Enedo Plc has agreed conditionally on cancellation of its debts totalling MEUR 3.3, is planning a directed issue and a rights issue totalling approximately MEUR 12, and intends to execute a turnaround program in order to improve its result

ENEDO PLC Stock Exchange Release February 16, 2021 at 9:55

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Enedo Plc has agreed conditionally on cancellation of its debts totalling MEUR 3.3, is planning a directed issue and a rights issue totalling approximately MEUR 12, and intends to execute a turnaround program in order to improve its result

On December 29, 2020, Enedo Plc (the ”Company”) announced that it would continue the planning of financing arrangements to secure the execution of its strategy and profitability turnaround. The Company has today agreed on a comprehensive arrangement of its debts totalling approximately EUR 8.6 million. In connection with the arrangement, a total of EUR 3.3 million of the Company’s current debts will be cancelled.

The completion of the above financing arrangement requires that the Company carries out the rights issue and the directed issue to certain new investors, totalling approximately EUR 12 million. The subscription price in both the rights issue and the directed issue is EUR 0.20 per share. The subscription price of the directed issue is based on negotiations between the Company, the parties of the financing arrangement and the parties committed to the subscription and, therefore, is justified in order to execute the comprehensive debt arrangement and to secure the Company’s working capital needs. A total maximum of 25,298,205 new shares in the Company will be issued in the rights issue, and the Company aims to raise total gross proceeds of approximately EUR 5 million through it. A total maximum of 35,000,000 new shares in the Company will be issued in the directed issue, and the Company aims to raise gross proceeds of approximately EUR 7 million through it. EUR 5.3 million of the raised proceeds will be used to execute the above financing arrangement. The rest of the raised proceeds will be used for the execution of the turnaround program described below and for the Company’s general working capital purposes.

If the rights issue, the directed issue and the comprehensive debt arrangement are realised in full, the total amount of the credit lines available to the Company and its bank loans will diminish by approximately 60 per cent from the level of EUR 13.4 million as at the end of 2020.

Swedish Inission AB (publ) (“Inission”), which is listed on First North Growth Market Sweden, has subject to certain customary conditions undertaken to subscribe for the main part of the shares offered by the Company in the directed issue. Inission is a supplier that offers demanding industrial customers in the Nordic region complete electronic and mechanical products. Inission’s services cover the entire product life cycle, from development and design to industrialization, volume production and aftermarket.

Joensuun Kauppa ja Kone Oy has, subject to certain customary conditions, undertaken to subscribe for the rest of the shares to be offered by the Company in the directed issue. The Company’s shareholders Rausanne Oy, Rausatum Oy, Adafor Oy, Soinitilat Oy, 4capes Oy, Jaakko Heininen and Pekka Heininen have undertaken, subject to certain customary conditions, to subscribe for shares in the rights issue for a total of EUR 1,659,617. Joensuun Kauppa ja Kone Oy has undertaken to subscribe for a total of 4,781,127 (EUR 956,225) shares in the Company with subscription rights based on Jussi Capital Oy’s shareholding in the Company. The received undertakings correspond to a total of 13 079 211 shares, i.e. a total of 51.7 per cent of all the shares to be offered in the rights issue. The Company’s Board of Directors, the President and certain persons in the management have expressed their support for the comprehensive arrangement and intend to issue undertakings to subscribe for shares in the Company in the secondary subscription of the rights issue. The shareholders having issued subscription undertakings in the rights issue have undertaken to vote at the Company’s Extraordinary General Meeting in favour of the rights issue and the directed issue and the decisions related thereto (including possible exemption issues related to the obligation to launch a tender offer) in accordance with the Board of Directors’ proposals.

After the execution of the comprehensive arrangement, Jussi Capital Oy will sell all its shares in the Company totalling 1,593,709 (EUR 318,742) to Joensuun Kauppa ja Kone Oy at a price of EUR 0.20 per share. After this and if the rights issue and the directed issue are realised in full, the Company’s largest shareholders are as follows: Inission (49.5%), Joensuun Kauppa ja Kone Oy (10.7%), Rausanne Oy, Rausatum Oy and Adafor Oy (jointly 7.3%), Jaakko Heininen and Pekka Heininen (jointly 3.1%), Soinitilat Oy (3.0%) and 4capes Oy (2.7%).

Inission intends to seek from the Finnish Financial Supervisory Authority a permanent exemption referred to in Chapter 11, section 26 of the Finnish Securities Markets Act from the obligation to launch a mandatory tender offer, and its subscription undertaking is conditional upon, among other things, its holding of the votes and shares in the Company not exceeding 49.99 per cent and on the exemption granted by the Finnish Financial Supervisory Authority. The exemption would apply to the crossing of the 30 per cent threshold for the obligation to launch a mandatory tender offer. The exemption requires that the directed issue is supported at the Company’s Extraordinary General Meeting by shareholders independent thereof that represent at least two thirds of the votes given.

The Company’s Board of Directors has decided to propose to the Extraordinary General Meeting to be convened on 9 March 2021 that it authorise the Board of Directors to decide on the above-mentioned rights issue and directed issue. The Company will publish the notice of the General Meeting through a separate stock exchange release later today. If the General Meeting grants the required authorisations, the Company aims to carry out both issues as soon as possible, however by the end of April 2021, at the latest. The financing arrangement, the rights issue and the directed issue will secure the continuity of the Company’s operations. If the General Meeting approves the rights issue authorisation, each share will entitle the holder to subscribe for three new shares.

Enedo is a European designer and producer of high-quality electronic power supplies and systems for critical equipment even in the most demanding environments. In 2018–2019, the Company implemented a significant structural change by divesting its unprofitable telecom business and focusing entirely on the industry business. Since the strategy update in February 2020, Enedo has three product categories, namely Power Supplies, LED Drivers and Power Systems.

With the help of the capital raised in the contemplated share issues, the Company intends to invest in the implementation of the reorganization measures defined in its updated strategy and which have been delayed by the COVID-19 pandemic. The Company intends to execute a financial turnaround programme, with which it seeks to achieve a significant positive change in its financial result by the end of 2023. The key elements of the turnaround program are estimated permanent annual savings exceeding EUR 4 million in direct and indirect costs over the period 2021–2023 compared to the 2020 cost level (excluding temporary layoffs and other temporary savings), an annual increase in sales from 5 to 10 percent, and a clear improvement of the balance sheet and financing structure.

If the above measures are realised as planned, the Company’s balance sheet position, liquidity and financial situation will improve significantly by the end of the second quarter of 2021.

Enedo’s President and CEO Vesa Leino comments:

“Through the planned financing arrangements, a strong capital structure can be created for Enedo. This will in turn enable the implementation of the company’s turnaround program in line with its strategy that was updated in February 2020. Having our main shareholders’ commitment to the rights issue, complemented with Inission’s industry and turnaround experience, will give a very solid basis for Enedo’s change of direction.

I am confident of the delivery of the turnaround program since it is based on the measures defined in our strategy to improve operational efficiency and support sales growth and whose dependency on external factors outside Enedo is low. In 2020, we already made progress in terms of introducing new product categories and starting the reorganization of both sales and marketing and production, but unfortunately the negative effects of the COVID-19 pandemic far outweighed the benefits achieved. We intend to further improve cost efficiency through both structural and operational changes that will enable the company to reduce its fixed annual expenses.

The planned changes will also enhance our ability to serve our customers even better and help us deepen and develop our current strengths, namely strong technological expertise, established customer relationships, a scalable and agile operating model, and a strong production network and expertise. I am confident that the planned share issues and other financing arrangements are in the best interest of both our customers and the company’s other stakeholders.”

Inission’s Chairman Fredrik Berghel comments:

“After discussions with representatives of Enedo and with the chairman of the Board we are pleased to announce this industrial investment. Enedo has a strong product portfolio, great reputation and a solid customer base and this industrial investment will enable us to investigate the possibility of developing common business as well as getting engaged in Enedo’s turnaround plan.”

UB Securities Ltd is the lead manager of the rights issue and the directed issue and Castrén & Snellman Attorneys Ltd the Company’s legal adviser.

ENEDO PLC

Vesa Leino
President and CEO

For further information, please contact Mr. Vesa Leino, CEO, tel. +358 40 759 8956.

DISTRIBUTION

Nasdaq Helsinki Ltd
Principal media

Enedo

Enedo is a European designer and producer of high-quality electronic power supplies and systems for critical equipment even in the most demanding environments. Enedo’s mission is to make electricity better – more reliable, more secure, more energy efficient – and just right to fit its purpose. Enedo’s three main product categories are Led Drivers, Power Supplies and Power Systems. In 2019 the group’s revenue was EUR 43,3 million. Enedo has 394 employees and its main functions are located in Finland, Italy, Tunisia and USA. The group’s head office is in Finland and parent company Enedo Oyj is listed on Nasdaq Helsinki Oy.

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