Scandinavian Tobacco Group A/S Offering of 35,600,000 Offer Shares (A Public Limited Company Incorporated in Denmark Registered Under CVR No
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OFFERING CIRCULAR 11JAN201613354117 Scandinavian Tobacco Group A/S Offering of 35,600,000 Offer Shares (a public limited company incorporated in Denmark registered under CVR no. 31 08 01 85) This document (the ‘‘Offering Circular’’) relates to the initial public offering (the ‘‘Offering’’) of 35,600,000 existing ordinary shares (the ‘‘Firm Shares’’) in Scandinavian Tobacco Group A/S (the ‘‘Company’’) by Skandinavisk Holding II A/S (‘‘Skandinavisk Holding II’’) and Swedish Match Cigars Holding AB (‘‘Swedish Match Cigars Holding’’, and together with Skandinavisk Holding II, the ‘‘Selling Shareholders’’). The Company will not receive any proceeds from the Offering. The Offering consists of: (i) an initial public offering to retail and institutional investors in Denmark (the ‘‘Danish Offering’’); (ii) a private placement in the United States only to persons who are ‘‘qualified institutional buyers’’ or ‘‘QIBs’’ (as defined in Rule 144A (‘‘Rule 144A’’) under the U.S. Securities Act of 1933, as amended (the ‘‘U.S. Securities Act’’)) in reliance on Rule 144A or pursuant to another available exemption from, or a transaction not subject to, the registration requirements under the U.S. Securities Act; and (iii) private placements to institutional investors in the rest of the world (together with the private placement contemplated under (ii) above, the ‘‘International Offering’’). The Offering outside the United States will be made in compliance with Regulation S (‘‘Regulation S’’) under the U.S. Securities Act. Skandinavisk Holding II has granted an option to the Managers (as defined herein), exercisable in whole or in part by the Stabilising Manager (as defined herein), to purchase up to 4,400,000 additional Shares at the Offer Price (as defined below) (the ‘‘Option Shares’’, and together with the Firm Shares, the ‘‘Offer Shares’’), from the first day of trading in, and official listing of, the Shares until the day 30 calendar days thereafter, solely to cover overallotments or other short positions, if any, in connection with the Offering (the ‘‘Overallotment Option’’). In relation to the Overallotment Option, the Selling Shareholders have entered into an agreement pursuant to which, subject to certain conditions, Swedish Match Cigars Holding agrees to sell to Skandinavisk Holding II, and Skandinavisk Holding II agrees to purchase from Swedish Match Cigars Holding, at the Offer Price, such number of Shares that would result in the Selling Shareholders selling an equal number of Shares in the Offering (the ‘‘Balancing Agreement’’). References in this Offering Circular to the ‘‘Overallotment Option’’ include any sale of Shares pursuant to the Balancing Agreement. As used herein, ‘‘Shares’’ refers to all outstanding shares in the Company at any given time. Prior to the Offering, certain members of the Existing Board of Directors, the New Board of Directors, the Executive Management, the Key Employee (each as defined herein) and a limited number of other employees of the Company and its consolidated subsidiaries (‘‘STG’’ or the ‘‘Group’’) have irrevocably undertaken to buy Offer Shares at the Offer Price up to a certain fixed investment amount for each eligible person. The number of Offer Shares that will be allocated to meet these orders will depend on the Offer Price. See ‘‘The Offering—The Offering’’. Prospective investors are advised to examine all risks and legal requirements described in this Offering Circular that might be relevant in connection with an investment in the Offer Shares. Investing in the Offer Shares involves a high degree of risk. See ‘‘Risk Factors’’ for a discussion of certain risks that prospective investors should consider before investing in the Offer Shares. PRICE RANGE: DKK 93 – DKK 110 PER OFFER SHARE The price at which the Offer Shares will be sold (the ‘‘Offer Price’’) is expected to be between DKK 93 and DKK 110 per Offer Share (the ‘‘Offer Price Range’’) and will be determined through a book-building process. The Offer Price will be determined by the Selling Shareholders and the Company’s board of directors (the ‘‘Board of Directors’’) in consultation with the Joint Global Coordinators, and is expected to be announced through Nasdaq Copenhagen A/S (‘‘Nasdaq Copenhagen’’) no later than 8:00 a.m. (CET) on 10 February 2016. The Offer Price Range may be amended during the book-building process and, as a result, the Offer Price may be outside the Offer Price Range set forth in this Offering Circular, subject to any requirement to supplement the Offering and this Offering Circular. The offer period (the ‘‘Offer Period’’) will commence on 28 January 2016 and will close no later than 9 February 2016 at 4:00 p.m. (CET). The Offer Period may be closed prior to 9 February 2016; however, the Offer Period will not be closed in whole or in part before 6 February 2016 at 00:01 a.m. (CET). The Offer Period in respect of applications for purchases of amounts up to, and including, DKK 3 million may be closed before the remainder of the Offering is closed. If the Offer Period is closed before 9 February 2016, the first day of trading in and official listing of the Shares on Nasdaq Copenhagen and the date of payment and settlement will be moved forward accordingly. Any such early closing, in whole or in part, would be announced through Nasdaq Copenhagen. Prior to the Offering, there has been no public market for the Shares. Application has been made for the Shares to be admitted to trading and official listing on Nasdaq Copenhagen under the symbol ‘‘STG’’. The existing Shares are registered in the permanent ISIN DK0060696300. The first day of trading in, and official listing of, the Shares on Nasdaq Copenhagen is expected to be on 10 February 2016. The Offer Shares are expected to be delivered against payment in immediately available funds in Danish kroner in book-entry form to investors’ accounts with VP SECURITIES A/S (‘‘VP Securities’’) and through the facilities of Euroclear Bank S.A./N.A. (‘‘Euroclear’’), as operator of the Euroclear System and Clearstream Banking, S.A. (‘‘Clearstream’’), starting on or around 12 February 2016. All dealings in the Offer Shares prior to settlement are for the account of, and at the sole risk of, the parties involved. This Offering Circular has been prepared under Danish law in compliance with the requirements set out in the Consolidated Act no. 1530 of 2 December 2015 on Securities Trading, as amended (the ‘‘Danish Securities Trading Act’’), the Executive Order no. 1257 of 6 November 2015 on prospectuses for securities admitted to trading in a regulated market and for offering to the public of securities of at least EUR 5,000,000 (the ‘‘Danish Executive Order on Prospectuses’’) as well as Commission Regulation (EC) no. 809/2004 of 29 April 2004, as amended (the ‘‘Prospectus Regulation’’). This Offering Circular does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy any of the Offer Shares in any jurisdiction to any person to whom it would be unlawful to make such an offer in such jurisdiction. The Offer Shares have not been and will not be registered under the U.S. Securities Act and are being (i) sold in the United States only to persons who are QIBs in reliance on Rule 144A or pursuant to another available exemption from, or a transaction not subject to, the registration requirements under the U.S. Securities Act, and (ii) offered and sold outside the United States in compliance with Regulation S. Prospective investors are hereby notified that sellers of the Offer Shares may be relying on the exemption from the registration requirements of Section 5 of the U.S. Securities Act provided by Rule 144A. For certain restrictions on transfer of the Offer Shares, see ‘‘Transfer Restrictions’’. The distribution of this document and the offer of the Offer Shares in certain jurisdictions are restricted by law. Persons into whose possession this Offering Circular comes are required by the Company, the Selling Shareholders and the Managers to inform themselves about and to observe such restrictions. For a description of certain restrictions on offers of Offer Shares and on distribution of this document, see ‘‘Selling Restrictions’’. Joint Global Coordinators and Joint Bookrunners J.P. Morgan Deutsche Bank Nordea Lead Global Coordinator Joint Global Coordinator Joint Global Coordinator Co-Lead Manager Carnegie 28 January 2016 TABLE OF CONTENTS Certain Information with Regard to the Offering ................................ v Responsibility Statement ................................................. vii Summary ............................................................. 1 Dansk Resume.......................................................´ 1 English Summary ..................................................... 21 Risk Factors .......................................................... 42 Risks Relating to STG’s Industry .......................................... 42 Risks Relating to STG’s Business ......................................... 48 Risks Relating to the Offering ............................................ 57 Important Notice ....................................................... 59 Special Notice Regarding Forward-looking Statements ............................ 60 Enforcement of Civil Liabilities and Service of Process ........................... 62 Presentation of Financial and Certain Other Information .......................... 63 Financial Information .................................................. 63 Non-IFRS Financial Measures ..........................................