STATEMENT OF THE BOARD OF DIRECTORS OF BLOM ASA
PURSUANT TO SECTION 6-16 OF THE NORWEGIAN SECURITIES
TRADING ACT IN CONNECTION WITH THE MANDATORY OFFER
PUTFORWARD BY MERCKX AS.
1 BACKGROUND
In a stock exchange announcement dated 19 August 2013
Merckx AS ("Merckx" or the "Offeror) announced that
they had acquired 36.45% of the shares in Blom ASA
("Blom" or "the Company") at a price of NOK 0.10 per
share and would make a mandatory offer for the
remaining shares in Blom.
On 18 September 2013 Merckx AS published an offer
document (the "Offer Document") and launched a
mandatory offer to purchase all shares in Blom not
already owned by Merckx at a price of NOK 0.10 per
share (the "Offer"). The Offer has been approved by
Oslo Børs pursuant to section 6-14(1) of the
Norwegian Securities Trading Act.
ABG Sundal Collier Norge ASA is acting (solely) as
receiving agent for Merckx in relation to the Offer.
Tenden Advokatfirma ANS is acting as legal advisor to
Merckx in relation to the Offer. The offer period is
from and including 19 September 2013 to and including
17 October 2013 at 16:30 (CET).
The Offer Document has been sent to the shareholders
in Blom (as registered in VPS on 18 September 2013).
The Offer Document can also be obtained by from ABG
Sundal Collier Norge ASA
(www.abgsc.no/Content/Transaction-documents/).
The board of directors of the Company has prepared
this statement in connection with the Offer pursuant
to and in accordance with section 6-16 of the
Securities Trading Act.
2 THE BOARD OF DIRECTORS' ASSESSMENT OF THE OFFER
2.1 Impact on the Company and its employees
Pursuant to the Offer Document, the completion of
this Offer will not in itself have any legal,
economic or other work related consequences for
Blom's employees. According to the Offer Document,
Merckx does not plan to make any changes to the
Company's workforce or other changes that would have
legal, economic or work-related consequences for the
Company following the completion of this Offer. The
Offer Document states that to the extent that changes
are identified that may affect the employees of Blom
following completion of this Offer, any such change
will be communicated to the employees and implemented
in accordance with applicable laws and agreements.
According to the Offer Document, Merckx will honor
all existing notice and severance arrangements with
Blom employees following the completion of this
Offer. No members of Blom's board of directors or
management will receive special favorable terms or
advantages (or prospects of such) in connection with
the Offer. Merckx states in the Offer Document that
it intends to initiate discussions with the
management of Blom relating to remuneration policy
and incentive schemes. This may include the
introduction of co-ownership in Blom for members of
the senior management.
If Merckx, as a result of the Offer or otherwise
(including the proposed conversion of bond loans into
shares as described in Section 4.3 ("Share Capital
and Shareholders")) becomes the holder of more than
90% of shares in Blom issued at such time and a
corresponding part of the votes, then Merckx will
have the right (and each remaining shareholder in
Blom will have the right to require Merckx) to
initiate a Compulsory Acquisition of remaining shares
in Blom not owned by Merckx, pursuant to section 4-25
of the Norwegian Public Limited Companies Act and
section 6-22 of the Norwegian Securities Trading Act.
If Merckx no longer considers the listing of Blom
appropriate following completion of this Offer or
otherwise (including the proposed conversion of bond
loans into shares as described in Section 4.3 ("Share
Capital and Shareholders")), Merckx has stated in the
Offer Document that it reserves the right to propose
to the general meeting of Blom to apply to Oslo Stock
Exchange for de-listing of the shares in Blom from
Oslo Stock Exchange.
Based on the information in the Offer Document
(including the information referred to above) it is
not expected significant changes to the Company and
its operations and strategy. However, the board of
directors has no basis to further assess the scope,
nature or significance of the effects of any such
changes on the Company's interests.
The board of directors has not received any separate
statement from the Company's employees on the effects
of the Offer on employment.
2.2 Evaluation of the Offer Price
The offer price is NOK 0.10 per share in the Company,
which will be settled in cash. The offer price is
equal to the price the Offeror paid for 36.45% of the
shares in the Company, shares which were bought from
large, professional institutional investors.
The Company has for a relatively long period not been
able to service the maturity structure of its bond
debt. The main liquidity risk of the company was
until the decision of the bondholder meetings on 19
September 2013, that the company would be unable to
find a lasting and final solution to the company's
debt maturing in September. The solution is, assuming
approval from the General Assembly in Blom 27
September 2013, that all bond debt amounting to NOK
97,336,716.10 is converted to equity in the Company
at a share price of NOK 0.10, which consequently
gives 973,367,610 new shares valued at a price of NOK
0.10 per share in addition to the 33,697,725 shares
outstanding in the Company as of today.
The board of directors has prior to the Offer from
Merckx diligently and extensively carried out a
strategic and operational review in order to make the
Company able to serve the maturity structure of its
debt. Such efforts have comprised e.g. streamlining
operations, cutting further costs, achieving
prolongation on the maturity structure of its debt,
further scaling down of operations by way of
withdrawal from selected markets and sale of certain
assets as well as exploring various strategic options
and working actively towards potential industrial and
financial investors.
The bondholders left the Company with the firm
impression that they were not willing to prolong the
maturity schedule further. Within the time frame
available, the company was not able to implement
sufficient operational measures to improve the cash
flow to the extent required to service the debt.
Further, no other options, neither industrial nor
financial based, have proved to be realistic in order
to solve the financial challenges of the Company.
Given the extensive and diligent process the board of
directors, in agreement with its major shareholders
and the Company's lenders, and in close co-operation
with the Company's management and advisers, has
carried out prior to the Offer, the board considers
that the Offer and the contemplated debt conversion
represent the best outcome available to the
Company. In light of this the board has considered
that it is not necessary to obtain an external
fairness opinion in relation to the Offer and hence
deviates from the recommendation of NUES Section 14
solely in this topic.
Based inter alia on the above, the board of directors
is of the opinion that the offer price reflects a
fair value to the shareholders.
3 CONCLUSION
Based on an overall assessment of the factors set out
above, the board of directors is of the opinion that
the offer price reflects a fair value to the
shareholders.
The board of directors has, however, noted that the
shares of Blom are currently trading at a higher
price than NOK 0.10 at the Oslo Stock Exchange. To
the extent that any investors are willing to pay
above NOK 0.10 per share, the board would recommend
the shareholders to consider such option.
Oslo, 25 September 2013