M&A Activity • Aug 27, 2020
M&A Activity
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27 August 2020
| DISCLAIMER2 | ||||
|---|---|---|---|---|
| 1. | SUMMARY & CONCLUSION 3 | |||
| 2. | TERMS AND CONDITIONS OF THE OFFER 4 | |||
| 3. | OFFEROR'S STRATEGIC PLANS FOR SONAE INDÚSTRIA 8 | |||
| 4. | IMPACTS OF THE OFFER ON THE INTERESTS OF SONAE INDÚSTRIA8 | |||
| 5. | OPPORTUNITY OF THE OFFER 9 | |||
| 6. | TYPE AND AMOUNT OF THE CONSIDERATION OFFERED11 | |||
| 7. | INTENTIONS OF THE MEMBERS OF THE BOARD OF DIRECTORS THAT ARE SIMULTANEOUSLY SONAE INDÚSTRIA SHAREHOLDERS ON THE ACCEPTANCE OF THE OFFER15 |
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| 8. | APPROVAL OF THE REPORT BY THE BOARD OF DIRECTORS 15 | |||
| GLOSSARY OF TERMS 16 |
This report was prepared by the Board of Directors of Sonae Indústria, SGPS, SA ("SONAE INDÚSTRIA" or the "Company") under the terms of number 1 of article 181 of the Portuguese Securities Code ("PSC"), following the analysis that the Board of Directors made of the draft prospectus and the draft offer announcement, received on August 19, 2020, regarding the general and voluntary public offer for the acquisition of shares representing SONAE INDÚSTRIA's share capital, launched by Efanor Investimentos, SGPS, SA ("Offeror" or "Efanor") and whose preliminary announcement ("Preliminary Announcement") was published on July 31, 2020 ("Offer").
This Report was prepared based on the information available to the Company's Board of Directors. When considering the acceptance or rejection of the Offer, SONAE INDÚSTRIA's shareholders are advised to take this Report into consideration, without prejudice to the necessary individual and weighted assessment and judgment by each of the shareholders.
The forecasts and estimates contained in this Report, which, as such, imply risks and uncertainties insofar as they are related to future events and depend on circumstances that may or may not occur, were made in accordance with the best knowledge and conviction of the Board of Directors, based on the information available at the date of making such forecasts and estimates. These forecasts and
estimates do not represent or constitute, in any way, a guarantee of verification of the expected results.
The Company does not undertake any obligation to update or make publicly available any revisions to the forecasts or estimates contained in this Report to reflect events or circumstances that occur after the present date, without prejudice to the publication of a supplement or addendum to this Report, which it may occur in the event of a possible revision of the Offer, of an update of its terms and conditions or of any additional information that in the meantime becomes available.
The Board of Directors of SONAE INDÚSTRIA ("Board of Directors") acting pursuant to the Provision 1 of Article 181 of the Portuguese Securities Code ("PSC") (Código dos Valores Mobiliários) hereby presents its report summarizing the position of the Board of Directors regarding the opportunity and conditions of the general and voluntary tender offer by Efanor as contained in the draft prospectus ("Draft Prospectus") and in the draft offer announcement ("Draft Offer Announcement") received on August 19, 2020.
According to the Preliminary Announcement and the Draft Prospectus and Draft Offer Announcement the consideration payable in cash offered in the Offer is of € 1.14 (one Euro and fourteen cents) per share deducting any (gross) amount which may be attributed to each share, such as dividends, advance for account of profits or distribution of reserves or others, such deduction to be made from the moment in which the right to said amount has been detached from the Shares and provided such detachment occurs prior to the financial settlement of the Offer.
No indication is provided on the Draft Offer Announcement and the Draft Prospectus on the duration and beginning and end dates of the offer period during which SONAE INDÚSTRIA's shareholders will be able to accept the Offer. This shall be made available to investors in the version of the offer announcement and prospectus approved by the CMVM and disclosure by the Offeror to the market.
The Offer is general and voluntary and the Offeror undertakes to purchase for cash the whole of the shares whose holders validly accept the Offer provided that:
In summary, from the analysis of the Draft Prospectus and Draft Offer Announcement, the Board of Directors of SONAE INDÚSTRIA considers that:
Accordingly, the understanding of the Board of Directors is that, in light of the existing information on the Company and of the current financial and market outlook for SONAE INDÚSTRIA, the Offer consideration and conditions are deemed to be fair and adequate.
SONAE INDÚSTRIA's share capital is represented by 45,403,029 ordinary nominative shares without nominal value which are admitted to trading on the Euronext Lisbon regulated market managed by Euronext Lisbon – Sociedade Gestora de Mercados Regulamentados, S.A. ("Euronext Lisbon"), with the ISIN code PTS3P0AM0025.
For a complete description of the Offer, the Shareholders may consult the documents related to it, on the company's website: www.sonaeindustria.com.
According to the information contained in the Preliminary Announcement, Draft Prospectus and Draft Offer Announcement, the Offeror is Efanor Investimentos, SGPS, SA, incorporated under the Portuguese laws, with registered office at Av. Boavista, 1277/81 – 4.º, 4100‐130 Porto and registered with the Porto Commercial Registry under its single registration and corporate taxpayer number: 502 778 466, with fully subscribed and paid‐up Share Capital of € 249,998,995.00
Also, according to the Draft Prospectus of the Offer, the Offeror holds 19,777,276 shares representing the share capital of SONAE INDÚSTRIA directly, and, indirectly, under the terms and for the purposes of article 20, paragraph 1, of the PSC, 11,779,717 shares, 11,730,752 of which are held directly by Pareuro; 4 of which are held directly by a director of the Offeror, Maria Margarida Carvalhais Teixeira de Azevedo; 38,931 of which are directly held by Migracom, S.A., a company controlled by a common director of both the Offeror and the Company, Paulo Azevedo; and 10,030 of which are held directly by Linhacom, S.A., a company controlled by a director of the Offeror, Cláudia Azevedo. Jointly, these
amount to 31,556,993 shares, which represent approximately 69.504% of SONAE INDÚSTRIA's share capital and voting rights.
The Offeror is the controlling shareholder of Sonae – SGPS (a group with a diversified business portfolio including food retail, shopping centers, telecommunications, electronics, fashion, investment management and others); Sonae Capital, SGPS (also a group with a diversified portfolio of businesses including energy, real estate, hospitality, fitness and other) and Sonae Indústria. Further information on Sonae – SGPS and Sonae Capital, SGPS can be found in the websites of these companies, respectively, www.sonae.pt and www.sonaecapital.pt.
The Offer is general and voluntary, and the Offeror undertakes, pursuant to the terms and conditions of the Draft Offer Announcement and Draft Prospectus, to acquire for cash, all the shares subject to the Offer which are validly accepted.
The financial intermediary appointed by the Offeror to advise on the Offer, namely by rendering the services necessary for the preparation, launch and execution of the Offer, is Caixa – Banco de Investimento, S.A., incorporated under the Portuguese laws, with registered office at Av. João XXI, n.º 63, 1000‐3000 Lisboa and registered with the Lisboa Commercial Registry under its single registration and corporate taxpayer number: 501 898 417, with fully subscribed and paid‐up share capital of € 81,250,000.00.
The Board of Directors has retained and been advised by Linklaters LLP on this process and on the preparation of this report.
The securities targeted by the Offer are the 13,895,001 ordinary, nominative, book‐entry, without nominal value shares, representing 30.604% of the Company's share capital, which amount to all of the shares representing the share capital of the Company, excluding the 19,777,276 shares directly held by the Offeror, and the 11,730,752 shares held by Pareuro, as an entity which is in relationship with the Offeror for the purposes of article 20, paragraph 1, of the PSC, which will be blocked until the termination of the Offer (the "Shares").
Sonae Indústria does not hold any treasury shares.
The Shares are admitted to trading on the regulated market Euronext Lisbon, managed by Euronext Lisbon — Sociedade Gestora de Mercados Regulamentados, S.A..
Only the Shares which, at the date of closing of the Offer, are fully paid‐up, with all inherent rights attached and free of any encumbrances, charges of liabilities, as well as any limitations of duties, notably regarding the respective economic and/or corporate rights and transferability, including when such limitation to their transmission results from blocking orders under the terms of article 72 of the Portuguese Securities Code, may be subject to acceptance in the context the Offer. The acceptance of the Offer by its addressees is subject to compliance with the relevant legal and regulatory requirements, including foreign law requirements, whenever the addressees of the Offer are subject to such foreign law.
The launch of the Offer is subject to the Offeror obtaining the prior registration of the Offer before the Portuguese Securities Market Commission with the consideration of € 1.14 (one euro and fourteen cents) per Share.
The effectiveness of the Offer shall be subject to the Offeror holding, in consequence of the Offer, more than 90% of the voting rights calculated under the terms of article 20(1) of the Portuguese Securities Code.
The Offeror states in the Draft Prospectus that reserves the right to, subject to its free and discretionary decision, waive the effectiveness condition referred to above up until the settlement of the Offer.
The Offeror has listed in the Preliminary Announcement, in the Draft Offer Announcement and in the Draft Prospectus of the Offer, a set of assumptions concerning the decision to launch the Offer.
Accordingly, it is assumed in the Offer, as determined in the Preliminary Announcement, in the Draft Offer Announcement and in Draft Prospectus of the Offer, that up until the termination of the Offer the following will not occur:
The consideration offered, payable in cash, is of € 1.14 (one euro and fourteen cents) per Share, deducting any (gross) amount which may be attributed to each Share, such as dividends, advance for account of profits or distribution of reserves or others, such deduction to be made from the moment in which the right to said amount has been detached from the Shares and provided such detachment occurs prior to the financial settlement of the Offer (the "Consideration").
The Offer is not a mandatory tender offer, but, according to the Offeror, the offered consideration would comply with the criteria set forth in article 188, paragraph 1 of the PSC, if they were applicable, because:
According to the Draft Prospectus of the Offer, the global amount of the offered consideration, which correspondsto a maximum amount of € 15,840,301.14 is guaranteed as provided for under paragraph 2 of Article 177 of the Portuguese Securities Code.
The Draft Prospectus does not provide information as to the means under which the Offeror will provide evidence of the availability of the necessary funds for the full payment of the offered consideration in the context of the Offer. This evidence shall be delivered to the CMVM and described in the final version of the prospectus that is approved by the CMVM and disclosed to the market. Accordingly, the necessary fundsforthe full payment of the global offered consideration in the context of the Offer will be fully assured and blocked for the purposes of the settlement of the Offer.
The Offer's Draft Prospectus does not provide an indicative timetable for the Offer as this depends on the date in which the CMVM approves the final version of the Offer's prospectus and announcement.
The Offeror made the Offer conditional to reaching as a consequence of the Offer and the Shares acquired, more than 90% of the voting rights calculated under the terms of article 20(1) of the Portuguese Securities Code. The Offeror states in the Draft Prospectus that it reserves the right, subject to its free and discretionary decision, to waive the effectiveness condition referred to above up until the settlement of the Offer.
The result of the Offer will be determined at a special session of the regulated market of Euronext Lisbon, at a date to be determined. The respective physical and financial settlement will take place on the second business day following the special session.
In the event that, as a result of the Offer, the Offeror comes to hold, directly or under the terms of article 20 of the Portuguese Securities Code, an amount of Shares that exceeds (i) 90% of the voting rights corresponding to the share capital of the Company and (ii) 90% of the voting rights comprised in the Offer, the Offeror considers the possibility to use the mandatory acquisition mechanism provided in article 194 of the PSC which, if occurring, will entail the immediate exclusion the shares of the Company from admission to trading in a regulated market, its readmission being limited for the period set out in the relevant laws.
If the second requirement referred to above, i.e., section (ii), is not verified and in case the Offeror comes to hold, in consequence of the Offer, more that 90% of the voting rights of the Target Company calculated under the terms of article 20(1) of the Portuguese Securities Code, the Offeror reserves the right to request the Portuguese Securities Market Commission the loss of public company status by the Target Company, under the provisionsset out in article 27(1)(a) of the Portuguese Securities Code, and to subsequently resort to the acquisition mechanism for the remaining shares provided in article 490 of the Portuguese Companies Code.
The application of any of the above mechanisms may be subject to the consideration due by the Offeror to the remaining SONAE INDÚSTRIA shareholders not being higher than the consideration offered in the context of the Offer.
SONAE INDÚSTRIA' shareholders that intend to accept the Offer should state such interest during the Offer period through sell orders issued through their broker companies, broker‐dealer companies and at the branches of the financial intermediaries eligible to render securities registration and deposit services.
While the Board of Directors cannot qualitatively assess the Offeror's medium term strategic plans for the Company, its understanding from the Draft Prospectus is that, as the current majority shareholder, Efanor does not plan to substantially change the Company's existing strategic plans and it is the Board of Directors' opinion that the Company will be in a stronger position to face business and financial challenges as a result of the Offer.
The Offeror expressly declaresin the Draft Prospectusthat, at least until the potential loss of the status of public company of SONAE INDÚSTRIA, and until any offer of the acquisition of the Shares of the remaining shareholders, under the terms of article 490 of the Portuguese Companies Code, as mentioned above, the Offeror intends to provide continuity to the business activity of the Company and the entities that are in a group or control relationship with the Company.
Moreover, the Offeror states that there are no substantial changes expected on this regard, and that the strategic orientation defined by the board of directors of the Company is to be maintained, as well as the confidence in the board of directors of the Company and in its individual members.
Finally, the Offeror affirms that it intends to continue to operate and guide the business of the Company from its existing facilities, and it does not anticipate at thisstage the need to change working conditions, nor of any reallocation of the employees of the group or the modification of their working condition.
The Offer does not foresee the need to make changes to the employees' conditions. The Offeror, that is already the controlling shareholder of SONAE INDÚSTRIA, indicates its intention to continue to operate the existing SONAE INDÚSTRIA businesses.
SONAE INDÚSTRIA (holding company) does not have employees.
No material changes to the relation between SONAE INDÚSTRIA and its customers and suppliers are expected in light of the statements made by the Offeror in the Draft Announcement and Draft
Prospectus, described in section 3. above. The Offeror is already the controlling shareholder of SONAE INDÚSTRIA and indicates its intention to continue to operate the existing SONAE INDÚSTRIA businesses.
If the Offer outcome determines that the percentage of voting rights of the Offeror in SONAE INDÚSTRIA exceeds 90% (potentially leading to a subsequent full control by the Offeror), SONAE INDÚSTRIA's credit risk profile should improve as a result of the economic implications of such event that should significantly reinforce the alignment of interests between the Offeror and SONAE INDÚSTRIA in the relation of SONAE INDÚSTRIA with its financial creditors.
As explained above in the section Mandatory Acquisition and Public Company Status and taking into consideration the Draft Offer Announcement and the Draft Prospectus:
It should also be noted that taking into consideration that, as further explained in section 5. Opportunity of the Offer, the likelihood of actions being required to address the current high levels of leverage by reducing debt has increased (namely in a scenario where the percentage of voting rights of the Offeror in SONAE INDÚSTRIA does not exceed 90% as a result of the Offer). The possibility of having to raise equity as part of possible actions designed to reduce the debt level cannot be discarded. A capital increase would necessarily have implications for all shareholders which could include the dilution of existing shareholders who would not participate in such capital increase.
The abrupt and severe global economic crisis resulting from the Covid‐19 pandemic has caused a significant disruption to Sonae Indústria's business and materially changed its short to medium term business prospects and its financial position.
Since the second half of March 2020 Sonae Indústria results have been significantly affected by the Covid‐19 outbreak and by the extraordinary containment measures imposed by the authorities in the several regions where Sonae Indústria conducts business (namely Europe, North America and South Africa). The main driver of the negative impacts of the pandemic in Sonae Indústria results has been the significant decrease in turnover levels only partially offset by a reduction of costs given the rigidity in the cost structure of the business namely maintenance costs; personnel costs, overheads and depreciation charges.
Due to the extreme uncertainty, not only in respect of the pandemic's intensity and duration but also on its impact on the economy, on the demand for Sonae Indústria's products (impacts which can also arise from pandemic related changes in consumer behavior and work routines like home office) and on our industrial operations, it is not possible to estimate future impacts on the company's results with accuracy or assurance.
In any case, the adverse economic consequences already caused by the pandemic namely on public accounts, employment, available income, consumer and investor confidence levels and consumer spending, will likely negatively impact demand for durable goods (new residences, residential renovation, furniture) that are important drivers of market demand for Sonae Indústria own products (wood based panels and laminates).
Accordingly, and given the cyclical nature of demand for Sonae Indústria products, the results and cash flow generation of Sonae Indústria fully owned businesses and of Sonae Arauco are likely to be negatively affected in the majority of the geographies where Sonae Indústria operates.
As a consequence, the financial ratios of Sonae Indústria and its main affiliates, Sonae Arauco and Tafisa Canada, have also become more pressured.
Bearing in mind that the accessto the cash flow of Sonae Arauco and Tafisa Canada by Sonae Indústria is in the form of dividends paid by these companies and that their ability to pay dividends is a result of their own results, cash flow generation and financial ratios, and with dividends also being conditioned to the compliance of financial ratios in their own financing agreements, the expected dividend flow from these companies to Sonae Indústria will be materially constrained in the short to medium term. In the case of Sonae Arauco, for instance, financial covenants require Net Debt to Recurrent EBITDA to be below 3.0x for dividend distributions to be made and in June 2020 the ratio stood at 5.2x.
Furthermore, SONAE INDÚSTRIA currently has high financial leverage ratios (Net Debt to EBITDA and Net Gearing) as shown below which conditions its ability to refinance its debt maturities under adequate terms.
Liquidity and available financing facilities must also be available for Sonae Indústria to cope with possible, although uncertain, cash out flows relating to existing contingent liabilities and obligations which to the extent they materialize would lead to even higher debt levels.
Taking into consideration the combined effects of: (i) the high leverage ratios; (ii) the short to medium term economic and financial consequences of the Covid‐19 crisis on profitability and cash flow generation; and (iii) the structural limitations in access to cash flow of main affiliates; the likelihood of there being a need to take actions to materially reduce the debt levels has increased as a result of the current context. The possibility of having to raise equity as part of possible actions designed to reduce the debt level cannot be discarded. A capital increase would necessarily have implications for all shareholders which could include the dilution of existing shareholders who would not participate in such capital increase.
The success of the Offer is deemed to be a way of obtaining the necessary financial stability in SONAE INDÚSTRIA. If the Offer outcome determines that the percentage of voting rights of the Offeror in SONAE INDÚSTRIA exceeds 90% (potentially leading to a subsequent full control by the Offeror), the company credit risk profile could improve materially asthe economic commitment of the Offeror in Sonae Indústria would be stronger, reinforcing significantly the alignment of interests between the Offeror and SONAE INDÚSTRIA and potentially reducing limitations in the Offeror ability to further support financially SONAE INDÚSTRIA.
Considering the abovementioned arguments, the understanding of the Board of Directors is that, in light of the existing information on the Company and of the current financial and market outlook for SONAE INDÚSTRIA, the Offer is deemed to be fair and adequate.
The lack of visibility on how the identified challenges can be overcome combined with current very high levels of uncertainty (including among other the uncertainties related with the future effects of the Covid‐19 pandemic) and the volatility of the wood based panels sector create significant obstacles to the assessment of potential value on a long term basis.
The Board of Directors considered the following main elements in its appraisal of the Offer consideration:
SONAE INDÚSTRIA's share price performance over recent periods has been negative as shown in the chart below which captures SONAE INDÚSTRIA's share price evolution (base=100) in the twelve
months period prior to the Preliminary Announcement compared with the performance of market benchmarks (PSI‐20 for Portugal and IBEX 35 for Spain):
Source: Bloomberg
Share price performance in different time periods before the Preliminary Announcement of the Offer (including a comparison with stock market benchmarks) can also be seen in the following chart which evidences a clearly unfavorable price performance of SONAE INDÚSTRIA's share (negative variation and underperforming against the market benchmarks).
Source: Bloomberg
The high uncertainty and the challenges faced in the short to medium term have possibly been the main driver of the negative share price market performance in the last months prior to the Preliminary Announcement of the Offer.
The Offer consideration of 1.14 Euros per share represents:
Considering the average price of SONAE INDÚSTRIA'sshare forthe period between Covid‐19 pandemic declaration by the World Health organization (made on 11 March 2020) and 31 July 2020, the Offer implied premium is of 83.1%.
The chart below shows the Offer price (1.14 Euros) compared with: the actual daily share price during a twelve month period, and; with the average price for the six months period before the Preliminary Announcement of the Offer (0.676 Euros).
Data source: Euronext Lisbon
| Price References | EUR per | Implied |
|---|---|---|
| share | Premium | |
| Efanor offer consideration | 1.140 | |
| 31 July average price | 0.642 | 77.7% |
| 31 July close price | 0.660 | 72.7% |
| Average 3 months | 0.644 | 77.0% |
| Average since pandemic declared 11‐Mar‐20 | 0.623 | 83.1% |
| Average 6 months | 0.676 | 68.6% |
| Average 12 months | 0.814 | 40.0% |
Data source: Euronext Lisbon
Notes: 1. calculations for periods ending 31 July 2020 (incl.); 2. volume weighted average price for each period (average turnover for the period divided by average volume for the period).
In order to assess how the premium implied in the Offer consideration compares with premiums of comparable transactions at an international level, information was obtained on the level of premiums paid in 116 completed deals of similar type targeting listed European companies (with information publicly available on the premium paid) in the period between 1 January 2018 and 31 July 2020. The premium levels are defined by comparing the offer price in those deals with the last price before the respective offer was announced.
The chart below shows the distribution of such deals with a breakdown by intervals of implied premium paid by the Offeror (including the total number of deals and also the total amount of the deals by each interval).
0
0‐10% 10.01‐20% 20.01‐30% 30.01‐40% 40.01‐50% 50.01‐60% 60.01‐70% 70.01‐80% +80% # Deals EUR M
Source: Bloomberg, Mergers and Acquisitions,search criteria: Country: Western Europe (Target and Acquirer); Deal Status: Completed; Dates: 1 Jan 2018 to 31 July 2020; Deal type: "Tender Offer", "Going Private", "Majority Purchase", "Management Buyout", "Squeeze Out"; Sector/Industry: non Financial targets; Public/Private: Public targets
0
Based on this information it is concluded that the large majority of the deals (c. 83%) have premiums of up to 40% and less than 1% of the deals have premiums above the 70‐80% interval, whereas the premium implied in the Offeris of 77.7% (when compared with the average daily price of 31 July 2020).
There are very few comparable quoted companies that can be considered when looking at SONAE INDÚSTRIA as almost all comparable peers are privately held. Lack of homogeneity in the business mix, product portfolio and geographical presence limit significantly the range of comparable companies. The only listed company that could be considered as a peer comparable to SONAE INDÚSTRIA was Pfleiderer Group, S.A. ("Pfleiderer") that was delisted from Warsow Stock Exchange in September 2019 in a squeeze out process that followed a tender offer in July 2019 (offer for 23,519,515 shares, totaling 36.35% of the share capital of the company, with offer price of 25.17 PLN). Pfleiderer tender offer price was equal to the previous 6 months weighted average share price without any premium. The implicit Enterprise Value / EBITDA multiple in Pfleiderer tender offer was of 7.3x considering as Enterprise Value the sum of the market capitalisation (valued at the offer price) and of the Net Debt as at June 30, 2019 and considering the last twelve months EBITDA as at June 30, 2019. This compares with an implicit Enterprise Value / EBITDA multiple in the Efanor tender offer of 9.0x on the basis of the Proportional accounts, considering as Enterprise Value the sum of the market capitalization (valued at the offer price) and of the Proportional Net Debt as at June 30, 2020 and considering the last twelve months Proportional Recurrent EBITDA1 as at June 30, 2020.
Considering the data above and in light of the existing information on the Company and of the current financial and market outlook for SONAE INDÚSTRIA, the understanding of the Board of Directors is that the Offer consideration of 1.14 Euros per share is deemed to be fair and adequate.
1 The implicit Enterprise Value / EBITDA multiple considers the last twelve months Proportional Recurrent EBITDA after financial discounts. If the multiple was calculated considering last twelve months Proportional Recurrent EBITDA before financial discounts, it would be 8.0x.
None of the members of SONAE INDÚSTRIA Board of Directors holds directly shares representative of the share capital and voting rights of the Company.
The Chairman of the Board of Directors, Duarte Paulo Teixeira de Azevedo, is a minority shareholder of the Offeror, with all shares that are owned by the Offeror (19,777,276) being excluded from the Offer. Additionally, Paulo Azevedo informed the Company that Migracom, SA, a company controlled by him, intendsto sell the 38,931 SONAE INDÚSTRIA shares owned by it in the framework of the Offer.
This report was approved at a meeting of the Board of Directors held on August 27, 2020, by telematic means.
All the members of SONAE INDÚSTRIA Board of Directors were present, with the exception of the Chairman and Vice‐Chairman of the Board of Directors, Duarte Paulo Teixeira de Azevedo and Carlos António Rocha Moreira da Silva, respectively, since they are also directors of the Offeror, and they accordingly understood that they should not participate in the meeting of the Board of Directors.
The decision to approve this report was taken unanimously by the members of the Board of Directors that were present (Albrecht Olof Lothar Ehlers, Berta Maria Nogueira Dias da Cunha, Isabel Sofia Bragança Simões de Barros2 , Javier Vega de Seoane Azpilicueta, José Joaquim Romão de Sousa, George Christopher Lawrie and Louis Brassard).
2 This Director also holds positions in the Board of Directors of companies held (directly or indirectly) by the Offeror.
IMPORTANT NOTE: SONAE INDÚSTRIA reports audited information for the full year periods ending in 31 December of each year, prepared in accordance with International Financial Reporting Standards. For other periods (quarterly, 1st half and nine months) SONAE INDÚSTRIA reports unaudited information. Proportional Indicators are in all cases unaudited.
| EBITDA | Earnings Before Interests and Taxes + Depreciations and Amortizations + (Provisions and impairment losses ‐ Impairment losses in trade receivables + Reversion of impairment losses in trade receivables) |
|---|---|
| Gross Debt | Bank loans + Subordinated bonds + Other bonds + Obligations under finance leases + other loans + Loans from related parties |
| LTM | Last Twelve Months |
| Net Gearing | Total Net Debt / Shareholders Funds |
| Pareuro | Pareuro B.V., a company incorporated under the laws of the Netherlands, with its head office at Hoogoorddreef 15, 1101, Amsterdam, with taxpayer number 8076.85.598, registered with the Dutch Chamber of Commerce under number 34110979, which is a wholly owned subsidiary of the Offeror. |
| Proportional Senior Leverage (unaudited) |
Proportional Senior Net Debt / Proportional LTM Recurrent EBITDA |
| Proportional Senior Net Debt (unaudited) |
Proportional Senior Net Debt considers the full contribution of the Senior Net Debt of the wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco Net Debt |
| Proportional: Recurrent EBITDA (unaudited) |
Proportional Recurrent EBITDA consider the full contribution of the wholly owned businesses and the proportional consolidation of the 50% contribution from Sonae Arauco. |
| Recurrent EBITDA | EBITDA excluding non‐recurrent operational income / costs |
| Senior Net Debt | Total Gross Debt ‐ Subordinated Bonds ‐ Cash and cash equivalents |
| Total Net Debt | Total Gross Debt ‐ Cash and cash equivalents |
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