Current Report No. 33/2016
Date of preparation: 02.11.2016
Abbreviated name of the Issuer: CIECH S.A
Subject: Deciding on the submission of an offer in a potential transaction to acquire 100% of the shares in SAPEC – Agro, S.A. and in Trade Corporation International, S.A.
Legal basis: Article 17 paragraph 1 of the MAR - inside information
Contents of the report:
The Management Board of CIECH S.A. with its registered office in Warsaw (the "Issuer") hereby informs that on 2 November 2016 the Management Board of the Issuer decided to submit an offer (the "Offer") regarding potential acquisition of:
from SAPEC - Portugal, SGPS, S.A. a company incorporated in Portugal with its registered seat in Lisbon, Portugal (the “Seller”), being subsidiary of SAPEC S.A. with its registered seat in Brussels, Belgium (“SAPEC”), and acquisition of the receivables of SAPEC Group (with the exception of the Companies) towards the Companies (the “Potential Transaction”).
In addition, on 2 November 2016 the Management Board of the Issuer decided to sign a commitment letter with a consortium of banks in respect of making available to the Issuer a debt financing to finance the Potential Transaction (the “Commitment Letter”),
On 2 November 2016 the Supervisory Board of the Issuer adopted the resolution accepting contents of the Offer and issued consent to submit the Offer and consent to sign the Commitment Letter.
The Management Board of the Issuer decided to submit the Offer in connection with development plans of CIECH S.A. capital group (“CIECH Group”) concerning the AGRO area. According to the Issuer, if the Potential Transaction is carried out, it would allow for the business diversification and realisation of synergy with CIECH Group. Potential Transaction will substantially increase CIECH Group share in the European crop protection market and significantly expand its product portfolio. Potential Transaction will also allow CIECH Group to enter a new business segment – crop nutrition, including micronutrients and biostimulants.
The Management Board of the Issuer expects that if the Potential Transaction is carried out, it will be financed with new debt which will be made available to the Issuer in accordance with the Commitment Letter and with own funds. The Commitment Letter provides that the undertaking of the banks to finance the Potential Transaction is subject to agreement and execution of the finance documentation and satisfaction of market standard conditions precedent, including among others, the Seller deciding to proceed with completion of the Potential Transaction with the Issuer following acceptance of the Issuer’s Offer by the Seller. The Commitment Letter provides also right of the Issuer to terminate it at any time.
As regards the estimated value of the Potential Transaction, the Management Board of the Issuer estimates that if the Potential Transaction is carried out and additional financial indebtedness referred to above is incurred, the ratios specified in the CIECH Group’s Strategy for the period 2014-2019 may not be achieved, including, in particular, a net debt to EBITDA ratio will exceed the level estimated in the Strategy (estimated in the strategy at below 1.00 in 2019) (current report No. 70/2014 of 04.11.2014).
Information about Companies
Companies deal with production and sale of generic crop protection and crop nutrition products. In crop protection segment Companies operate primarily in Europe, with strong presence in Spain and Portugal, while in crop nutrition globally.
In accordance with the consolidated financial statement of SAPEC, the crop protection and crop nutrition segments jointly generated revenue of EUR 223m in 2015.
Terms of the Offer and the Auction Process
Should the Seller accept the Issuer’s Offer and parties reach an agreement concerning the Potential Transaction, the Management Board of the Issuer expects that the final terms of the Potential Transaction (including the final sale price), will be determined in the course of bilateral negotiations.
The Offer is not legally binding, and in particular does not constitute an offer in the meaning of the civil code nor applicable regulations in other jurisdictions. The Issuer reserved in the Offer the right to withdraw from the Potential Transaction at any time prior to execution of any legally binding agreements.
The documentation of the auction process stipulates the Seller’s right to abandon the auction process at any time or to select a different bidder.
The Management Board of the Issuer will inform in a separate report(s) about the selection of the Issuer for the purpose of conducting bilateral negotiations, about receiving any exclusivity in negotiations, conclusion of a legally binding agreement for the sale or about terminating the Issuer’s participation in the auction process in another way.
Legal basis: Article 17 paragraph 1 of the MAR - inside information
Signatures of persons authorised to represent the company:
Maciej Tybura - President of the Management Board
Artur Osuchowski - Member of the Management Board
