Ljubljana, 04 August (STA) - Financial firm KS Nalozbe published a takeover bid for beverage group Pivovarna Lasko on Thursday. The all-bond deal would see Lasko shareholders get nine newly issued KS Nalozbe bonds with a face value of one euro for each Lasko share. The bid is valid until 30 September. A success threshold has not been set.
Since KS Nalozbe first announced its intention to acquire Lasko, the financial press has been speculating that the company would pay for the acquisition with bonds since it does not have the money to finance the deal.
A report by the daily Dnevnik in late July suggested KS Nalozbe would have to offer 50 bonds from the planned EUR 200m bond issue for each Lasko share in order to meet the expectations of the banks, which have become major shareholders of Lasko after a failed management buyout.
Dnevnik put the expected price at 30 euros per share, which would require a 50:1 bond-share ratio since the bonds are expected to trade on the stock market at a heavy discount due to the considerable risk involved.
But KS Nalozbe director Blaz Vodopivec said in a press release today that the offered price had "nothing to do with the price of Lasko shares when they were seized by banks".
Banks seized Lasko stock as collateral at a price of about EUR 31 per share, but Vodopivec notes that the average market price in the two months prior to the publication of the takeover intent was EUR 8.
"Moreover, when Lasko asked for a capital increase in June it proposed a price of EUR 8. If anyone, it is the company which knows the true price," he said.
In the takeover prospectus, KS Nalozbe says that the swap ratio takes into account "all potentials and downside risks associated with the investment in the target company," including market price, liquidity, operating and legal risks, and the high indebtedness of Lasko.
Lasko posted a pre-tax profit (EBITDA) of EUR 41.7m in 2010, while its debt, at EUR 422m, was ten times EBITDA. This puts the company on or beyond the limit of insolvency according to international criteria, the prospectus says.
Igor Lah, the controlling shareholder of KS Nalozbe and one of the richest Slovenians, said the company opted for bond financing due to uncertainty as to whether it will manage to take control of Lasko or end up merely as a portfolio investor.
"However, if we become the majority shareholder, which is our plan, the bonds can be recalled at any time and cash compensation paid," Lah said in a press release.
There has been considerable speculation as to the background of the deal considering that KS Nalozbe specialised in energy and real estate.
One theory holds that KS Nalozbe has an eye on the valuable property of Lasko's subsidiary Pivovarna Union near the centre of Ljubljana.
There have also been rumours that KS Nalozbe is merely a front for a major international brewery, but the company has denied such suggestions.
The fact is that the heavily indebted Lasko is currently trading at a steep discount on the Ljubljana Stock Exchange and may soon be in better shape if it manages to sell off non-core assets to pay off the mountain of debt.
The sale of soft drinks subsidiary Fructal has already been finalised, while other assets on the chopping block include a 23.34% stake in no. 1 retailer Mercator and an outright stake in Slovenia's leading newspaper publisher Delo.
After banks made margin calls on soured loans, Lasko is in majority ownership of domestic and foreign banks.
NLB holds 23.5%, Hypo Alpe Adria banka around 7%, Probanka around 7%, Gorenjska banka 6.2%, Abanka 3.3%, Banka Celje 2.9% and Banka Koper 2.6%. The state-run KAD fund has a 7% stake.
Having surged in the aftermath of the takeover intent, Lasko lost in excess of 15% in early trading in Ljubljana today and is currently hovering at EUR 11.5.