COMPANY DESCRIPTION OF
BYGGMÄSTARE ANDERS J AHLSTRÖM FASTIGHETS AB (PUBL)
PREPARED IN CONNECTION WITH THE LISTING OF
MAXIMUM SEK 200,000,000 SENIOR SECURED BONDS 2013/2018
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First North Disclaimer
First North Bond Market is an alternative marketplace operated by an exchange within the
NASDAQ OMX group. Issuers on First North Bond Market are not subject to the same rules as
Issuers on the regulated main market. Instead they are subject to a less extensive set of rules and
regulations. The risk in investing in an Issuer on First North Bond Market may therefore be
higher than investing in an Issuer on the main market. At least during the listing process all
Issuers with financial instruments traded on First North Bond Market have a Certified Adviser
who monitors that the rules are followed. The Exchange approves the application for admission
to trading.
Important Information
Byggmästare Anders J Ahlström Fastighets AB (publ) (the “Issuer” or the “Group”) issued SEK 200
million of senior secured callable fixed rate bonds (the “Bonds”) on 18 November 2013 (the “Issue
Date”) (the “Bond Issue”) under the terms and conditions for the Bonds (the “Terms and Conditions”).
The Issuer has undertaken to list the Bonds on the institutional segment of First North Bond Market at
NASDAQ OMX Stockholm (“First North”) within 60 days of the Issue Date. This company description
(the “Company Description”) is prepared in relation to such listing.
This Company Description does not constitute or form part of an offer or solicitation to purchase or
subscribe for securities in the United States. The Bonds have not been and will not be registered under the
United States Securities Act of 1933, as amended, (the “Securities Act”), or with any securities
regulatory authority of any state or other jurisdiction in the United States. Accordingly, the Bonds may
not be offered, sold (directly or indirectly), delivered or otherwise transferred within or into the United
States or to, or for the account or benefit of, U.S. persons.
This Company Description does not constitute a prospectus as defined in the Directive 2003/71/EC, as
amended, (the “Prospectus Directive”) and no prospectus relating to the Bonds or the listing on First
North has been or will be registered under any law or regulation. This Company Description has not been
prepared to comply with the Prospectus Directive or the EC Commission Regulation No. 809/2004, nor
with any national rules and regulations relating to prospectuses, including but not limited to Chapter 2 of
the Swedish Financial Instruments Trading Act (Sw. lag (1991:980) om handel med finansiella
instrument). The Bond Issue was made with a minimum subscription and allocation of SEK 1,000,000 to
a limited number of professional investors and was thus made in reliance upon one or several
exemption(s) from the prospectus requirements under the Prospectus Directive. The listing of the Bonds
contemplated herein is also being made in accordance with such exemption(s) and is not being made to
require a prospectus, registration measures or other similar measures (except as provided for under the
rules for First North).
Certain information contained in this Company Description, including any information on the Issuer’s
plans or future financial or operating performance and other statements that express the Issuer’s
management’s expectations or estimates of future performance, constitute forward-looking statements
(when used in this document, the words “anticipate”, “believe”, “estimate” and “expect” and similar
expressions, as they relate to the Issuer or its management, are intended to identify forward-looking
statements). Such statements are based on a number of estimates and assumptions that, while considered
reasonable by management at the time, are subject to significant business, economic and competitive
uncertainties. The Issuer cautions that such statements involve known and unknown risks, uncertainties
and other factors that may cause the actual financial results, performance or achievements of the Issuer to
be materially different from the Issuer’s estimated future results, performance or achievements expressed
or implied by those forward-looking statements.
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1
Risk Factors
Investments in corporate bonds always entail a certain degree of risk and this is also the case for
an investment in the Bonds. A number of factors, both within the Issuer’s control but also
factors not controllable by the Issuer, affect and may come to affect the Issuer’s profit and
financial position as well as the Bonds. A number of risk factors, both general risks attributable
to the Issuer’s operations and risks linked directly to the Bonds in their capacity of financial
instruments, are described below. The intention is to describe risks that are linked to the Issuer’s
business and thus also the Issuer’s ability to fulfil its obligations in accordance with the Terms
and Conditions. The below summary of risk factors does not claim to be complete, nor are the
risks ranked in order of importance.
Before making a decision about acquisition of Bonds, any potential investors should carefully
consider the risk factors described below, as well as any other provided information about the
Issuer and the Bonds. In addition, an investor must, alone or together with its financial and other
types of advisers, engage in a general evaluation of external facts, other provided information
and general information about the real estate market and real estate companies from its own
perspective. An investor should have adequate knowledge to evaluate the risk factors as well as
sufficient financial strength to bear these risks.
Additional risk factors which the Issuer is not currently aware of or that currently is not
considered to be material, may also affect the Issuer’s future operations, result and financial
position and thus the Issuer’s ability to fulfil its obligations in accordance with the Terms and
Conditions.
All risk factors described below may potentially adversely affect the Issuer’s operations,
financial position and result. In turn this would affect the Issuer’s ability to fulfil its obligations
in accordance with the Terms and Conditions.
1.1
Risks Relating to the Group
Acquisition of Real Estates
Risk of Unpaid Claims Under Share Purchase Agreement
Pursuant to a share purchase agreement, the wholly owned subsidiary of the Issuer, Mitt Alby
AB, has indirectly acquired the real estates Botkyrka Albyberget 1, Botkyrka Albyberget 2,
Botkyrka Albyberget 3, Botkyrka Albyberget 4, Botkyrka Albyberget 5, Botkyrka Albyberget 6,
Botkyrka Albyberget 7, Botkyrka Albyberget 8, Botkyrka Fogden 1 and Botkyrka Godemannen
1 (the “Properties”) from the municipal company AB Botkyrkabyggen (“Botkyrkabyggen”)
through purchase of all shares in a newly established limited liability company, Albyhjärtat AB
(the “Target”), to which the Properties were transferred in connection with the transaction.
Botkyrkabyggen has provided certain representations and warranties and made certain
undertakings (including an undertaking to pay any stamp duty associated with the sale of the
Properties) under the share purchase agreement. There is always a risk that a seller, in this case
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Botkyrkabyggen, does not pay any claims made by a buyer, in this case Mitt Alby AB, or due to
bankruptcy or similar reasons is unable to fulfil its financial obligations towards the buyer. If
this risk were to materialise it may adversely affect the Group’s operations, financial position
and results.
Decision of the Municipality
Botkyrka municipality’s decision to approve of the divestment of the Properties is currently
under the administrative court’s consideration following an appeal. The scope of the appeal is
limited to procedural matters regarding the municipality’s decision and not the appropriateness
of the divestment as such. Botkyrkabyggen and Botkyrka municipality are of the opinion that no
procedural errors were made during the decision making process.
Swedish law allows for a municipality’s decision to be enforced even though it has been
appealed. Botkyrkabyggen as well as Botkyrka municipality have stated that their intention is to
complete the divestment of the Properties as soon as possible notwithstanding the current
process in the administrative court. If a court annuls a municipality’s already executed decision,
the municipality shall, to the extent possible, ensure that the execution of the decision is
reversed.
The managing director of Botkyrkabyggen has confirmed in writing that the intention of the
board of directors of Botkyrkabyggen is to complete the divestment of the Properties. The share
purchase agreement with Botkyrkabyggen was made conditional upon the approval by the
municipality’s assembly of the divestment, which is the matter currently being considered by
the administrative court. Under the share purchase agreement regarding the shares in the Target,
Botkyrkabyggen had until 15 October 2013 a right to cancel the agreement if such approval was
not given, but no such cancellation was made. The managing director of Botkyrkabyggen has
confirmed that Botkyrkabyggen therefore consider that (i) Botkyrkabyggen is now legally
bound to complete the transfer of the Properties on the terms of the agreement and (ii) the
intention of Botkyrkabyggen is to complete the transfer before 30 November 2013. The transfer
of the Properties and the shares in the Target has also subsequently been completed.
If Botkyrka municipality’s decision is annulled by the administrative court, the municipality has
to reverse the execution of the decision to the extent possible. The opinion of the Issuer is that
the share purchase agreement is binding under Swedish private law and that Botkyrkabyggen
therefore will not be able to cancel it, notwithstanding the outcome of the process in the
administrative court. However, if the administrative court annuls the municipality’s decision,
the municipality could possibly instruct Botkyrkabyggen to explore whether the share purchase
agreement can be cancelled. Even if the Issuer believes that Botkyrkabyggen has no legal right
to cancel the share purchase agreement and Botkyrkabyggen has confirmed its intention to fulfil
its obligations under the agreement, it cannot be ruled out that Botkyrkabyggen tries to cancel
the agreement if the municipality’s decision is annulled by the administrative court. Such
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attempt to cancel the agreement may, regardless of such attempt is successful or not, adversely
affect the Group’s operations, financial position and results.
Industry and Market Risks
Macroeconomic Factors
The real estate business is extensively affected by macroeconomic factors such as the general
economic trend, growth, employment, the rate of production of new premises, changes in
infrastructure, population growth, inflation and interest rates. The economic growth affects the
employment rate which is a factor for the supply and demand on the real estate rental market. In
turn this affects the vacancy ratio and rents. Expectations regarding the inflation affect the
interest rate and therefore affect the Group’s net of financial items. The interest cost for the
Bonds and debt to financial institutions is one of the Group’s main costs items. Changes in
interest rate have a significant effect on the Group’s long-term result and cash flow. Inflation
also affects the Group’s costs. In addition, changes in interest rate and inflation also affect the
yield requirements and thus the market value of the real estate. A higher vacancy ratio and
interest rates, increased costs and lower rents may adversely affect the Group’s operations,
financial position and results.
Demand and Supply
The demand for residence in the Stockholm region as of today exceeds the supply. However, no
guarantees can be provided in relation to the demand or supply of residential properties in the
area where the Properties are located. The Group is dependent on a high tenancy ratio. If
fluctuations in demand or supply of residential properties should occur, the tenancy ratio and
rents may decrease and consequently the Group’s operations, financial position and results may
be adversely affected.
Operational Risks
Rental Income
The Issuer is dependent on tenants paying agreed rents as they fall due. There is a risk that
tenants do not pay in time, or at all, or fulfil their obligations in general. If so, the Group’s
operations, financial position and results may be adversely affected.
Regulation of Rent
In Sweden rents for residential properties are regulated and as in the Group’s case, set between
property owners and The Swedish Union of Tenants (Sw. Hyresgästföreningen). The regulatory
cap on rent may prevent expected rent increase, thus preventing the Group from recovering
costs spent in relation to the Properties. If so, the Group’s operations, financial position and
results may be adversely affected.
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Operational, Maintenance and Renovation Costs
Operational costs, such as costs for electricity, cleaning, water and heating, are mainly tariffbased. Several of these services may only be bought from one or only a few external suppliers,
which may affect the price.
Maintenance and renovation costs are attributable to measures required in order to maintain the
standard of the real estate in the long term. The Group expects to renovate a majority of the
apartments’ bathrooms and plumbing stacks within a timeframe of 6–10 years. The Group also
expects to upgrade elevators which need to be upgraded, strengthen selected pillars in parking
garages and make maintenance upgrades to kitchens. Even though maintenance and renovation
costs are expected to be reasonable and partly covered by an increase in rent, they may also
occur unexpectedly and/or be more extensive than expected.
When operational, maintenance and/or renovation costs are not compensated through an
increase in rent or covered by the Group’s insurance, the Group’s operations, financial position
and results may be adversely affected.
Costs Associated with Residents Moving
Currently about 8 percent of the residents move each year and the apartments are rented out in a
corresponding pace. Should there be an increase in volume of residents moving out and moving
in, investments and renovations may have to be made to maintain or improve current standard of
the apartments. If such costs increase as a result of a higher turnaround of residents the Group’s
operations, financial position and results may be adversely affected.
Divestments of Properties
The Group intends to divest 10 percent of the Properties to housing co-operations (Sw.
bostadsrättsföreningar) for a consideration amounting to approximately SEK 10,000 per square
meter on a debt free basis, which would generate approximately SEK 100 million in proceeds
which in turn may be used by the Group for reduction of debt and renovations. There are
however no guarantees that such divestment will be made, and thus that such proceeds will be
obtained, and should the consideration amount to less, it may adversely affect the Group’s
operations, financial position and results.
Technical Risks
Real estate investments involve technical risks. A technical risk can be defined as the risk
related to the technical operation of the real estate, such as the risk of constructional defects,
other latent shortcomings or deficiencies, damages (for instance due to fire or other forces of
nature) and pollution. If any technical problems should occur it may result in significantly
increased costs for the real estate which in turn may adversely impact the Group’s operations,
financial position and results.
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PCB Inventory
PCB was previously used in electrical equipment as well as in certain plastics and sealants. The
use of PCB has been prohibited for some time but may still be found in buildings and certain
products. Owners of buildings constructed or renovated during the years 1956–1973 are
obligated to perform PCB inventories and report the results of the inventory to the municipality
and, if needed, carry out decontamination measures. In the due diligence process that preceded
the acquisition of the Properties it was noted that a PCB inventory of the buildings located on
the Properties were made in 2007 and followed by certain PCB decontamination measures. The
reports that were provided in relation to the due diligence process could, however, not exclude
the occurrence of additional PCB in the buildings. Due to this fact a provision regarding
additional PCB inspections was included in the share purchase agreement under which
Botkyrkabyggen shall bear the cost for PCB decontamination in the Properties up to an amount
of SEK 2,000,000. Should the costs for remediation exceed SEK 2,000,000, Botkyrkabyggen
and the Group shall split the additional costs. Thus, any PCB measures exceeding
SEK 2,000,000 may adversely affect the Group’s operations, financial position and results.
Changes in Value of the Group’s Real Estate
The Properties will be reported at fair value in the balance sheet and with changes in value in
the profit and loss account, but unrealised changes in value do not affect the cash flow. The
value of the real estate is affected by a number of factors, some of which are real estate-specific
such as occupancy ratio and operative expenses whereas others are market-specific such as yield
requirements and cost of capital that are derived from comparable transactions on the real estate
market. Different factors may cause the Group to write down the fair value on its real estate,
which may adversely impact the Group’s operations, financial position and results.
People
The Group’s future development depends largely on the skills, experience and commitment of
the chairman of the board and indirect shareholder Mikael Ahlström. Therefore it is important
for the Group’s future business activities and development that it is able to retain Mikael
Ahlström. If the Group should become unable to retain Mikael Ahlström it may adversely
impact the Group’s operations, financial position and results.
Reputational Risk
In order to develop the area in which the Properties are located, the Group has initiated
discussions and collaborations with local organisations. However, the potential rent increase and
partial sale of apartments to housing co-operations may attract negative media attention and
upset tenants which could negatively affect the possibility of further developing the area
through co-operation with local forces. Such strained relationship with local stakeholders may
adversely affect the Group’s operations, financial position and results.
Financial Risks
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Credit Risks
When there is a risk of the Group’s counterparties being unable to fulfil their financial
obligations towards the Group, there is a credit risk. The Group’s current and potential
customers may get in a financial situation where they cannot pay the agreed rent as it falls due
or otherwise abstain from fulfilling their obligations. Credit risks within the financial operations
arise, inter alia, from the investment of excess liquidity, when interest cap agreements are
entered into and upon obtaining long- and short-term credit agreements. There are no guarantees
that the Group’s counterparties can fulfil their obligations.
Interest Rate Risk
Besides equity, the Group’s operations are mainly financed by the Bonds and loans from credit
institutions. Interest expenses are therefore one of the Group’s main costs items. Other than in
respect of the Bonds, interests charged on the Group’s borrowings are subject to changes in the
market interest rates. Although the Group has entered into an interest rate protection agreement,
an increase in such interest rates will increase the Group’s interest payments and may adversely
impact the Group’s operations, financial position and results.
Liquidity and Refinancing Risk
Liquidity and refinancing risk refers to the risk that financing opportunities will be limited when
the Bonds or other loans made available to the Group, are to be refinanced, and that payment
commitments cannot be met as a result of insufficient liquidity.
The availability of capital is dependent on a variety of factors, such as market conditions,
general credit availability within the financial markets and the Group’s credit rating (if any) and
its credit capacity. If access to capital which is required to operate its business or to refinance
the liabilities under the bank loans and the Bonds were to become limited it may adversely
impact the Group’s operations, financial position and results.
Legal Risks
Legislation and Regulation
New legislations or regulations or changes regarding the application of existing legislations or
regulations, which are applicable on the Group’s operations or its assets, may adversely impact
the Group’s operations, financial position and results.
Environmental Risks
Real estate management has environmental impact. Everyone whose operations have
contributory caused pollution is responsible for after-treatment according to the Swedish
Environmental Code. If an operator is not able to carry out or pay for the after-treatment of a
polluted property, the person who acquired the property and was aware of the pollution at the
time of acquisition or ought to have detected it then shall be liable for after-treatment. This
means that demands of soil decontamination or after-treatment, due to existing or suspected soil,
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surface water or ground water pollution in certain circumstances may be directed against the
Group in order to set the real estate in such condition that is required by the Swedish
Environmental Code. Such demands may adversely affect the Group’s operations, financial
position and results.
Tax Risks
Changes in corporate income tax, real estate tax, VAT as well as other fiscal charges and
contributions, may affect the conditions for the Group’s operations. There are no guarantees that
these fiscal charges and contributions will remain unchanged in the future. The corporate
income taxation is subject to frequent changes why it cannot be excluded that tax rates may
change in the future. Neither can it be excluded that other changes are made to the legal systems
which affects the real estate ownership. Changes to corporate income tax and other fiscal
charges may adversely affect the Group’s operations, financial position and results.
Disputes
From time to time, the Issuer may be involved in disputes with tenants, suppliers and other
business partners. Currently, two disputes regarding extension of two residential lease
agreements are pending in the rent tribunal (Sw. hyresnämden) in Stockholm; one in relation to
an apartment in the real estate Botkyrka Albyberget 2 and one in relation to an apartment in the
real estate Botkyrka Godemannen 1. In both cases the current landlord has terminated the lease
agreement due to the tenants subletting the apartments without permission. The Issuer cannot
give any assurances that no claims or legal actions are taken against the Issuer in the future or
that such, or current, claims and legal disputes will not have an adverse effect on the Issuer’s
operations, financial position and results.
1.2
Risks Relating to the Bonds
Bond loans may contain elements which confer specific risks for investors. The Bonds carry a
relatively high interest rate which should be regarded as a compensation for the relatively high
risk carried by investors compared to, for example, government bonds.
Credit Risks
An investment in the Bonds carries a credit risk relating to the Issuer and the Group. The
investor’s ability to receive payment under the Terms and Conditions is therefore dependent
upon the Issuer’s ability to meet its payment obligations, which in turn is largely dependent
upon the performance of the Group’s operations and its financial position. The Issuer’s and the
Group’s financial position is affected by several factors, a number of which have been discussed
above. An increased credit risk may cause the market to charge the Bonds a higher risk
premium, which would affect the Bonds’ value negatively.
Refinancing Risk
The Issuer may be required to refinance certain or all of its outstanding debt, including the
Bonds. The Issuer’s ability to successfully refinance its debt obligations is dependent upon the
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conditions of the capital markets and the Issuer’s financial position at such time. Even if the
markets and the Issuer’s financial position improve, the Issuer’s access to financing sources may
not be available on acceptable terms, or at all. The Issuer’s inability to refinance its debt
obligations on acceptable terms, or at all, could have a material adverse effect on the Issuer’s
and the Group’s business, financial position and results of operations and on the bondholders’
recovery under the Bonds.
Interest Rate Risks
The Bonds’ value depends on several factors, one of the most significant over time being the
level of market interest. Investments in the Bonds involve a risk that the market value of the
Bonds may be adversely affected by changes in market interest rates.
Liquidity Risks
Even if securities are admitted to trading, there is not always active trading in the securities.
Hence, there are no guarantees that there will be a liquid market for trading in the Bonds or that,
if a liquid market develops, it will be maintained, even if the Bonds are listed. This may result in
that the bondholders cannot sell their Bonds when desired or at a price level which allows for a
profit comparable to similar investments with an active and functioning secondary market. Lack
of liquidity in the market may have a negative impact on the market value of the Bonds.
Furthermore, the nominal value of the Bonds may not be indicative compared to the market
price of the Bonds. It should also be noted that during a given time period it may be difficult or
impossible to sell the Bonds (at all or at reasonable terms) due to, for example, severe price
fluctuations, close down of the relevant market or trade restrictions imposed on the market.
The Market Price of the Bonds May Be Volatile
The market price of the Bonds could be subject to significant fluctuations in response to actual
or anticipated variations in the Issuer’s and the Group’s operating results and those of its
competitors, adverse business developments, changes to the regulatory environment in which
the Group operates, changes in financial estimates by securities analysts and the actual or
expected sale of a large number of Bonds, as well as other factors. In addition, in recent years
the global financial markets have experienced significant price and volume fluctuations, which,
if repeated in the future, could adversely affect the market price of the Bonds without regard to
the Issuer’s and the Group’s operating results, financial position or prospects.
The Bonds Are Structurally Subordinated to the Liabilities of the Issuer’s Subsidiaries
The Issuer is a holding company and as such is dependent upon other entities within the Group
to enable it to make payments under the Bonds (for which the Issuer will be reliant on the ability
of other entities within the Group to advance loans or make dividend distributions). The
Group’s operating companies are legally separate and distinct from the Issuer and have no
obligation to pay amounts due with respect to the Issuer’s obligations and commitments or to
make funds available for such payments. The ability of the Group’s operating companies to
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make such payments to the Issuer is subject to, among other things, the availability of funds,
corporate restrictions and the terms of each operation’s indebtedness. In particular, the Issuer’s
subsidiaries have entered into a loan agreement which contains prohibitions against loans to the
Issuer and a restriction on payment of dividends to the Issuer pursuant to which the subsidiaries
may not make dividends if there is a breach of certain financial covenants (being equity/asset
ratio or interest cover ratio).
No present or future subsidiary of the Issuer will guarantee or provide any security for the
Issuer’s obligations under the Bonds and consequently the bondholders do not have any
recourse to the assets of the Issuer’s subsidiaries other than, indirectly, following the
enforcement of the pledge over the shares in the Issuer and the satisfaction of any and all
priority claims, including, but not limited to, the claims of the lenders under the Facilities
Agreement (as defined below) (currently being SBAB Bank AB (publ)).
If any subsidiary of the Issuer is subject to any foreclosure, dissolution, winding-up, liquidation,
recapitalisation, administrative or other bankruptcy or insolvency proceeding, the creditors of
such subsidiary of the Issuer, being trade creditors and lending banks, including the lenders
under the Facilities Agreement (currently being SBAB Bank AB (publ)), will generally be
prioritised due to their position in the capital structure and will generally be entitled to payment
in full from the sale or other disposal of the assets of such a subsidiary before the Issuer, as a
direct or indirect shareholder, will be entitled to receive any distributions from such a
subsidiary. Please see section 6.9 for more information on the Facilities Agreement.
Certain Material Interest
The Lead Manager and Issuing Agent have engaged in, and may in the future engage in,
investment banking and/or other services for the Issuer and the Group in the ordinary course of
business. Accordingly, conflicts of interest may exist or may arise as a result of the Lead
Manager and Issuing Agent having previously engaged, or will in the future engage, in
transactions with other parties, having multiple roles or carrying out other transactions for third
parties with conflicting interests.
The Principal Shareholder
The interests of the principal indirect shareholder, Mikael Ahlström, or any other indirect
shareholder of the Issuer could conflict with those of the bondholders and/or those of the Issuer
and the Group, particularly if the Group encounters difficulties or is unable to pay its debts as
they fall due. A company where any shareholder has a controlling interest may also have an
interest in pursuing acquisitions, divestitures, financings or other transactions that, in their
judgement, could enhance their equity investments, although such transactions might involve
risks to the bondholders. In addition, there is nothing that prevents such shareholder or any of its
affiliates from acquiring businesses that directly compete with the Group. If such an event were
to arise this may adversely affect the Group’s operations, financial position and results.
Risks Related to the Facilities Agreement
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The Facilities Agreement contains a provision stating that any payment of capital under the
Bonds other than mandatory payments, and any amendment to the Terms and Conditions that
affects the Issuer’s position in any adverse manner, constitutes an event of default under the
Facilities Agreement, meaning that the lender under the Facilities Agreement will be entitled to
receive immediate repayment of all loans outstanding under the Facilities Agreement.
Consequently, the Issuer may not always be able to make such dispositions as it is otherwise
entitled to make under the Terms and Conditions, and the Issuer and the bondholders may not
always be able to agree on such amendments to the Terms and Conditions as they otherwise are
entitled to agree on, without the lender under the Facilities Agreement demanding repayment of
all loans outstanding under the Facilities Agreement. Further, the Facilities Agreement contains
a cross-default clause stating that a default in relation to any financial indebtedness of the Group
(including the Bonds) constitute an event of default under the Facilities Agreement.
Consequently, the lender may demand immediate repayment of all loans outstanding under the
Facilities Agreement should the Issuer be in default pursuant to the Terms and Conditions.
Risks Relating to the Pledge over the Shares in the Issuer
The Issuer’s obligations under the Bonds are secured by a pledge over the shares in the Issuer.
However, the Issuer cannot guarantee that the proceeds from any enforcement sale of the shares
in the Issuer would be sufficient to satisfy all amounts then due on or in respect of the Bonds.
An enforcement of the pledge over the shares in the Issuer may also trigger an event of default
under the Facilities Agreement, meaning that the lender under the Facilities Agreement
(currently being SBAB Bank AB (publ)) will be entitled to receive immediate repayment of all
loans outstanding under the Facilities Agreement. As the obligations to the lenders under the
Facilities Agreement must first be satisfied there may be little or no remaining assets in the
Issuer for the bondholders. As a result, the bondholders may not recover any or the full value in
the case of an enforcement sale of the share pledge.
Risks Related to Early Redemption and Put Options
Under the Terms and Conditions, the Issuer has reserved the possibility to redeem all
outstanding Bonds before the final redemption date. Further, the Issuer is obliged to redeem the
Bond, in part or in full, in certain situations. If the Bonds are redeemed before the final
redemption date, the bondholders have the right to receive an early redemption amount which
exceeds the nominal amount. However, there is a risk that the market value of the Bonds is
higher than the early redemption amount and that it may not be possible for bondholders to
reinvest such proceeds at an effective interest rate as high as the interest rate on the Bonds and
may only be able to do so at a significantly lower rate.
Furthermore, the Terms and Conditions stipulate that the Bonds are subject to termination for
payment prematurely at the option of the bondholders upon the occurrence of a change of
control event or certain ownership events (as stipulated in the Terms and Conditions). There is,
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however, a risk that the Issuer will not have sufficient funds at the time of such premature
termination to make the required prepayment of Bonds.
No Action Against the Issuer and Bondholders’ Representation
In accordance with the Terms and Conditions, the Agent will represent all bondholders in all
matters relating to the Bonds and the bondholders are prevented from taking actions on their
own against the Issuer. Consequently, individual bondholders do not have the right to take legal
actions to declare any default by claiming any payment from or enforcing any security, if such
has been granted by the Issuer, and may therefore lack effective remedies unless and until a
requisite majority of the bondholders agree to take such action. However, the possibility that a
bondholder, in certain situations, could bring its own action against the Issuer (in breach of the
Terms and Conditions) cannot be ruled out, which could negatively impact an acceleration of
the Bonds or other action against the Issuer. To enable the Agent to represent bondholders in
court, the bondholders may have to submit a written power of attorney for legal proceedings.
The failure of all bondholders to submit such a power of attorney could negatively affect the
legal proceedings.
Under the Terms and Conditions, the Agent will in some cases have the right to make decisions
and take measures that bind all bondholders. Consequently, the actions of the Agent in such
matters could impact a bondholder’s rights under the Terms and Conditions in a manner that
would be undesirable for some of the bondholders.
Bondholders’ Meetings
The Terms and Conditions include certain provisions regarding bondholders’ meetings. Such
meetings may be held in order to resolve on matters relating to the bondholders’ interests. The
Terms and Conditions allow for stated majorities to bind all bondholders, including bondholders
who have not taken part in the meeting and those who have voted differently to the required
majority at a duly convened and conducted bondholders’ meeting. Consequently, the actions of
the majority in such matters could impact a bondholder’s rights in a manner that would be
undesirable for some of the bondholders.
Restrictions on the Transferability of the Bonds
The Bonds have not been and will not be registered under the Securities Act, or any U.S. state
securities laws. A holder of the Bonds may not offer or sell the Bonds in the United States. The
Issuer has not undertaken to register the Bonds under the Securities Act or any U.S. state
securities laws or to affect any exchange offer for the Bonds in the future. Furthermore, the
Issuer has not registered the Bonds under any other country’s securities laws. It is the
bondholder’s obligation to ensure that the offers and sales of Bonds comply with all applicable
securities laws.
14
Risks Relating to the Clearing and Settlement in Euroclear’s Book-entry System
The Bonds will be affiliated to Euroclear Sweden AB’s (“Euroclear”) account-based system,
and no physical notes will be issued. Clearing and settlement relating to the Bonds will be
carried out within Euroclear’s book-entry system as well as payment of interest and repayment
of the principal. Investors are therefore dependent upon the functionality of Euroclear’s
account-based system.
Amended or New Legislation
This Company Description and the Terms and Conditions are based on Swedish law in force at
the date of the Company Description and the Issue Date, respectively. No assurance can be
given on the impact of any possible future legislative measures or changes or modifications to
administrative practices. Amended or new legislation and administrative practices may
adversely affect the investor’s ability to receive payment under the Terms and Conditions.
15
2
The Liability Statement of the Board of Directors
We declare that, to the best of our knowledge, the information provided in the Company
Description is accurate and that, to the best of our knowledge, the Company Description is not
subject to any omissions that may serve to distort the picture the Company Description is to
provide, and that all relevant information in the minutes of board meetings, auditors’ records
and other internal documents is included in the Company Description.
Stockholm, December 2013
Byggmästare Anders J Ahlström Fastighets AB (publ)
The Board of Directors
16
3
Description of the Issuer
3.1
Description of the Issuer’s Business Model
The Issuer is a property management company with focus on creating value through
improving the living environment for their residents.
The Issuer has acquired the strategic high-yielding Properties which are located at
Albyberget in northern Botkyrka, just south of Stockholm. The area consists of 24
buildings, including 942 parking spaces, which are distributed on 145,032 square
meters of land area. Total residential area amounts to 102,126 square meters
distributed over 1,303 apartments. There are good public communications to
Stockholm, firstly through the subway station located at Albyberget and secondly by
car via the E20 highway. Basic services such as schools, pre-schools and day care are
available in the vicinity of the Properties. Additionally, the close proximity to Alby
Centrum ensures that municipal services and grocery stores are accessible close to the
residents. A larger amount of stores and warehouses can be found at Kungens Kurva,
which is located a couple of kilometres away from the Properties. Also, easily
accessible nature areas are attractive to both current and future tenants.1 The current
yield of about 7.0 percent on assessed property value is above the average high yield
of 6.5 percent on properties in Alby.2
The Issuer’s objective is to maintain a good standard of the buildings and cooperate
with local organisations in order to improve the living environment. Botkyrkabyggen,
the previous public owner which was established in 1957, has maintained the
Properties in a good condition and thereby obtained a fair level of customer
satisfaction. 84 percent of residents would recommend Botkyrkabyggen as a landlord.3
Investments in the Properties amounting to approximately SEK 79 million have been
made during 2009–2012, e.g. in relation to ventilation, insulation, construction of
duplex apartments and installation of fibre network.
The Group’s intention is to ensure continued high level of customer satisfaction and
intends to recruit staff with key competences and experience from the area from
Botkyrkabyggen’s existing staff. For the purpose of financing larger investments and
renovations between year six and year ten, the Group seeks to divest some of the
apartments to its residents. Three-dimensional land parcelling will enable divestments
of parts of buildings, rather than entire buildings, hence minimising the need for
reallocations of residents.
1
Company information
Newsec Advice
3
Botkyrkabyggen
2
17
The Group intends to divest about 10 percent of the Properties for an indicative price
of around SEK 10,000 per square meter and thus generate about SEK 100 million in
proceeds which in turn may be used for reduction of debt and renovations.
Renovations will be made with the objective of ensuring residents’ satisfaction. For
example, the Properties’ plumbing stacks are 40 years old and have a normal technical
life expectancy of 50 years. As a result a majority of renovations in year six to ten will
be due to replacing the old plumbing stacks and on renovating bathrooms, at a total
cost of about SEK 125 million, corresponding to 85 percent of projected renovation
need. In addition, the Group plans to spend approximately SEK 20 million on
upgrading elevators to meet modern requirements, strengthening selected pillars in
parking garages and maintenance upgrades of kitchens. For the purpose of improving
residents’ living environment and increasing the attractiveness of the area, renovations
will primarily be made to the extent of the resident’s preference. Residents will get the
opportunity to decide between three levels of renovation; no renovation, modest
renovation and major renovation. No luxury renovations will be made and apartments
which have not yet been renovated after ten years will be renovated in due course.
Following renovations, the Group expects to increase rents by 2.1 percent annually
during the period 2014-2020. The Issuer further projects that the rents will be
increased by 11 percent in conjunction with a completed modest renovation and 15
percent in conjunction with a completed major renovation. Furthermore, rent
increases, which are supported by improved living standards, will accelerate from
2018 together with the accelerated increase in renovations. The Issuer expects the payback period on renovations to be ten to fourteen years.
By continuously increasing the attractiveness of the living environment, the Properties
may be taken from what is considered a C-rated location to a B-rated location, where
A-rating is apartments in the inner city of Stockholm, B rating is apartments in the
suburbs closest to the inner city or attractive apartments in suburbs more distant to the
inner city and C-rating is average apartments in suburbs more distant to the inner city.
The area is expected to become a more attractive living environment as ownership
among residents increase as well as through cooperation with local entrepreneurs and
organisations. Moreover, as living standard improves value is added throughout the
process. A revaluation of the Properties in accordance with normal Alby yield
requirement would reduce the net LTV to 73 percent. Going forward and increased
income from property management could further result in value expansion and
potentially reduce the net LTV below 70 percent. The projected continued expansion
of the Stockholm region could potentially lead to lower yield requirements.
Consequently both the continuously increasing yield and reduced yield requirements
increases the value of the Properties and reduces financing risk.
18
Lastly, by combining measures to increase the standard of the Properties with social
and environmental efforts the area will be developed further and attractiveness may
increase. Residents will be invited to work together and taking care of public areas.
The Group strives to actively discuss and collaborate with municipality and local
players in order to develop the area further. The main goal is to create a dialogue
between stakeholders, include them in the decision making and implementation
process. For instance, attractiveness could be increased by developing cafés,
restaurants and stores in cooperation with local stakeholders.
3.2
Description of the Issuer’s Organisation
The Issuer has a small and efficient organisation led by its CEO, Mattias Tegefjord,
although the final organisation is yet to be engaged. Several of the potential employees
approached by the Issuer have experience from the area and are familiar with the
residents. In addition to the employees, the Issuer has a consultancy agreement with a
former technical manager for Botkyrkabyggen. During a transition period, which at
the option of the Issuer, may run up until 5 May 2014, Botkyrkabyggen has agreed to
support the Issuer and continue managing the Properties to the extent needed.
CEO
CEO
Economy
Customer Contact
Administration
Property manager
External environment
3.3
Repairs
Description of the Issuer’s Most Significant Markets
The Group operates on the Swedish property management market. In light of the
general European economic development, the Swedish economy stands out as strong,
with second quarter GDP growth of 0.1 percent, expected growth of 1.1 percent in
2013 and 2.5 percent in 2014.4 Sweden is in addition to good growth prospects
experiencing a low inflation of 0.1 percent, in August 2013.5 Also for the purpose of
maintaining stability and continue supporting the economic upturn as well as
contributing to inflation rising to the target of 2 percent, the executive board of the
Swedish Riksbank decided to keep the repo rate at 1.0 percent in October 2013. It is
4
5
Swedish Statistics
National Institute of Economic Research
19
expected to remain at 1.0 percent until the third quarter of 2014 when it is projected to
gradually increase over time and reach 2.8 percent in the third quarter of 2016.6
The Swedish residential market is characterised by a steady increase both regarding
rental levels and purchase prices for residences. Both privately and publically owned
rental residences have shown steadily increasing rents throughout the last ten years.
Average prices have, during the last year, increased by 14 percent in Sweden and
Stockholm.7 Residential investments are low, despite Sweden’s economic outlook,
compared to other European countries. Moreover lack of housing is common,
especially close to the larger cities. The shortage of residential units amounted in 2012
to 110,000 in the Stockholm region and in total there was a lack of 87,800 housing
units produced over the period 2009-2012. Only 22,500 housing units were built while
at the same time the population in the region increased by approximately 110,000
inhabitants. The region is expected to grow at about 35,000 people annually up until
2020. Historically the population in the Stockholm region has increased at an
accelerating rate while construction has remained at a constant level. 8
Botkyrka benefits from the proximity to Stockholm, which drives the population
growth and reduces the unemployment. The area is characterised by good access
through public transportations as well as by closeness to the E20 highway
concurrently with presence of rural environments. The urban areas are characterised
by residential apartments, which were built during the 1960s and 1970s within the
“Miljonprogrammet”.9 As a result of “Miljonprogrammet”, the population increased
during 1970-1975 from 16,700 to 57,300.10 Currently, one third of Botkyrka’s
population of 86,000 lives in apartments which are managed by the public property
company Botkyrkabyggen.11 The population is expected to increase at an annual rate
of 1.3 percent until 2021, which is higher than the projected rate for Sweden as a
whole at 0.9 percent. In addition, the municipality hosts about 3,000 companies, both
public and private, including Alfa Laval, De Laval, Crane and Logica. Only the public
sector provides 22,000 job opportunities. Consequently, the unemployment rate is at
the low level of 5.3 percent.12
Similarly to the rest of the Stockholm region, construction has not followed the
population increase. For instance the population increase has been 11,058 since 2003
6
Monetary Policy Report, October 2013
Mäklarstatistik
8
Stockholm Chamber of Commerce, ”110 000 bostäder saknas i huvudstadsregionen”
9
Botkyrkabyggen
10
Botkyrka Municipality
11
Botkyrkabyggen
12
Botkyrka Municipality
7
20
while at the same time 2,242 apartments have been built. Quantitatively this amounts
to an increase of 4.93 people per built apartment during the time period 2003-2012.13
3.4
Description of the Issuer’s Competitive Situation
Botkyrkabyggen is the largest competitor and manages about 10,500 apartments after
the sale of the Properties to the Group. As of the year-end 2012, no apartments were
vacant and the average queuing time for applicants exceeded five years. 14
Prices for apartments in Botkyrka have grown every year since 1996. Average price
per square meter amounted to SEK 19,845 in September 2013 an increase from less
than SEK 2,000 in 1996.15 In comparison, the Stockholm region has an average price
per square meter of about 24,693. Moreover, the price increase for Botkyrka has been
139 percent during the period 2005-2013 compared to the average increase for the
region of 96 percent. In spite of the rapid and steady increase in prices, the
municipality prices remain at low levels compared to the rest of the Stockholm region.
It ranks 20 out of 26 when ranking the municipalities’ average price per square meter
from the highest to the lowest.16
The excess demand in connection with planned improvement projects are expected to
decrease the rental gap between central A-locations and suburban C-locations. About
8 percent of the Group’s residents move each year and the apartments are rented out at
about the same rate whereby the vacancy rate is approximately zero.17 As a result of
the large portfolio, it will be possible to relocate residents between apartments, and
thereby sell parts of the portfolio to housing cooperatives, thereby funding
investments. Due to the low vacancy rate, in combination with high demand, the risks
associated with maintaining current levels of income are low. The residential
properties yields 7 percent compared to 3.75 percent to 5.75 percent in Huddinge,
which was built at about the same time as Botkyrka.18 Furthermore, the apartments in
the portfolio are of similar layout. Consequently, maintenances and renovations are
simplified due to an extensive repetition effect. There is a possibility to increase rents
from the currently low level of SEK 909 per square meter. Historically, rents have
increased by more than the inflation. Moreover there are future growth options
available for the Group seeing that there are non-developed land at Albyberget, in
excess of 145,000 square meters. To conclude, there are possibilities for the Group to
gain further market shares. In addition, the market rivalry is mitigated due to a large
housing queue and high occupancy rates.
13
Statistics Sweden
Botkyrkabyggen, Annual report 2012
15
Mäklarstatistik
16
Svenska dagbladet
17
Botkyrkabyggen
18
Newsec Advice
14
21
3.5
Working Capital Statement and Intended Financing
The Issuer expects to have a positive cash flow and earnings directly following the
acquisition of the Properties, thus mitigating the need for additional external capital.
The Issuer further expects revenues of SEK 97.9 million, EBITDA of SEK 50.8
million, EBIT of SEK 39.3 million, thus resulting in an EBITDA margin of 52
percent, EBIT margin of 40 percent and profit margin of 5 percent, in 2014. Moreover,
the Issuer expects to have cash and cash equivalences of approximately SEK 10
million, in closing balance as of 31 December 2013. Cash flow for the year 2014 is
expected to be SEK 5.2 million, resulting in a closing balance 2014 of SEK 15.2
million. Consequently, the Issuer is fully financed and expects no need for additional
external capital to be raised during the first 12 months following listing. However
additional acquisitions, increased renovations, or other opportunities might trigger the
need for more capital.
22
4
Description of the Bonds
4.1
Description of the Terms and Conditions
This section contains a general and broad description of the Bonds and is not a comprehensive
description of the Bonds. Potential investors should therefore carefully consider this Company
Description as a whole before a decision is made to invest in the Bonds.
Concepts and terms defined in this section are used with the same meaning as in the Terms and
Conditions unless otherwise is explicitly understood from the context or otherwise defined in
this Company Description.
The Bonds are debt instruments, intended for public market trading, which confirm that the
Holder has a claim on the Issuer. The Bonds constitute direct, general, unconditional,
unsubordinated and secured obligations of the Issuer. The Bonds were issued on 18 November
2013 and the bond loan was raised in order to partly finance the acquisition of the Target and
thereby, indirectly, the Properties.
The bond loan amounts to SEK 200,000,000 represented by Bonds denominated in SEK with
the ISIN SE0005504719, each of a nominal amount of SEK 100,000 or full multiples thereof.
The Bonds have been issued in accordance with Swedish law and are connected to the accountbased system of Euroclear. Holdings of the Bonds are registered on behalf of the Holders on a
Securities Account and no physical notes have or will be issued. Payment of principal and
interest as well as, if applicable, withholding of preliminary tax will be made by Euroclear.
Holders of the Bonds have a right to receive interest and the Bonds shall be redeemed by the
Issuer at the Nominal Amount on the relevant redemption date. The bond loan is payable on 30
November 2018 or on such earlier date which follows from sections 11.3 (Early voluntary
redemption by the Issuer (call option)), 11.6 (Mandatory prepayment (upon a Total
Divestment)) and 15 (Termination of the Bonds) of the Terms and Conditions. If the Bonds are
redeemed early in accordance with section 11.3 (Early voluntary redemption by the Issuer (call
option)) of the Terms and Conditions, the Bonds shall be redeemed at the Nominal Amount
with an addition of:
-
-
-
104.00 percent of the Nominal Amount if the call option is exercised on or after the
First Call Date up to (but not including) the date falling 36 months after the Issue Date;
103.25 percent of the Nominal Amount if the call option is exercised on the date falling
36 months after the Issue Date up to (but not including) the date falling 42 months after
the Issue Date;
102.50 percent of the Nominal Amount if the call option is exercised on the date falling
42 months after the Issue Date up to (but not including) the date falling 48 months after
the Issue Date;
101.75 percent of the Nominal Amount if the call option is exercised on the date falling
48 months after the Issue Date up to (but not including) the date falling 54 months after
the Issue Date; or
23
-
101.00 percent of the Nominal Amount if the call option is exercised on the date falling
54 months after the Issue Date to (but not including) the Final Redemption Date.
The Issuer shall redeem all outstanding Bonds at the Nominal Amount together with accrued but
unpaid interest on the Final Redemption Date. Payment of the Nominal Amount and accrued but
unpaid interest shall be made to the person who is registered on a Securities Account as holder
or otherwise is entitled to receive payment in respect of a Bond on the Record Date. The right to
receive payment of the Nominal Amount is prescribed and becomes void ten years from the
Final Redemption Date.
The Bonds bear interest from, but excluding, the Issue Date up to, and including, the
Redemption Date at an interest rate of 8.00 per cent. per annum. The interest is paid in arrears
on each Interest Payment Date and is calculated on a 30/360-days basis. Interest Payment Dates
are 15 February, 15 May, 15 August and 15 November each year. The right to receive payment
of interest is limited and becomes void three years from the relevant due date for payment. The
calculation of interest is carried out by Euroclear.
Pareto Securities AB is the Issuer’s initial Lead Manager and Issuing Agent.
There are no restrictions in the terms and conditions for the Bonds for the Holders to freely
transfer the Bonds and trading can occur from the Issue Date. Holders may, however, be subject
to purchase or transfer restrictions with regard to the Bonds, as applicable from time to time
under local laws to which a Holder may be subject (due to, e.g., its nationality, its residency, its
registered address or its place(s) of business). Each Holder must ensure compliance with local
laws and regulations applicable at their own cost and expense. All Bond transfers are subject to
the Terms and Conditions and the Terms and Conditions are automatically applicable in relation
to all Bond transferees upon the completion of a transfer.
The Terms and Conditions include an undertaking by the Issuer to list the Bonds on First North
not later than 60 calendar days after the Issue Date and to take all measures required to ensure
that the Bonds, once listed on First North, continue being listed on First North for as long as any
Bond is outstanding.
4.2
Description of Ranking of the Bonds
The Bonds constitute direct, general, unconditional, unsubordinated and secured obligations of
the Issuer and shall at all times rank at least pari passu and without any preference among them.
4.3
Description of Bondholders’ Representation and Exercise of Rights
Swedish Trustee AB (publ) is the initial Agent. Even without a separate authorisation from the
Holders, the Agent, or a person appointed by the Agent, is entitled to represent the Holders
against the Issuer in every matter concerning the Bonds, whether or not in court or before an
executive authority. Further, each Holder shall immediately upon request by the Agent provide
the Agent with any such documents, including a written power of attorney, which the Agent
deems necessary for the purpose of carrying out its duties under the Terms and Conditions. The
24
Agent may, at any time, request that a Holders’ meeting is convened or request a procedure in
writing amongst the Holders, see further section 17 (Decisions by Holders), 18 (Holder’s
meeting) and 19 (Written procedure) of the Terms and Conditions. Such meetings or procedures
in writing can lead to that a majority decision, binding for all Holders, is passed.
4.4
Limitations of Bondholders’ Exercise of Rights
In accordance with the Terms and Conditions, the Agent will represent all bondholders in all
matters relating to the Bonds and the bondholders are prevented from taking actions on their
own against the Issuer. Consequently, individual bondholders do not have the right to take legal
actions to declare any default by claiming any payment from or enforcing any security, if such
has been granted by the Issuer, and may therefore lack effective remedies unless and until a
requisite majority of the bondholders agree to take such action. To enable the Agent to represent
bondholders in court, the bondholders may have to submit a written power of attorney for legal
proceedings. The failure of all bondholders to submit such a power of attorney could negatively
affect the legal proceedings.
Under the Terms and Conditions, the Agent will in some cases have the right to make decisions
and take measures that bind all bondholders. Consequently, the actions of the Agent in such
matters could impact a bondholder’s rights under the Terms and Conditions in a manner that
would be undesirable for some of the bondholders.
4.5
Details of any Credit Rating
The Bonds and the Issuer are not subject to any official credit rating assigned to them at the
request or co-operation of the Issuer.
25
5
Description of the Board of Directors and Senior Management
The business address for all members of the Board of Directors and the Senior Management of
the Issuer is: c/o Curitas AB, Linnégatan 9-11, 114 47 Stockholm, Sweden. All members of
Board of Directors of the Issuer are indirect shareholders in the Issuer. Further information on
the members of the Board of Directors and the Senior Management, including significant
assignments outside the Issuer, is set forth below.
5.1
The Board of Directors and Senior Management
The Board of Directors and Senior Management of the Issuer currently consist of the following
seven members, who also hold the corresponding positions in the Issuer’s parent company
Byggmästare Anders J Ahlström Holding AB.
Name
Year of birth
Position
Mikael Ahlström
1956
Chairman of the Board of Directors
Charlotte Bergman
1963
Member of the Board of Directors
Anders Hörnqvist
1966
Member of the Board of Directors
Lars Magnusson
1949
Member of the Board of Directors
Hidayet Tercan
Wennerström
1971
Member of the Board of Directors
Marcus Trummer
1980
Member of the Board of Directors
Mattias Tegefjord
1974
CEO
Mikael Ahlström
Mikael Ahlström is the Chairman of the Board of Directors since 2013.
Mikael Ahlström is further a member of the board of directors of Philippe Haspeslagh
Aktiebolag (alternate director), Herbst & Forsell Holding Aktiebolag, Curitas AB,
Avvecklingssällskapet 17 januari 2013 AB, Procuritas Aktiebolag, LBO Invest AB (alternate
director), C. Broström Ahlström Holding AB (alternate director ), Spiltan Underhållning M AB,
Oral Care Holding SWE AB, Autus Invest AB (alternate director), PCTC Invest AB, Procuritas
Partners AB and Charity Raring Sverige (a non-profit association).
Charlotte Bergman
Charlotte Bergman is a member of the Board of Directors since 2013.
Charlotte Bergman is further a member of the board of directors of AB Strängetong, CBI
Betonginstitutet AB, Svensk Betong Service AB, Forsells Prefab AB and Tonful AB. She is
also the CEO of AB Strängbetong.
26
Anders Hörnqvist
Anders Hörnqvist is a member of the Board of Directors since 2013.
Anders Hörnqvist is further a member of the board of directors of AB Norrlandsinvest,
Capensor Capital AB. He is also runs his own company AH Företagskonsult (a sole
proprietorship) and is a limited partner in Guldkaminen Kommanditbolag.
Lars Magnusson
Lars Magnusson is a member of the Board of Directors since 2013.
Lars Magnusson is further a member of the board of directors of AB Riddaregatan-Hee, AB
Livered 1:23 and Sturekatten AB (alternate director).
Hidayet Tercan Wennerström
Hidayet Tercan Wennerström is a member of the Board of Directors since 2013.Hidayet Tercan
Wennerström is further a member of the board of directors of HTS Holding AB and runs her
own company Hidayet Tercan (a sole proprietorship).
Marcus Trummer
Marcus Trummer is a member of the Board of Directors since 2013.
Marcus Trummer is further a member of the board of directors of Gosh AB, LBO Invest AB (as
well as CEO), Autus Invest AB, Finanshandboken Jacobson, Pérez, Trummer Vahlne economic
association, and Caloroso s.r.o. He is also the CEO of Curitas AB, Investmentbolaget av 1 maj
2009 AB and PCTC Invest AB.
Mattias Tegefjord
Mattias Tegefjord is the Chief Executive Officer of the Issuer since 2013.
Mattias Tegefjord holds no other material assiggments.
5.2
Information on Bankruptcy, Liquidation, Fraud and Similar
None of the members of the Board of Directors or Senior Management is a closely related party
to any other board member or senior executive. There are no conflicts of interest between the
above-mentioned board members’ or senior executives’ responsibilities with respect to the
Issuer and their personal interests or other obligations. None of the board members or senior
executives has been found guilty in any fraud-related case in the past five years. Except for that
Hidayet Tercan Wennerström was the chairman of the board of directors in Lillugglans
BHSV AB, which was declared bankrupt in October 2013, none of the board members or senior
executives has been involved in any bankruptcy, liquidation or receivership while serving as a
board member or senior executives in the past five years. None of the board members or senior
executives have, over the past five years, been the object of official allegations or sanctions by a
supervisory or legislative authority, nor have any of them been prohibited by a court of law
from serving as a board member or in management, or in any other way been prohibited from
27
conducting commercial activity. None of the board members has any agreement with the Issuer
giving the board member the right to compensation upon termination of his assignment.
28
6
Legal and Supplementary Information
6.1
Description of Significant Contracts
Except for the share purchase agreement regulating the acquisition of the Target, the Facilities
Agreement and thereto related securities agreement as well as the Terms and Conditions, the
Group is not a party to any significant agreements.
6.2
Reasons for the Decision to Apply for Listing
The main reasons for the Issuer to apply for listing of the Bonds on First North are to comply
with the Terms and Conditions, to simplify trading in the Bonds and to achieve a dispersed
sphere of bondholders.
6.3
Date of First Annual General Meeting and Publication of Financial Statements
The Issuer intends to hold its first annual general meeting following the listing of the Bonds on
8 April 2014 and intends to publish its first annual financial statements on 30 April 2014.
6.4
Loans Granted to the Issuer by Directors, Senior Executives and Shareholders
Prior to the acquisition of the Properties, the Issuer entered into four loan agreements with
Autus Invest AB, a company wholly owned by Mikael Ahlström (indirectly) and Marcus
Trummer (directly), each holding 95 and 5 percent, respectively, of the shares. The purpose of
the loans was to finance certain transaction costs in relation to the acquisition of the Properties
and all loans were repaid in full in connection with the closing of the acquisition.
6.5
Description of Ownership Structure
The Issuer is a wholly owned subsidiary to Byggmästare Anders J Ahlström Holding AB. The
Issuer is domiciled in Stockholm, Sweden. The Group’s legal structure is presented below. All
subsidiaries are wholly owned.
Byggmästare Anders J Ahlström Holding AB
Byggmästare Anders J Ahlström Fastighets AB (publ) (the Issuer)
Mitt Alby AB
Albyhjärtat AB (the Target)
29
6.6
The Identity of the Certified Adviser
The Lead Manager and Issuing Agent has acted as Certified Advisers for the Issuer during the
period for application to admission to trading and will act as Certified Adviser to the Issuer until
the first day of trading on First North.
6.7
Description of the Acquisition
Botkyrkabyggen is a real estate company wholly owned by Botkyrka municipality.
Botkyrkabyggen previously decided to divest the Properties. Pursuant to a share purchase
agreement, a wholly owned subsidiary of the Issuer, Mitt Alby AB, will indirectly acquire the
Properties from Botkyrkabyggen through purchase of all shares in the Target, to which the
Properties will be transferred in connection with the transaction.
In the transaction, the Target will acquire the real estate Botkyrka Albyberget 5. In order to limit
the amount of the stamp duty, it was agreed that the remaining Properties should be merged
with Botkyrka Albyberget 5 into one single property through reallotment (Sw.
fastighetsreglering). Simultaneously, all existing mortgages in the Properties are to be
congregated into a joint mortgage for Botkyrka Albyberget 5.
The reallotment procedure is administrated by Swedish National Land Survey (Sw.
lantmäteriet). The Swedish National Land Survey has given positive remarks on the prospects
of finalising the reallotment procedure. However, as the outcome of the reallotment procedure is
not certain until the Swedish National Land Survey’s decision is made, it was agreed that if the
Swedish National Land Survey decides against a reallotment, the remaining Properties are to be
transferred through real estate transfer agreements. Thus, the allotment agreement was made
conditional upon the allotment being finalised and back-up agreements, i.e. ordinary real estate
transfer agreements, for each of the remaining Properties were entered into at the same time as
the reallotment agreement. If reallotment is not granted by the Swedish National Land Survey,
the back-up agreements will automatically apply, in which case, the transfers will be subject to
stamp duty. Under the share transfer agreement regarding the shares in the Target,
Botkyrkabyggen shall bear any due stamp duty in relation to the transfer of the Properties.
6.8
Administrative Proceedings
As Botkyrkabyggen is ultimately owned by Botkyrka municipality, it was resolved that the
transfer of the divestments of the Properties was to be approved not only by the board of
directors of the Seller, but also by Botkyrka municipality. Further, a petition for a referendum
on the matter of the divestments was to be considered by the municipality.
An appeal was made against Botkyrka municipality’s decisions to (i) approve the seller’s
(Botkyrkabyggen) divestment of the Properties and (ii) refuse a petition for a referendum. The
appeal against the municipality’s decision to refuse a referendum was rejected by the
administrative court and the deadline to appeal the administrative court’s decision has expired.
30
The appeal against the decision to approve the divestment is currently being considered by the
administrative court.
The scope of the appeal is limited to procedural matters regarding the municipality’s decision
and not the appropriateness of the divestment as such. Botkyrkabyggen and Botkyrka
municipality are of the opinion that no procedural errors were made during the decision making
process. Swedish law allows for a municipality’s decision to be enforced even though it has not
become legally binding. Botkyrkabyggen as well as Botkyrka municipality have stated that their
intention is to complete the divestment of the Properties as soon as possible notwithstanding the
current process in the administrative court. The managing director of Botkyrkabyggen has
confirmed in writing that the intention of the board of directors of Botkyrkabyggen is to
complete the divestment of the Properties. The purchase agreement with Botkyrkabyggen was
made conditional upon the approval by the municipality’s assembly of the divestment, which is
the matter currently being considered by the administrative court. Under the purchase
agreement, Botkyrkabyggen had until 15 October 2013 a right to cancel the agreement if such
approval was not given, but no such cancellation was made. The managing director of
Botkyrkabyggen has confirmed that they therefore consider that (i) Botkyrkabyggen is now
legally bound to complete the transfer of the Properties on the terms of the agreement and (ii)
the intention of Botkyrkabyggen is to complete the transfer before 30 November 2013. The
transfer of the Properties has also subsequently been completed.
6.9
The Group’s Facilities Agreement
The Issuer’s subsidiaries have entered into a Swedish law governed facilities agreement with
SBAB Bank AB (publ) (the “Facilities Agreement”) whereby a term facility in the amount of
SEK 465,000,000 was made available to the subsidiaries. The proceeds obtained under the
Facilities Agreement has been applied towards financing the acquisition of the shares in the
Target (and indirectly the Properties) and to refinance certain existing financial indebtedness.
The Facilities Agreement contains, inter alia, certain representations and warranties, financial
covenants such as restrictions on payment of dividends to the Issuer and events of default.
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Addresses
Company and issuer
Central securities depository
Byggmästare Anders J Ahlström Fastighets AB (publ)
c/o Curitas AB
Linnégatan 9-11
114 47 Stockholm
Sweden
Web page: www.andersjahlstrom.se
Euroclear Sweden AB
P.O. Box 7822
SE-103 97 Stockholm
Sweden
Tel: +46 (0)8 402 90 00
Web page: www.euroclear.com
Issuing agent and certified advisor
Agent and bond trustee
Pareto Securities AB
P.O. Box 7415
SE-103 91 Stockholm
Sweden
Tel: +46 (0)8 402 50 00
Web page: www.paretosec.com
Swedish Trustee AB (publ)
P.O. Box 7329
SE-103 90 Stockholm
Sweden
Tel: +46 (0)8 783 79 00
Web page: www.swedishtrustee.se
Auditor
Legal advisor
Ernst & Young AB
Box 7850
103 99 Stockholm
Sweden
Tel: +46 (0)8 520 590 00
Web page: www.ey.com
Gernandt & Danielsson Advokatbyrå KB
Box 5747
SE-114 87 Stockholm
Sweden
Tel +46 (0)8 670 66 00
Web page: www.gda.se