NOT FOR DISTRIBUTION OR RELEASE, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, HONG KONG OR JAPAN, OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL
Reference is made to the announcement made by Frasers Group plc ("Frasers") on 6 December 2024 in which Frasers announced an intention to launch a conditional voluntary offer for all shares in XXL ASA ("XXL" or the "Company") at a price per share of NOK 10 (the "Offer"), and the Company's announcement in that respect on the same date.
The board of directors of XXL (the "Board") has discussed the intended Offer and the Company's continued process towards implementation of the announced Alternative Rights Issue. After dialogue with owners representing more than 60% of the shares in the Company, the Board is of the view that the intended Offer, if made, is not likely to be successful and the Company will therefore continue towards implementation of the Alternative Rights Issue.
Due to restrictions set out in Section 6-17 of the Norwegian Securities Trading Act limiting the Board and management from taking certain actions in a take-over situation, the Board has decided to call for an extraordinary general meeting to be held on 7 January 2025 to resolve that the Alternative Rights Issue shall be implemented and that the Board and CEO of the Company shall be authorized to make any resolutions and take any steps on behalf of the Company and its subsidiaries in connection therewith. Shareholders representing in total 60.86% of the shares and 51.77% of the votes in the Company have undertaken to vote in favor of the resolutions. These votes will accordingly represent more than the 50% majority votes cast required to approve the Alternative Rights Issue.
The Company has now secured underwriting of the Alternative Rights Issue for the maximum amount of NOK 600 million. Further, the Company has agreed with the underwriters that the subscription price in the Alternative Rights Issue shall be equal to a price for the shares in XXL of NOK 1.65 per share, an increase from the NOK 0.10 per share in XXL implied by the close price on Oslo Børs on 12 December 2024.
Frasers and XXL
XXL has since late September 2024 been in dialogue with Frasers regarding the Company's financial position and need to strengthen its liquidity. Frasers has been invited to discuss and participate in XXL's planned equity raise, but have repeatedly responded that they will neither support nor contribute to any equity issue. Instead, they have indicated solutions that by XXL have been considered to neither being in the best interest of the Company nor its shareholders. Based on this, the Company on 6 November 2024 announced the fully underwritten Rights Issue. Further, in the event that Frasers' would use its approximately 32.5% of the votes in the Company to vote against the Rights Issue at the extraordinary general meeting, the Alternative Rights Issue was introduced as a back-up alternative.
On 26 November 2024, XXL received a litigation notification letter from Frasers' Norwegian legal counsel pursuant to the Norwegian Dispute Act (Norwegian; prosessvarsel), informing the Company that Frasers is considering filing invalidity and compensation claims with respect to both the proposed Rights Issue and the Alternative Rights Issue. Frasers is in the notification letter inter alia alleging XXL for discrimination of shareholders, circumvention of mandatory voting regulations by implementing the Alternative Rights Issue, and that the Company will not be adhering to its purpose as stated in articles of association following the implementation of the Alternative Rights Issue.
XXL does not agree to these accusations. Despite repeatedly stating that they will not support or contribute to the Company's equity raise, Frasers has both before and after the extraordinary general meeting held 28 November 2024 been invited into the underwriting syndicate for the rights issues on the same terms and conditions as other shareholder underwriters, but Frasers has chosen not to accept these invitations. The terms of the underwriting agreement (including the size and form of settlement of the underwriting commission) reflect market terms and were negotiated with underwriters not being shareholders of the Company. The Alternative Rights Issue is, in the view of the board of directors of XXL, the best alternative available to the Company and its shareholders following Frasers voting against the Rights Issue on 28 November 2024, and represents no unlawful circumvention of mandatory voting regulations, nor any unlawful discrimination of shareholders.
The Offer Announcement
Contrary to market practice, Frasers announced the Offer without any pre-acceptances having been obtained from shareholders. The Company has the following comments on certain statements made in the announcement:
- Funding: Frasers states that XXL, as Frasers understand it, is short of funds to pay its suppliers. That is not correct. XXL will honour all its supplier agreements and continue to develop its already strong brand & supplier relationships. An attempt to create uncertainty amongst the Company's suppliers can not be seen as an act of a shareholder who is supporting the Company.
- Interim financing solution: Frasers is indicating interim financing solutions in the announcement. It should be noted that the solutions indicated in the announcement are supposed to be established following completion of the Offer, i.e. at a point in time when Frasers is in control of the Company. Frasers has in the Offer announcement not offered any financing solution that will be available earlier.
- Detrimental transaction structure: Frasers states that the Alternative Rights Issue will be extremely detrimental to both Frasers and the other minority holders of XXL shares. The Company would like to repeat that its preference was to implement an ordinary rights issue, but was hindered from doing by Frasers voting at the extraordinary general meeting on 28 November 2024. Frasers was at that time fully aware that the Company's back-up solution was the Alternative Rights Issue, and has unfortunately, yet intentionally, left the Company with no option other than pursuing the Alternative Rights Issue to raise new equity. The Board would also like to re-emphasize that all shareholders, including Frasers, will be invited to participate in the Alternative Rights Issue on equal terms.
- Dilution by the Alternative Rights Issue: Frasers states that non-participating shareholders will face a dilution of approximately 99% based on a subscription price of NOK 0.10 per new share. Based on a subscription price of NOK 0.10, that is mathematically correct. However, XXL emphasizes that all shareholders, in line with market practice, will have equal rights to participate in the Alternative Rights Issue, and thereby mitigating dilution. The subscription rights will also be tradeable. It should also be noted that the underwriting syndicate has agreed that the subscription price shall be set at a level reflecting a price of NOK 1.65 per XXL share, which will reduce the dilutive effect for shareholders choosing not to participate in the Alternative Rights Issue.
- Dilution by fees: Frasers states that shareholders will be diluted by the underwriting fee. That is factually correct as any underwriting comes at a cost. The level of the underwriting fee is, inter alia, a consequence of the complexity of the transaction which again is a result of Frasers blocking the proposed Rights Issue and the need to increase the level of underwriting due to uncertainty created by Frasers' Offer announcement on 6 December 2024. Frasers has been invited to participate in the underwriting, but has declined that invitation and thereby actively chosen any dilution caused by the underwriting fee. It is also correct that the shareholders will be diluted by the bridge loan guarantee fee. The reason for the bridge loan guarantee being required by the lending banks is the uncertainty and complexity created by Frasers' unwillingness to support any equity raise.
- Offer premium: It is correct that the Offer price represents a premium of 25% over the closing price of NOK 8.00 on 5 December 2024. Providing bid-premium only by comparing to the closing price the last day before announcement of an offer is not in line with market practice and in the Company's view does not give a fair impression of the attractiveness of the Offer. The Offer price represents a discount of: (i) 80% to the closing price of NOK 51.00 on 5 November 2024, which was the last trading day prior to announcement of the fully underwritten Rights Issue, (ii) 82% to the volume weighted average price of NOK 57.11 over the 30 day period up to and including 5 November 2024, and (iii) 86% to the volume weighted average price of NOK 71.66 over the 90 day period up to and including 5 November 2024.
The Offer Conditions
Pursuant to Frasers' announcement on 6 December 2024, the offer document for the Offer – if the Offer is made – will be published in January 2025 and will include full details of the Offer, including all of its conditions. The Board will make a statement on the Offer and the offer conditions on the basis of the offer document no later than one week prior to the expiry of the offer period in accordance with Section 6-16 of the Norwegian Securities Trading Act.
However, based on indications received from shareholders other than Frasers, the Board finds it unlikely that the minimum acceptance condition (i.e. Frasers becoming the owner of more than 50% of the shares and votes on a fully diluted & converted basis) will be satisfied. On that basis, the Company will proceed towards implementation of the Alternative Rights Issue, which means that condition no. 5 for the Offer, pursuant to which completion of the Offer will be conditional upon no share issuance by XXL or its subsidiaries and no distributions being made, will also not be satisfied.
Update on the Alternative Rights Issue
Given the uncertainty created by Frasers’ statements, and to provide more visibility on the amount being raised in the Alternative Rights Issue, the Company has now secured underwriting of a total amount of NOK 600 million for the Alternative Rights Issue.
It has further been agreed with the underwriters that the subscription price to be applied in the Alternative Rights Issue shall reflect a share price of NOK 1.65 per share in XXL, an increase from the NOK 0.10 per share in XXL implied by the close price on Oslo Børs on 12 December 2024.
Extraordinary general meeting
The notice of the extraordinary general meeting to be held on 7 January 2025 is attached to this stock exchange announcement.
Chairman of the Board of Directors, Håkan Lundstedt, says:
“With the challenging sporting goods and outdoor market as backdrop, XXL continues to focus operations, improve the Company’s cost position and ultimately strengthen its commercial offering and thus also its position as the Nordic market leader. By securing new financing we will be able to capture growth and market share in a Nordic market expected to return. The proposed structure represents a holistic financing solution with short- and long term bank financing interlinked with an equity raise, and we are grateful for most shareholders’ and the banks' continued support and belief in the long-term prospects of the Company.”
CEO Freddy Sobin, says:
“In the implementation of our Reset & Rethink plan, we have reached significant milestones and made important changes to our concept and operations, and now we are ready and eager to take the next step by further strengthening our inventory with popular brands and products that our customers want, at increasingly low price points but still with a good-better-best price ladder. However, already now I experience that our stores are fully stocked with great brands, products and prices and that we are back in better shape than in a long time. Furthermore, our fantastic teams in Norway, Finland and Sweden are ready. We thus welcome all customers back to experience what XXL can offer and to make the best Christmas deals of 2024.”
Advisors
Carnegie AS, DNB Markets, a part of DNB Bank ASA, and Nordea Bank Abp, filial i Norge, have been retained as global coordinators (the “Global Coordinators”) for the Alternative Rights Issue. Advokatfirmaet Thommessen AS is legal advisor to the Company.
For further queries, please contact:
Investor Relations Tolle O. R. Grøterud
Tel: +47 90 27 29 59
E-mail: ir@xxlasa.com
Press contact:
Jan Christian Thommesen
Tel: + 47 918 21 387
E-mail: presse@xxl.no
ABOUT XXL ASA
XXL ASA is a leading sports retailer with stores and e-commerce in Norway, Sweden and Finland. It is the largest among the major sports retailers in the Nordics. XXL pursues a broad customer appeal, offering a one stop shop experience with a wide range of products for sports, hunting, skiing, biking and other outdoor activities. XXL's concept is to have the largest stores with the best prices and the widest assortment of products, focusing on branded goods.
This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act. This stock exchange announcement was published by Tolle O. R. Grøterud, Investor Relations Officer at XXL ASA, on 13 December 2024 at 08:00 CET.
Important information
The release is not for publication or distribution, in whole or in part directly or indirectly, in or into Australia, Canada, Japan or the United States (including its territories and possessions, any state of the United States and the District of Columbia). This release is an announcement issued pursuant to legal information obligations. It is issued for information purposes only, and does not constitute or form part of any offer or solicitation to purchase or subscribe for securities, in the United States or in any other jurisdiction. The securities mentioned herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “US Securities Act”). The securities may not be offered or sold in the United States except pursuant to an exemption from the registration requirements of the US Securities Act.
Neither the Company nor any of its affiliates intend to register any portion of the offering of the securities in the United States or to conduct a public offering of the securities in the United States. Copies of this announcement are not being made and may not be distributed or sent into Australia, Canada, Japan or the United States.
Any offering of the securities referred to in this announcement will be made by means of a prospectus. This announcement is an advertisement and is not a prospectus for the purposes of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on prospectuses to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (as amended) as implemented in any Member State. Investors should not subscribe for any securities referred to in this announcement except on the basis of information contained in the aforementioned prospectus, if a prospectus is published. Copies of any such prospectus will, following publication, be available from the Company’s registered office and, subject to certain exceptions, on the websites of Carnegie AS (https://www.carnegie.no/ongoing-prospectuses-and-offerings/), DNB Markets, a part of DNB Bank ASA (www.dnb.no/emisjoner) and Nordea Bank Abp, filial i Norge (www.nordea.com/xxl).
The issue, subscription or purchase of shares in the Company or its affiliates is subject to specific legal or regulatory restrictions in certain jurisdictions. Neither the Company, its affiliates nor Carnegie AS, DNB Markets, a part of DNB Bank ASA or Nordea Bank Abp, filial i Norge (acting as "Global Coordinators" in the Alternative Rights Issue) assume any responsibility in the event there is a violation by any person of such restrictions. The distribution of this release may in certain jurisdictions be restricted by law. Persons into whose possession this release comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
The Global Coordinators are acting for the Company and no one else in connection with the Alternative Rights Issue and will not be responsible to anyone other than the Company providing the protections afforded to their respective clients or for providing advice in relation to the offering and/or any other matter referred to in this release. Forward-looking statements: This release and any materials distributed in connection with this release may contain certain forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they reflect the Company’s current expectations and assumptions as to future events and circumstances that may not prove accurate. A number of material factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.