MOLS-LINIEN A/S This statement has been prepared in Danish and subsequently been translated into English. In case of inconsistencies between the two versions, the Danish version prevails.
Statement by
the board of directors of Mols-Linien A/S concerning the mandatory public offer made on 24 August 2015
submitted by
Holding af 29. juni 2015 A/S (CVR No 36 94 06 70)
a 100 % owned and fully controlled subsidiary of
Polaris Private Equity IV K/S (CVR No 36 48 65 97)
Malmøgade 3, 2100 Copenhagen Ø
The offer is made in the form of an offer document with related acceptance form prepared by the Offeror (as defined below) and the offer document contains the terms governing the Offer as well as the procedure for accepting it. Any decision to accept the Offer should be made only following a careful review of the Offer and this report, which has been prepared pursuant to the Takeover Order.
The below forward-looking statements, in particular those that relate to future sales and operat- ing profit, are subject to risks and uncertainties as various factors, many of which are outside Mols-Linien's control, may cause the actual development to differ materially from the expecta- tions contained in this statement. Factors that might affect such expectations include, among others, major changes in the market environment, the competitive situation, legislation and oth- er regulations, development in oil prices or acquisitions/divestments or chartering in/out of ves-
sels.
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Table of contents
1. Introduction ........................................................................................... 3
2. Background............................................................................................ 4
3. The Board's assessment of factors pertaining to the offer ............................... 10
4. Disclosure of certain interests ................................................................... 12
5. Additional remarks ................................................................................. 13
6. Conclusion ............................................................................................ 14
Schedule 1: 15
holding of shares for members of the board of directors and the management
board of Mols-Linien A/S .................................................................................. 15
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Statement from the Board of Directors of Mols-Linien A/S ('The Board') pursuant to
Section 23(1) of The Danish Financial Supervisory Authority's executive order no.
562/2014 dated 2 June 2014 on takeover bids ('The Take Over Order') regarding the mandatory public offer ('Offer') that has been submitted on 24 August 2015 by Hold- ing af 29. juni 2015 A/S ('Offeror'), a 100% owned subsidiary of Polaris Private Equity IV K/S ('Polaris').
1. INTRODUCTION
1.1 The Offer
The Offer is submitted on the terms and conditions set forth in the offer document da- ted 24 August 2015 (the 'Offer Document') prepared by the Offeror.
Pursuant to the Offer the Offeror offers the shareholders of Mols-Linien A/S (the 'Shareholders') to acquire all issued shares in Mols-Linien A/S ('Mols-Linien' or 'Com- pany') (the 'Shares') at a price of DKK 40 in cash per Share of nominally DKK 20 each (the 'Offer Price').
The Offeror is a 100 % owned and fully controlled subsidiary of Polaris. According to the Offer Document Polaris represents and warrants that the Offeror will have sufficient cash funds to purchase and pay for any and all Shares tendered in the Offer in accord- ance with the terms set out in the Offer Document.
Attention is made to the fact that the Offeror in connection with its wish to acquire control over Mols-Linien in addition to a mandatory public offer of 24 August 2015 has made a voluntary public offer on 10 July 2015 at a price of DKK 34 in cash per Share, which price was increased to DKK 40 in cash per Share in a separate addendum to the offer document on 10 August 2015. Reference is made to the statements by the board made in connection with the voluntary public offer and the addendum thereto dated 10
July 2015 (company announcement no 253) and 14 August 2015 (company announce- ment no 262), respectively. The board of directors directs the attention to the fact that pursuant to applicable rules the voluntary public offer was automatically cancelled as a
direct consequence of the submission by Polaris of its mandatory public offer.
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1.2 The pur pose of thi s St ateme nt
According to Section 23(1) of the Take Over Order, the board of directors of a listed company which is made subject to a public takeover offer shall draw up a statement setting out the board of directors' opinion of the offer and the reasons on which such opinion is based, including its views on the effects of the offer on all the company's interests, and on the Offeror's strategic plans for the offeree company and their likely consequences for employment and the locations of the company's places of business as set out in the offer document.
This Statement is governed by Danish law.
2. BACKGROUND
2.1 Mols-Linien' s ope rati ons a nd a ctivities
Mols-Linien was established in 1966 and is a Danish high speed ferry operator connect- ing Sealand and Jutland with up to 24 daily departures via the services Aarhus-Odden and Ebeltoft-Odden.
Mols-Linien's fleet consists of 3 modern high speed ferries which ensure a quick, effec- tive and convenient short cut between Sealand and Jutland for passengers, cars, buses, trucks and motor cycles.
The journey between Aarhus-Odden takes approximately 75 minutes and the journey between Ebeltoft-Odden takes approximately 55 minutes.
The current board of directors and management board launched in 2011 a comprehen- sive turn-around process, following which the Company today appears as a modern and well operated enterprise with a modern fleet of high speed ferries, motivated and loyal employees, and improved profitability and a strong cash flow. The Company is thus well positioned to maintain and manifest its position as a strong and competitive alter- native to the traffic over the Great Belt Bridge and Tunnel.
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2.2 Mols-Linien' s ex pect a tions t o t he fina ncial year 2015
Mols-Liniens expectations for the financial year 2015 was originally announced in con- nection with the release of the annual report 2014 in company announcement no 241 of 3 March 2015, where - based on certain assumptions on the development in the traffic - it was announced that Mols-Linien expected a positive result for 2015 in the range of 25 - 35 mil. DKK compared to a result in 2014 of 21,4 mil. DKK after tax but before inclusion of receipt of an insurance sum in connection with an insurance matter.
By company announcement no 246 of 22 April 2015 with the interim accounts for the first quarter of 2015, Mols-Linien adjusted its profit forecast from an expected result in the range of 25 - 35 mil. DKK to a result in the range of 35 - 45 mil. DKK after tax based on a strong development in the traffic in the first calendar months of 2015.
By company announcement no 248 of 18 June 2015 Mols-Linien adjusted on the basis of continued strong traffic developments its expected results from a range between 35 - 45 mil. DKK to a range between 50 - 60 mil. DKK after tax.
By company announcement no 257 of 5 August 2015 Mols-Linien informed about the traffic developments in the period from 1 January through 31 July 2015 which comprises a very substantial part of the Company's high-season- the summer traffic. The Board maintained on the basis thereof the profit forecast for 2015 as contained in company announcement no
248 of 18 June 2015.
By company announcement no 264 of 20 August 2015 Mols-Linien published its interim ac- counts for the first and second quarter of 2015, where the Company based on certain speci- fied assumptions maintained its profit forecast for a positive result in the range of 50 - 60 mil. DKK after tax.
2.3 Mols-Linien' s foreca st for 2 01 6
The Board has not yet discussed and approved the budget for 2016, but the Company has in company announcement no 264 of 20 August 2015 stated the following in regard to the forecast for 2016:
The Company has secured a fixed fuel price in DKK for the full year 2016. Consequent- ly, changes in fuel prices and/or the exchange rate between Danish kroner and US dol-
lars will have no impact on the expected results for 2016.
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The Company has projected the forecast for 2016 on the basis of the forecast for 2015, an expected increase in the traffic volumes of 5 %, the fixed fuel prices and on the further assumption that the average fare remains unchanged. Based on these assump- tions Mols-Linien expects an EBIT result of approximately 146 mil. DKK and a result in
2016 of approximately 92 mil. DKK.
The Company expects that a cash-flow will be generated in the range of 90 - 100 mil. DKK, which does not include any extraordinary payments.
In relation to sensitivity, the Company is able to advice that a change in the number of passenger cars carried of +/- 5 % for the entire 2016 will result in an impact on the expected result and liquidity position of +/- 34 mil. DKK.
2.4 Mols-Liniens sha rehol der base
Mols-Linien has a total share capital of DKK 283,333,400 divided into 14,166,670
Shares of nominally DKK 20.
Mols-Linien's shareholder base consists of 2,237 Shareholders recorded by name as per
31 December 2014, representing 13,564,387 shares corresponding to approximately 96
% of the total share capital.
The Company has as of today been notified that each of the following holds more than
5 % of the Shares and the voting rights:
• Holding af 29. juni 2015 A/S
c/o Polaris Private Equity IV K/S 76.18 %
As per 31 December 2014 and as per today Mols-Linien held 207,450 treasury Shares of nominally DKK 20 each, corresponding to 1.46 %.
2.5 The process leadi ng t o the submission of t he Offer
Representatives for three shareholders holding approximately 46 % have on a continu- ous basis supported the board of directors and the management board in relation to the turn-around process following the completion of which they were aiming for a dis- posal of their shareholdings.
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A purchase of a shareholding of such a size in a listed company triggers an obligation for the purchaser to make a mandatory public offer to all Shareholders in the company which limits the group of potential purchasers to those who has the financial strength to fulfil such an obligation. I some articles in the media this legal aspect has been pre- sented as if the Board wanted only to sell the entire Company. This is an incorrect presentation.
After the financial year 2014, when the Company for the first time in several years achieved a positive result, the Board initiated examinations with the purpose of deter- mining the possibilities for making a private placement of these shareholdings thereby creating a more stable and lasting Shareholder structure which could support the com- mercial developments of the Company in a way that would benefit the Company, its employees, the Shareholders and the interests of other stakeholders, possibly by ac- quiring the entire Company.
This process has included establishing contacts to a number of potential industrial and financial investors in Denmark and internationally. The Board, nevertheless, had to acknowledge in May that none of these approaches had resulted in any indication of interest from any industrial or financial investor for the acquisition of the entire Com- pany. Prompted by the recent press coverage the Board wishes to direct the attention to the fact that as part of this process the Board has had discussions with Lind Invest ApS during the Spring 2015 and that this dialogue has been closer than with anyone else that the Board has been in contact with.
In May 2015, the Board was approached by representatives of a number of the larger Shareholders, representing in total approximately 76 % of the Shares. These Share- holders announced that they had entered into a process agreement with Polaris on sell- ing their shares, subject to fulfillment of certain terms and conditions in the agree- ment, including inter alia a price of DKK 34 per Share, (the 'Process Agreement').
The Process Agreement assumed that the Board of Mols-Linien would allow Polaris as
well as Polaris' advisors to conduct a limited due diligence exercise covering legal, fi- nancial and technical matters ('Due Diligence'), that Mols-Linien would grant Polaris exclusivity and that Polaris on the basis thereof would make a voluntary public offer to all Shareholders in Mols-Linien on the purchase of their Shares on the same terms and conditions as having been offered to the large Shareholders comprised by the Process Agreement.
In light of the wish by the Board to secure a more stable Shareholder structure com- bined with the obligations of the large Shareholders comprised by the Process Agree-
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ment, the Board engaged in May 2015 in discussions with Polaris on the terms for the Due Diligence. At the end of May 2015 and before the Board signed an exclusivity agreement with Polaris the chairman approached again Henrik Lind/Lind Invest ApS with an aim to involve Lind Invest ApS in the forthcoming public offer process. Henrik Lind, nevertheless, announced that he would only be interested in acquiring a 30 % shareholding, and that he wanted to avoid submitting a public offer to all Shareholders in Mols-Linien. At no point in time, any indication was made at what price Lind Invest ApS' interest was based.
In June 2015 Polaris was thus the only party potentially interested in acquiring all of the Shares in Mols-Linien and the only potential investor having disclosed a specific price for the Shares. Taking that into account and the Process Agreement and the large Shareholders' wishes to dispose of their Shares in any event the Board signed an ex- clusivity agreement with Polaris.
After Polaris had completed its Due Diligence certain negotiations took place during which Polaris made it clear to the Board that Polaris' willingness to make a public offer was subject to the Board extending the exclusivity agreement until the end of the offer period. It was emphasized that this condition was non-negotiable. Due to this and tak- ing into consideration also that the Shareholders being party to the Process Agreement wanting to sell their Shares in any event, and that - at this point in time - there were no other potential buyers - also not Lind Invest ApS - who were willing to make a pub- lic offer to all Shareholders, the Board considered that it would serve the best interests of the remaining Shareholders in Mols-Linien if the Board accommodated Polaris' exclu- sivity request as all Shareholders would be given the possibility to consider and decide whether they wanted to dispose of their Shares.
Polaris' resolution to make a voluntary public offer was then publicly announced on 3
July 2015 under company announcement no 250, while the actual offer document was made public on 10 July 2015 under company announcement no 252. The statement by the Board of Mols-Linien was made public on the same day under company announce- ment no 253.
On 27 July 2015, Lind Invest ApS approached the Board and expressed that it was con- sidering to submitting a competing offer (at a price of DKK 40 per Share) and request- ed that it be given the opportunity to conduct a limited due diligence investigation. On
28 July 2015, it was conveyed to Lind Invest ApS that it was not possible until after 12
August 2015 due to the restrictions in the exclusivity agreement with Polaris. However, at the same time it was communicated to Lind Invest ApS that nothing prevented Lind
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Invest ApS from submitting a competing offer, and if necessary, to make it subject to certain conditions.
By company announcement no 258 dated 7 August 2015 it was announced that Polaris had made a decision to increase the Offer Price from DKK 34 to DKK 40 per Share, cor- responding to an increase by 17.6 %. The decision was inter alia made on the basis of certain discussions with the larger Shareholders being parties to the Process Agree- ment and certain discussions with the Board in Mols-Linien.
On 19 August 2015 (cf. company announcement no 263) Lind Invest ApS announced that it would make a voluntary public offer to all shareholders of Mols-Linien at a price of at least 41 DKK per Share, which offer - however - was conditional upon Lind Invest ApS being granted access to conduct a limited due diligence, and which offer further- more did not specify which conditions completion of the offer would be made subject to. On several occasions before and after this announcement Mols-Linien has conveyed to Lind Invest ApS that the board of directors would assist competing bidders in getting access to conduct a limited due diligence, provided that such bidders would extend an offer to all Shareholders with the purpose of obtaining control over the Company, and on the basis of a genuine offering material demonstrating transaction certainty, and with an offer on clearly defined terms, with a specific price, information on possible price adjustment mechanisms and the entailing consequences. Furthermore, Lind In- vest ApS was requested to present a business plan. Lind Invest ApS has at no point accommodated these requirements.
On 21 August 2015, Polaris notified the Company that it had now purchased all of the Shares comprised by the Process Agreement and that Polaris now held at least 76.18 % of the Shares in Mols-Linien. Consequently, Polaris has on 24 August 2015 submitted the mandatory public offer to all Shareholders in Mols-Linien.
As Polaris stated no intention to dispose of its shares in Mols-Linien that it previously had secured and on 21 August 2015 had definitively purchased, neither to Lind Invest ApS nor to any other potential buyer, Mols-Linien has concluded that Lind Invest ApS was and would continue to remain a minority shareholder and thus also for that reason, and consistent with common practice for listed companies, the board of directors on 24
August 2015 rejected the request from Lind Invest ApS to conduct a limited due dili- gence.
There have been discussions in the press why the board of directors of Mols-Linien has not conducted a controlled auction process for the sale of the Shares in Mols-Linien.
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The board of directors of a listed company cannot independently complete a controlled auction process but can only encourage it. The board of directors has had to realize that a substantial majority of the Company's shareholders has chosen a sales method for their shares in the form of the Process Agreement described above.
2.6 Agree me nt s wit h prov isions on c ha nge of c ontr ol in Mol s-Linie n
Mols-Linien has not entered into any material agreements that contain provisions which are triggered or may be triggered in the event of a change of control situation occur- ring, including with customers, suppliers or members of the board of directors or the management board.
Reference is furthermore made to Section 4.1 below.
2.7 Fairne ss opi nion
For the purpose of its assessment of the voluntary public offer originally made by Pola- ris on 3 July 2015 for a price of 34 DKK per Share, the Board has obtained a fairness opinion from its financial advisor, Handelsbanken Capital Markets, dated 3 July 2015.
In its fairness opinion Handelsbanken Capital Markets is of the opinion, that the origi- nal Offer Price of DKK 34 was fair to the Shareholders, and the fairness opinion has the following conclusion:
'On the basis of the background and the assumptions set out above together with oth- er matters which in Handelsbanken's view are relevant, it is our opinion that the Offer Price from a financial perspective is fair to the Shareholders in Mols-Linien as of the date of this Fairness Opinion'.
3. THE BOARD' S A SSE SS MENT OF FACTORS P E RTAINING TO THE OFFER
The Board has considered a number of factors pertaining to the Offer:
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3.1 Offer Price
The Offer Price in the amount of DKK 40 per Share provides the Shareholders with a premium compared to the official trading price immediately prior to the publication of the Offeror's decision to submit a voluntary public offer on 3 July 2015.
The board of directors directs the attention to the fact that the offer price pursuant to the mandatory public offer dated 24 August 2015 in the amount of 40 DKK per Share is lower than the prices currently quoted for the shares in Mols-Linien on NASDAQ OMX Copenhagen.
3.2 Adva nta ge s to the S hareholde rs
The Board finds that the Offer provides the following advantages to the Shareholders:
• The consideration offered to the Shareholders is in cash payment.
• All Shareholders are offered the opportunity to dispose of their entire share- holding.
• The completion of the Offer is not subject to any conditions.
• The Shareholders have under certain conditions the option to withdraw their ac- ceptances in the event that a competing offer may be made which for the Shareholders is more attractive.
3.3 Disa dva nta ges to t he Sha reholde r s
The Board finds that the Offer provides the following disadvantages to the Sharehold- ers:
• After completion of the Offer and a possible delisting of the Shares, continuing
Shareholders will face more difficulties if they wish to dispose of their Shares.
• Shareholders either selling their Shares or might become squeezed out follow- ing a possible redemption of Shares following a completion of the Offer will not be offered the opportunity to participate in a possible future value creation in Mols-Linien.
• If the Shareholders choose to dispose of their Shares they will as a starting point be subject to tax of the profits achieved and this may advance tax liabili- ties. The tax consequences of an acceptance of the Offer will depend on the in- dividual factors of each individual Shareholders and the Board recommends consequently that each of the Shareholders makes the necessary assessment of the personal tax implications and that they obtain tax advice from their own tax advisors.
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