TTS Group ASA: Signing of asset sale agreement – detailed stock exchange announcement - TTS Group ASA

TTS Group ASA: Signing of asset sale agreement – detailed stock exchange announcement 08.02.2018

Today, TTS Group ASA (the "Company" or "TTS") has signed an asset sale agreement with MacGregor, a part of Cargotec Oyj, which is a company listed on Nasdaq Helsinki Stock Exchange.

 

The agreement implies a takeover by MacGregor of all of TTS’ assets except for TTS Group ASA and its subsidiary TTS Syncrolift AS, which will become a cornerstone in the development of the Company after the divestment. The purchase price is MNOK 840, subject to working capital and net debt adjustments at closing, and shall be settled in cash.

 

"The ships equipment industry is moving towards larger, integrated units with global presence, offering a broader scope of products and services. In order to meet this challenge, a combination of TTS' marine and offshore activities with MacGregor will be an important step in the consolidation process, and is expected to be favorable to all TTS stakeholders in the long term", says TTS Group CEO Toril Eidesvik.

 

TTS, proposed to be renamed Nekkar ASA, will build its operation around Business Unit Shipyard Solutions with its Syncrolift brand, and additionally seek new investment opportunities building on the heritage of TTS, access to exciting technology and knowledge clusters in Norway, together with a strong and committed management team.

 

Each future portfolio investment will be targeted to grow by both organic expansion and accretive acquisitions. The ownership can be based on either 100% ownership, majority ownership with majority vote and key rights or have a significant minority stake, normally with a strong shareholder agreement with veto rights in the portfolio companies.  

 

Through industry network, operational focus through active ownership, digitalisation competence and business-building skills – Nekkar has the ability to create value for its shareholders.

 

An extraordinary general meeting in the Company to approve the transaction and change the Company's name will be called later today and be held on 12 March 2018.

 

The Board of Directors will propose a significant dividend to the shareholders when the transaction is completed.

 

Parties to the transactions, transaction structure

 

The transaction is structured as an asset purchase agreement between the Company as seller and various companies within MacGregor as buyers.

 

Under the agreement, the Company shall transfer the following business to MacGregor (the "Business"):

 

(a)       the shares in all subsidiaries of the Company except for the shares in TTS Syncrolift AS;

 

(b)       certain contracts;

 

(c)       certain IT systems; and

 

(d)       certain intellectual property rights (including the TTS trademarks, logos and domain names).

 

Completion of the transaction is conditional on (i) approval by the Company's extraordinary general meeting with two-thirds majority (pre-acceptances from more than 2/3 of the shareholders have already been secured, and bondholders representing more than 2/3 of outstanding convertible bonds have also committed to consent to the transaction in the event that they should convert their bonds to shares prior to the above mentioned extraordinary general meeting) (ii) the transaction being cleared by the competition authorities in Norway, Germany, Austria, South Korea and China on or before 30 September 2018 unconditionally or on conditions which are acceptable to MacGregor. The Company has given warranties which are in line with market practice for similar transactions.

 

Further details will be included in an information memorandum to be published later.

 

Consideration and settlement model

 

The purchase price is MNOK 840, subject to working capital and net debt adjustments at closing, and shall be settled in cash. Based on 3Q 2017 financials, the transaction will be equivalent to NOK 7.0 per share on an undiluted basis and NOK 6.6 per share on a fully diluted basis.

 

Timetable

 

The transaction is subject to approvals from relevant competition authorities. The approval process will start immediately. All approvals are expected within the third quarter of 2018.  

 

Significance of the transaction for TTS

 

If completed, the transaction will reduce the total Company activity by approximately 90% as measured by revenue 2016 and year to date 3Q 2017. The Business also represents the majority of the Company’s assets.

 

Shipyard Solutions with its Syncrolift brand, the remaining business unit in the TTS Group, is a leading ship lift provider. 2016 revenues were MNOK 189, and EBITDA MNOK 28. Year to date 3Q 2017 results were revenues of MNOK 153 and EBITDA of MNOK 25. The 2016 numbers exclude revenues and EBITDA from Liftec OY, of MNOK 109 and MNOK 8 respectively. Liftec OY was sold in 1Q 2017. The Syncrolift business has developed positively throughout 2017, and the high activity levels are expected to continue in 2018 on the back of a strong order book, high utilization of resources, and a strong market.

 

Nekkar ASA will continue as the holding company for Syncrolift and the future portfolio companies. It will be scaled (staff and cost base) in accordance with the operating requirements of the business going forward. The preliminary assessment indicates a cost level of approximately NOK 15 million per year.

 

Agreements to the benefit of board members or management in TTS

 

Trym Skeie, Chairman of the Board of Directors, is directly and indirectly a major shareholder in the Company. Board member Gisle Rike is employed by Rasmussengruppen AS, which is a major shareholder in the Company.

 

As per 8 February 2018, 27,109,124 shares in TTS are indirectly held by Trym Skeie through Skeie Technology AS, Skeie Capital Investment AS and Skeie Alpha Invest AS. In addition, Trym Skeie holds 323,140 TTS shares directly.

 

As per 8 February 2018, 11,512,506 shares in TTS are held by Rasmussengruppen AS.

 

Under her current bonus agreement, Toril Eidesvik, CEO of the TTS Group, will be entitled to a bonus equal to 50% of her base salary upon closing of the transaction.

 

Summons to EGM

 

The Board of Directors of the Company will today summon the Company's shareholders to an extraordinary general meeting to be held on 12 March 2018 to approve the transaction. The notice will be attached to a separate stock exchange announcement to be released later today.

 

Pareto Securities AS acted as financial advisor to TTS Group ASA in the transaction while Wikborg Rein Advokatfirma AS acted as legal advisor.

 

Additional information