The Board of Directors of Recipharm resolves on a rights issue of approximately SEK 2,017 million and announces the terms

NOT FOR RELEASE, DISTRIBUTION OR PUBLICATION, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND, SWITZERLAND, SINGAPORE, SOUTH AFRICA, THE UNITED STATES OF AMERICA OR ANY OTHER JURISDICTION IN WHICH THE RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. OTHER RESTRICTIONS ARE APPLICABLE. PLEASE SEE THE SECTION “IMPORTANT INFORMATION” AT THE END OF THIS PRESS RELEASE.
 

The Board of Directors of Recipharm AB (publ) (”Recipharm”, the ”Company” or the ”Group”) has, with the support of the authorisation from the Annual General Meeting on 12 May 2020, resolved on a new issue of shares with preferential rights for existing shareholders of approximately SEK 2,017 million (the ”Rights Issue”). The Board of Directors of Recipharm also announces the terms of the Rights Issue through this press release.

THE RIGHTS ISSUE IN BRIEF

  • The purpose of the Rights Issue is, as previously communicated by the Company, primarily to finance the acquisition of Consort and to repay the associated bridge facility.
  • Shareholders in Recipharm have preferential right to subscribe for two (2) new shares per five (5) existing shares of the same share class, i.e. a subscription ratio of 2:5.
  • The subscription price has been set to SEK 70 per share regardless of share class which, assuming that the Rights Issue is fully subscribed, amounts to issue proceeds of approximately SEK 2,017 million before the deduction of issue costs.
  • The subscription period runs from 5 June 2020 through 22 June 2020.
  • The record date for the Rights Issue is 3 June 2020. Last day of trading in Recipharm series B shares including right to receive subscription rights in the Rights Issue is 1 June 2020 and the first day of trading in the Recipharm series B shares without receiving subscription rights in the Rights Issue is 2 June 2020.
  • Trading in subscription rights of series B will take place on Nasdaq Stockholm during the period from 5 June 2020 through 17 June 2020.
  • The Rights Issue is encompassed, through subscription undertakings or intentions to subscribe, by shareholders together representing approximately 58.6 per cent of the shares and approximately 85.7 per cent of the votes in Recipharm.
  • The Rights Issue comprises a maximum of 6,089,142 series A shares and a maximum of 22,725,862 series B shares, a total of maximum 28,815,004 shares.

THOMAS ELDERED, CEO OF RECIPHARM
Following the recently completed directed issue, we are now fulfilling the authorisation that the Board of Directors was given from the Annual General Meeting through the share issue of approximately SEK 2.0 billion, with preferential rights for existing shareholders in Recipharm. We are very pleased with the confidence existing shareholders are now showing with shareholders representing about 58.6 percent of the shares having announced that they will subscribe for their respective pro rata shares in the rights issue already in advance. When the rights issue has been carried out, we will have completed the shares issues we announced our intention to make in conjunction with the offer to acquire Consort.

BACKGROUND AND RATIONALE
On 18 November 2019, Recipharm announced that the Company had made an offer to acquire all outstanding shares in Consort at a purchase price of approximately GBP 627 million[1]  on a cash and debt-free basis. On 4 February 2020, Recipharm declared the offer unconditional and on 5 February 2020 Recipharm announced that Consort becomes part of the Group. On 6 March 2020, the Consort share was delisted from the London Stock Exchange and on 3 April 2020, the Company announced that it had acquired the entire issued share capital of Consort.

Consort complements Recipharm's previous offering as the companies provide different products and services to a number of customers within the same value chain. Through the acquisition, Recipharm becomes a top five global CDMO (Contract Development and Manufacturing Organisation), measured in revenue, with a better opportunity to compete for global contracts and technological leadership in inhalers with an improved customer offering and extensive knowledge throughout the production chain, from APIs to finished dose forms. Anticipated annual cost synergies amount to SEK 125 million and are expected to be realised within 18 months of completion of the transaction, with the potential for further cost and sales synergies in the medium and long term.

Already prior to the acquisition, Recipharm was a leading[2] CDMO in the pharmaceutical industry offering manufacturing services of pharmaceuticals in various forms, the production of materials for clinical trials and APIs and pharmaceutical product development. Prior to the acquisition, Consort was a global, integrated supplier in the development and manufacture of inhalers and other products for drug delivery. At the time of acquisition, Consort's business area Bespak was focused on the manufacture of products for drug delivery as well as devices for point of care diagnostics. The business area Aesica mainly concerned the development and manufacture of APIs and finished pharmaceutical products. As of 30 April 2019, Consort had more than 2,000 employees. During the 2018/2019 financial year, Consort had a revenue of GBP 305 million and an operating profit before non-recurring items of GBP 41 million.

THE RIGHTS ISSUE
The acquisition of Consort was fully financed through bank facilities arranged and made available by Danske Bank A/S and DNB Sweden AB including a bridge facility of SEK 2,000 million with a 12 month maturity. In connection with the acquisition of Consort, Recipharm announced its intention to carry out one or several share issues of approximately SEK 2.5 billion in total, primarily in order to repay the bridge facility obtained to finance the acquisition of Consort.

With reference to above, the Board of Directors was authorised by the Annual General Meeting on 12 May 2020 to, at one or several occasions during the period until the next Annual General Meeting, resolve on share issues with total issue proceeds of up to approximately SEK 2.5 billion, whereof at least SEK 2.0 billion shall be carried out with preferential rights for Recipharm’s shareholders and not more than SEK 500 million shall be carried out with deviation from the shareholders' preferential rights. The Company carried out a directed issue of approximately SEK 500 million on 19 May 2020. The Board of Directors of Recipharm has now, in line with the authorisation from the Annual General Meeting on 12 May 2020, resolved on the Rights Issue of approximately SEK 2,017 million.

Assuming that the Rights Issue is fully subscribed, Recipharm will receive total proceeds of approximately SEK 2,017 million, before deduction of issue costs. The issue proceeds from the Rights Issue will firstly be used for repayment of the bridge facility of SEK 2,000 million, and secondly to finance the Company’s day-to-day operations.

TERMS OF THE RIGHTS ISSUE
Those who are registered shareholders in Recipharm on the record date 3 June 2020, receive one (1) subscription right for each series A share and one (1) subscription right for each series B share. The subscription rights grant the holder a preferential right to subscribe for new shares, whereby five (5) subscription rights of series A entitle the shareholder to subscribe for two (2) new shares of series A and five (5) subscription rights of series B entitle the shareholder to subscribe for two (2) new shares of series B. In addition, investors are offered the possibility to subscribe for shares without subscription rights.

For shares not subscribed under the primary preferential right, allotment shall be made to shareholders who have subscribed for shares on the basis of the subsidiary preferential right. If the shares offered are not sufficient for subscription on the basis of the subsidiary preferential right, the shares shall be distributed among subscribers in relation to the primary preferential right exercised and, to the extent that this cannot be done, by drawing lots. For shares not subscribed for under the primary or subsidiary preferential right, the allocation shall be made to others who have registered for subscription of shares in the Rights Issue and, if they are unable to obtain full allotment, in relation to the number of shares each reported for subscription and, to the extent that this cannot be done, by drawing lots.

The subscription price is SEK 70 per new share, regardless of share class. Assuming that the Rights Issue is fully subscribed, the share capital will be increased by a maximum of approximately SEK 14,407,502.00[3] , from SEK 36,150,339.50 to SEK 50,557,841.50, by new issue of a maximum of 6,089,142 new series A shares and 22,725,862 new series B shares, resulting in the total number of shares increasing from 72,300,679 shares to 101,115,683 shares, whereof 21,312,000 series A shares and 79,803,683 series B shares. Assuming full subscription, Recipharm will receive total proceeds of approximately SEK 2,017 million, before deduction of issue costs[4].

The subscription period runs from 5 June 2020 through 22 June 2020. The Board of Directors of Recipharm is entitled to extend the subscription period and the time for payment which, if applicable, will be announced by the Company in a press release no later than 22 June 2020. Trading in subscription rights of series B will take place on Nasdaq Stockholm during the period from 5 June 2020 through 17 June 2020 and the trading in paid-up subscribed shares of series B (Sw: betalda tecknade aktier) during the period from 5 June 2020 through 2 July 2020.

Shareholders who choose not to participate in the Rights Issue will, assuming that the Rights Issue is fully subscribed, have their shareholdings diluted by approximately 28.6 per cent[5] , but are able to financially compensate for this dilution by selling their subscription rights.

UNDERTAKINGS AND INTENTIONS TO SUBSCRIBE
The Company’s two largest shareholders, Flerie Participation AB, owned by the CEO of Recipharm, Thomas Eldered, and Cajelo Invest Limited, owned by the Chairman of the Board of Directors of Recipharm, Lars Backsell, together representing approximately 25.4 per cent of the total number of shares and approximately 74.2 per cent of the total number of votes in Recipharm, have undertaken to subscribe for their respective pro-rata share in the Rights Issue.

In addition, some of Recipharm’s larger institutional shareholders, Första AP-fonden, Fjärde AP-fonden and Lannebo Fonder, together representing approximately 17.0 per cent of the total number of shares and approximately 5.9 per cent of the votes in Recipharm, have undertaken to subscribe for their respective pro-rata share in the Rights Issue. A few additional larger institutional shareholders of Recipharm, Didner & Gerge Fonder, SEB-stiftelsen, Gladiator, Polar Capital, Länsförsäkringar, and five others, together representing approximately 16.3 per cent of the total number of shares and approximately 5.6 per cent of the votes in Recipharm, have announced their intention to subscribe for their respective pro-rata share in the Rights Issue.

Thus, the Rights Issue is encompassed by subscription undertakings and intentions to subscribe from shareholders together representing approximately 58.6 per cent of the shares and approximately 85.7 per cent of the votes in Recipharm.

PRELIMINARY TIMETABLE
The below timetable for the Rights Issue is preliminary and may be adjusted.

1 June 2020 Last day of trading in series B shares including right to participate in the Rights Issue
2 June 2020 First day of trading in series B shares excluding right to participate in the Rights Issue
3 June 2020 Record date for participation in the Rights Issue, i.e. holders of shares who are registered in the share register on this date will receive subscription rights for participation in the Rights Issue
4 June 2020 Estimated date for publication of the prospectus
5 June – 17 June 2020 Trading in subscription rights of series B
5 June – 22 June 2020 Subscription period
5 June – 2 July 2020 Trading in paid-up subscribed shares (Sw: betalda tecknade aktier) of series B
24 June 2020 Estimated date for publication of preliminary results of the Rights Issue
25 June 2020 Estimated date for publication of final results of the Rights Issue
 

ADVISERS

In connection with the Rights Issue, Recipharm has appointed Danske Bank A/S, Danmark, Sverige Filial and DNB Markets, a part of DNB Bank ASA, Sweden Branch as financial advisers and Joint Lead Managers. Setterwalls Advokatbyrå acts as legal adviser to the Company and Schjødt acts as legal adviser to Danske Bank and DNB.

[1]Based on Consort’s net debt as of 30 April 2019.
[2]Leading refers to a place among the ten largest CDMO companies globally, measured in terms of revenue (Results Healthcare – Outsourced Pharmaceutical Manufacturing 2020 (November 2019).
[3]Excluding consideration of 263,165 own shares of series B, which do not entitle to participation in the Rights Issue.
[4]Excluding consideration of 263,165 own shares of series B, which do not entitle to participation in the Rights Issue.
[5]Excluding consideration of 263,165 own shares of series B, which do not entitle to participation in the Rights Issue.

 

For more information please visit www.recipharm.com or contact:
Thomas Eldered, CEO, telephone: +46 8 602 52 10
Tobias Hägglöv, CFO, ir@recipharm.com, telephone: +46 8 602 52 00 

This information is information that Recipharm AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above at 08:30 CEST on 27 May 2020.

 

About Recipharm
Recipharm is a leading Contract Development and Manufacturing Organisation (CDMO) in the pharmaceutical industry employing almost 9,000 employees. Recipharm offers manufacturing services of pharmaceuticals in various dosage forms, production of clinical trial material and APIs, pharmaceutical product development and development and manufacturing of medical devices. Recipharm manufactures several hundred different products to customers ranging from big pharma to smaller research and development companies. Recipharm’s annual turnover is approximately SEK 11 billion. The company operates development and manufacturing facilities in France, Germany, India, Israel, Italy, Portugal, Spain, Sweden, the UK and the US and is headquartered in Stockholm, Sweden. The Recipharm B-share (RECI B) is listed on Nasdaq Stockholm.

For more information on Recipharm and our services, please visit www.recipharm.com

 

IMPORTANT INFORMATION
The release, announcement or distribution of this press release may, in certain jurisdictions, be subject to restrictions. The recipients of this press release in jurisdictions where this press release has been published or distributed shall inform themselves of and follow such restrictions. The recipient of this press release is responsible for using this press release, and the information contained herein, in accordance with applicable rules in each jurisdiction. This press release does not constitute an offer, or a solicitation of any offer, to buy or subscribe for any securities in the Company in any jurisdiction where such offer would be considered illegal. This press release does not constitute an offer to sell or an offer to buy or subscribe for shares issued by the Company in any jurisdiction where such offer or invitation would be illegal. In a member state within the European Economic Area ("EEA"), securities referred to in the press release may only be offered in accordance with applicable exemptions under Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 (the “Prospectus Regulation”).

This press release is not an offer or invitation to acquire or subscribe for shares or other securities in the United States. The securities that have been mentioned in this release are not allowed to be sold in the United States without registration, or without application of an exception from registration, according to the applicable U.S. Securities Act from 1933 (“Securities Act”), or as a part of a transaction that is not covered by the registration requirements according to the Securities Act. There is no intention to register any shares or securities mentioned herein in the United States or to announce a public offering of such securities in the United States. The information in this press release shall not be published, copied, reproduced or distributed, directly or indirectly, in whole or in part, in or into Australia, Canada, Hong Kong, Japan, New Zealand, Switzerland, Singapore, South Africa, the United States of America or any other jurisdiction in which the release, publication or distribution of this information would be unlawful or where such action is subject to legal restrictions or would demand additional registration or other actions according to Swedish law. Acts in contrary to this instruction can constitute a crime according to applicable securities laws.

A prospectus regarding the Rights Issue described in this press release will be published by the Company on or about 4 June 2020. The prospectus will be approved and registered by the Swedish Financial Supervisory Authority (Sw: Finansinspektionen) and be published on https://www.recipharm.com/. The upcoming approval of the prospectus by the Swedish Financial Supervisory Authority shall not be regarded as an approval of the shares. This release is however not a prospectus in accordance to the definition in the Prospectus Regulation. In order for investors to fully understand the potential risks and benefits associated with a decision to participate in the Rights Issue, any investment decision should only be made based on the information in the prospectus. Thus, investors are encouraged to review the prospectus in its entirety. In accordance with article 2 k of the Prospectus Regulation this press release constitutes an advertisement. Recipharm has not authorized any offer to the public of shares or rights in any other member state of the EEA than Sweden. This announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in shares. An investment decision to acquire or subscribe for shares in the Rights Issue shall only be made based on publicly available information.

To the extent this press release contains forward-looking statements, such statements does not constitute facts and are characterized by words such as “shall”, “expect”, “believe” “assess”, “intend”, “estimate” and similar expressions. Such statements reflects Recipharm’s intentions, views or present expectations or assumptions. Such forward-looking statements are based on Recipharm’s current plans, estimates and projections, which have been made to the best of Recipharm’s ability. However, Recipharm does not assert that these statements will be correct in the future. Forward-looking statements are associated with risks and uncertainties which are difficult to predict and which generally cannot be affected by Recipharm. It should be contemplated that actual events or outcomes may differ materially from what is included or expressed in such forward-looking statements.