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The Swedish shareholders’ association, Aktiespararna, will make a recommendation on which option shareholders should accept in the Lindex/ Kappahl situation after a committee meeting on 19 September, said representative Gunnar Ek.
Kappahl, the Swedish listed fashion retailer, has offered SEK 102 (EUR 10.89) per share in cash for its listed competitor. However, Lindex’s board has rejected the offer and proposed a share capital restructuring alternative where shareholders get SEK 29 in cash and SEK 15 in listed bonds per share. The recapitalization is subject to approval by an EGM due to be held on 26 September.
Ek pointed out that it is a complex situation as Lindex shareholders have three options - to accept the Kappahl offer, to reject the Kappahl offer and vote for the recapitalisation, or to reject both offers.
He said what an unusual move the recapitalization is in Sweden. This, he continued, will make it more complicated to recommend.
Ek said it is unprecedented that a company will take such action against a bid in Sweden. “I have never seen anything like this in 30 years, it is quite extraordinary,” he said. He said that usually a company’s board will recommend one way or the other, but if they are against a bid then they will not come up with an active plan against it like this. According to Lindex’s website, approximately 41.8% of its shareholders are based in Sweden.
Ek said the association has not published any opinion yet on the situation. However, he said that it is possible that shareholders could be interested in the recapitalization if it is possible for Lindex’s management to make good profits as predicted.
Meanwhile, Christian Jansson, president and CEO of Kappahl, said Kappahl is planning to talk to Lindex shareholders to convince them its offer is the best. “The market as a whole is declining and our offer still stands and is looking more and more attractive,” he said.
Jansson said that while Lindex has now clarified the breakdown between cash and bonds that the shareholders will receive, there is still uncertainty about the interest rate on the bonds. ”It makes it difficult for shareholders to assess the offers, shareholders are in limbo”, he said.
He questioned how much of a discount the bond will trade at in the market. He also said that the 5.5% interest rate on the debt is “remarkably high for five years” and that Lindex is paying a premium to its bank for this deal.
Conny Karlsson, chairman of Lindex, said the company has roadshowed to its shareholders and is confident that the feedback has been that SEK 102 is too little in comparison to the standalone option. When asked whether this meant that they felt shareholders would accept the recapitalization plan, he said “that is the way I interpret it”.
Karlsson said it is now up to the shareholders to decide and there will not be any more roadshows or information from Lindex.
When asked whether he thought Lindex has put out enough information on the recapitalization, he said that he could not see what else it could say. He said that in regards to the bond, Lindex has said the interest rate will be in line with market rates but the details have not been decided yet and more information on that will be published later on.
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