Swiss Steel Holding AG effective December 22, 2020. The Board of Directors thanks Jens Alder for his great commitment as independent Chairman of the Board of Directors in the past, very challenging years. The Board of Directors has decided to appoint the current vice-chairman Heinrich Christen as the new chairman for the remaining term until the ordinary general meeting 2021.

CEO Clemens Iller commented: "The strengthening of our financing by way of additional equity and the significant improvement of our credit terms will send a strong message to our employees, customers and suppliers: Swiss Steel group is a reliable and solid partner for the long term. Our increased entrepreneurial freedom and resilience will offer an opportunity to further pursue the turnaround of our company in an economic environment, which continues to be challenging. The new equity financing will significantly reduce our interest expense and the modified credit terms and conditions will result in lower related costs of third parties. Such money can be spent elsewhere in a more targeted manner. We are grateful for the continued support of our main shareholder and at the same time consider this as a clear commitment to our chosen path to turnaround.”

Source and graphic: Swiss Steel