Bellman Group seeks to amend floaters due 2022 for VSM acquisition

By Susanna Moon

Chicago, June 11 – Bellman Group AB, formerly BMST Intressenter AB, is asking for approval to amend its SEK 400 million senior secured callable floating-rate bonds due 2022.

The request for amendments will be held by way of written procedure until 11 a.m. ET on June 29.

The amendment of the maximum nominal amount under the bond issue and the waiver for a promissory note is being sought in connection with the company’s planned acquisition of VSM Entreprenad AB, a machine contracting company, according to a notice by Nordic Trustee & Agency AB as agent.

Holders must be of record as of June 18.

The purchase price will be about SEK 328.51 million plus accrued interest on the purchase price of 6% annualized from Jan. 1 until the closing date, the release noted.

The purchase price will be paid in a cash payment and by issue of a promissory note of SEK 99,999,632. At closing, the promissory note will be set off toward shares in the issuer, resulting in that the sellers will receive an ownership in the issuer of about 33%. The issue of the promissory note is only a formality, according to the notice, but not allowed under bond terms, so the issuer is asking for holder approval.

The issuer said it expects to finance the remaining part of the acquisition through a subsequent bond issue of about SEK 280 million under the bonds. In addition, the existing owners of the issuer will contribute an equity injection of SEK 44,999,849.61.

The bond financing is not permitted because subsequent bonds may only be issued up to the maximum amount of SEK 180 million. The issuer is therefore asking to lift the maximum to SEK 600 million from SEK 400 million.

The company also is asking for a waiver to the add-on acquisition incurrence test of a ratio of net interest bearing debt to EBITDA of no greater than three until the first call date of Dec. 19.

After the acquisition, the issuer said it will ensure that the shares in the target companies acquired, of which the acquisition price is financed with proceeds from a bond issue, is pledged to the holders as a first ranking security under the bonds, provided that the companies are material group companies and to the extent the shares are owned by the group. Following the acquisition and the approvals, the following two companies of the target group will be pledged to the holders under the bonds, VSM Entreprenad and Munthers Specialtransporter AB.

In addition, any loan provided to a group company for proceeds from the bond financing will be pledged according to a pledge agreement over intercompany loans.

The terms and conditions only include incurrence tests in the form of a leverage ratio, and the issuer is proposing that the maintenance test also be a leverage ratio test that will be met if the ratio of net interest bearing debt to EBITDA is no more than 4.25.

Under the equity cure, if, within 20 business days of the compliance certificate showing a breach of the maintenance test, the issuer has received an equity injection in cash by way of a share issue in the issuer or an unconditional shareholder contribution to the issuer in an amount that would ensure compliance with the maintenance test, no event of default will occur.

The issuer also is seeking to amend the definition of the make-whole amount to exclude the discounting part of the interest rate due to a regulation after the bonds were initially issued.

The make-whole amount for a redemption from the first issue date to but excluding the first call date would be at a price of 103.25% of par.

The consent fee is 2%, if the required majority of holders have approved the proposal and the subsequent bonds are issued under the bond financing by July 31.

To form a quorum, holders representing at least 50% of the adjusted nominal amount of the bonds must reply to the proposal under the written procedure. To pass, at least two-thirds of the response must be in favor of the proposal.

For questions about the administration of the written procedure, contact the agent at voting.sweden@nordictrustee.com or +46 8 783 79 00. For questions about the proposal, contact Håkan Lind, chief executive officer, Bellman Group, at +46 0 70 669 80 28 or hakan@bellmans.se or Roger Axelsson, chief financial officer and head of communications, Bellman Group, at +46 0 70 874 50 41 or roger@bellmans.se.

The notes were issued in 2017.

Bellman Group includes Bellmans Akeri & Entreprenad AB, Grundab Entreprenader in Stockholm AB and Modern Explosion Technology in Norden AB. Bellmans Akeri is a plant-related transport and machine services company based in Saltsjo-Boo, Sweden.

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