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Q-FREE ASA ANNOUNCES A NEW LONG-TERM FINANCIAL AGREEMENT WITH MAIN BANK AND CONVERTIBLE BOND ISSUE PRE-COMMITTED AT THE MINIUM AMOUNT

NOT FOR DISTRIBUTION OR RELEASE, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, HONG KONG OR JAPAN, OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER OF ANY OF THE SECURITIES DESCRIBED HEREIN.

Reference is made to the announcement from Q-FREE ASA (“Q-FREE” or the “Company”) on 1 April 2020 regarding the operational and financial impact of the corona virus outbreak. The combined effect of the corona virus situation, hereunder expected delays in processes related to divestment of assets, and the payment for the remaining Intelight shares in May, is expected to cause a temporary strain on the company’s liquidity.

NEW FINANICAL AGREEMENT WITH MAIN BANK

Subject to completion of the convertible bond offering described below, Q-Free’s main bank Nordea Bank has agreed to provide additional financing and revise the covenant structure to ensure that the Company is able to meet its financial obligations. The new added facility amounts to 82 MNOK and is partly guaranteed by GIEK as part of the Norwegian government’s Covid 19 support packages. Furthermore, the entire bank engagement is prolonged to June 2022 and has a new covenant structure with improved operational headroom in the coming quarters. The new covenant structure has a holiday until Q4-2020. At the end of Q4-2020 the covenant structure requires 12M reported EBITDA to exceed MNOK 30 and pr. end of Q1-2021 12M rolling EBITDA should exceed MNOK 45. Starting Q2-2021, covenant is based on measurement of leverage ratio (NIBD excluding convertible bond /EBITDA) that should not be higher than 3.50 in Q2-2021 before being reduced quarterly by 0.25x until a normalised level in Q1-2022. In addition, there is a minimum equity ratio covenant of 35%, where equity ratio is defined as equity plus subordinated convertible bond divided on total assets.

CONVERTIBLE BOND OFFERING TO STRENGHEN LIQUIDITY

To further strengthen its operational liquidity and fulfil applicable conditions under the new financing agreement with Nordea Bank, Q-Free today announces the offering of a subordinated unsecured convertible bond issue convertible into ordinary shares of the Company.

MNOK 70 has been pre committed by certain key shareholders including Rieber & Søn.

The convertible bond issue will bear interest at 6 months NIBOR + 4 percentage points per annum with deferral optionality, have a tenor of three years and an initial conversion price of NOK 4.3669 equal to a premium of 25% over the volume weighted average price of the Shares on the Oslo Stock Exchange the 22 April 2020 of NOK 3.4935.

The bookbuilding period in the convertible bond issue will commence today at around 09:00 CET and is expected to close before Friday 24 April 2020 08:00 CET. The final size of the bond issue will be announced thereafter.

The convertible bond issue will be directed towards (i) professional investors, subject to further restrictions outside the EEA, and (ii) selected retail clients incorporated in or domiciled in Norway, as the offer is open also to the 149 largest Norwegian shareholders of the Company. The minimum application and allocation amount in the convertible bond issue will be NOK 100,000. No prospectus or key information document will be provided as the convertible bond issue will be subject to applicable exemptions.

Nordea Markets and SpareBank1 Markets are acting as Joint Global Coordinators and Joint Bookrunners of the Offering.

Please observe that the convertible bond offering is not a rights offering and that Q-Free shareholders eligible for subscription must contact the Joint Bookrunners in the bookbuilding period if they wish to subscribe for convertible bonds, at one of the following addresses: 

Nordea Markets
+47 48 40 19 19
Postboks 1166, Sentrum, 0107 Oslo

SpareBank1 Markets AS
+47 24 14 74 70
Olav Vs gate 5, 0161 Oslo           

Prior to launching the convertible bond offering, the Board of Directors of the Company has together with the Company’s advisors considered alternative structures for the raising new capital to the Company in order to satisfy conditions under the amended Nordea Bank facility. The Board is of the view that it will be in the common interest of the Company and its shareholders to raise the new capital through a private placement of convertible bonds setting aside the pre-emptive rights of the shareholders. By structuring the transaction in the manner set out herein, the Company will be in a position to complete the fund raising in today’s market conditions in an efficient manner on market terms, and at the same time allowing shareholders representing more than 95 % of the shares in the Company to participate in the transaction.   

Completion of the convertible bond issue is inter alia subject to approval by the general meeting of the Company.

PRELIMINARY Q1 KEY FIGURES AND COVENANTS

As previously announced, the Q1-20 and annual report will be made public on Wednesday 29 April 2020. Q-Free expects to be in compliance with its financial covenants at Q1-20.

PRELIMINARY KEY FIGURES Q1-20 NOK million
Total operating revenues 202
Earnings before interest, taxes, depreciation and amortisation (EBITDA) -8
Earnings before interest and taxes (EBIT) -24
Pre-tax profit -12
Borrowings 267
Cash and cash equivalents 43
Equity 410
Total assets 965

As stated in the announcement on 1 April 2020, Q-Free has taken several actions to reduce its operational expenses. The expected monthly saving is approximately 6 MNOK versus the cost base in Q1-20. Further details will be given on 29 April 2020.

IMPAIRMENT OF GOODWILL RELATED TO INFOMOBILITY SEGMENT

In the preliminary Q4–19 report, Q-Free announced a 32 MNOK impairment of Parking assets related to the decision to seek divestment of this business. In addition to Parking, the Infomobility segment will also be classified for divestment. Based on updated expectations and market conditions, Q-Free has decided to make an additional impairment of goodwill of MNOK 26 related to Infomobility. This impairment was not included in the preliminary Q4–19 report, but will be included in annual statutory accounts.

DEFINITION OF THE ALTERNATIVE PERFORMANCE MEASURES (APM) ABOVE:

EBITDA / EBIT:
The Group considers EBITDA / EBIT to be normal accounting terms, but they are not included in the IFRS accounting standards. EBITDA is an abbreviation for Earnings Before Interest, Taxes, Depreciation and Amortisation. The Group uses EBITDA in the income statement as a summation line for other accounting lines. These accounting lines are defined in our accounting principles, which are part of the financial statements for 2018.
The same applies for EBIT.

Net Interest Bearing Debt (NIBD):
Long-term borrowings plus short-term borrowings less cash and cash equivalents
 

CONTACT INFORMATION

For further information, please contact:

Interim-CFO, Trond Christensen: +47 481 02 754

President & CEO, Håkon Volldal: +47 977 19 973

ABOUT Q-FREE

Q-Free is a leading global supplier of ITS (Intelligent Transportation Systems) products and solutions. The company has approximately 400 employees, offices in 16 countries, and a presence on all continents. Headquartered in Trondheim, Norway, Q-Free is listed on the Oslo Stock Exchange under the ticker QFR.

IMPORTANT INFORMATION

THIS INFORMATION IS SUBJECT TO A DUTY OF DISCLOSURE PURSUANT TO SECTION 5-12 OF THE NORWEGIAN SECURITIES TRADING ACT.

NO ACTION HAS BEEN TAKEN BY THE COMPANY, THE JOINT BOOKRUNNERS OR ANY OF THEIR RESPECTIVE AFFILIATES THAT WOULD PERMIT AN OFFERING OF THE BONDS OR POSSESSION OR DISTRIBUTION OF THIS ANNOUNCEMENT OR ANY OFFERING OR PUBLICITY MATERIAL RELATING TO THE BONDS IN ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS REQUIRED. PERSONS INTO WHOSE POSSESSION THIS PRESS RELEASE COMES ARE REQUIRED BY THE COMPANY AND THE JOINT BOOKRUNNERS TO INFORM THEMSELVES ABOUT, AND TO OBSERVE, ANY SUCH RESTRICTIONS.

THIS ANNOUNCEMENT IS NOT FOR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN OR INTO THE UNITED STATES. THIS ANNOUNCEMENT IS NOT AN OFFER TO SELL SECURITIES OR THE SOLICITATION OF ANY OFFER TO BUY SECURITIES, NOR SHALL THERE BE ANY OFFER OF SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SALE WOULD BE UNLAWFUL.

THIS ANNOUNCEMENT AND THE OFFERING WHEN MADE ARE ONLY ADDRESSED TO, AND DIRECTED IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA (THE “EEA”) PERSONS WHO ARE “QUALIFIED INVESTORS” WITHIN THE MEANING OF THE PROSPECTUS REGULATION (“QUALIFIED INVESTORS”). FOR THESE PURPOSES, THE EXPRESSION “PROSPECTUS REGULATION” MEANS REGULATION (EU) 2017/1129.

SOLELY FOR THE PURPOSES OF THE PRODUCT GOVERNANCE REQUIREMENTS CONTAINED WITHIN: (A) EU DIRECTIVE 2014/65/EU ON MARKETS IN FINANCIAL INSTRUMENTS, AS AMENDED (“MIFID II”); (B) ARTICLES 9 AND 10 OF COMMISSION DELEGATED DIRECTIVE (EU) 2017/593 SUPPLEMENTING MIFID II; AND (C) LOCAL IMPLEMENTING MEASURES (TOGETHER, THE “MIFID II PRODUCT GOVERNANCE REQUIREMENTS”), AND DISCLAIMING ALL AND ANY LIABILITY, WHETHER ARISING IN TORT, CONTRACT OR OTHERWISE, WHICH ANY “MANUFACTURER” (FOR THE PURPOSES OF THE MIFID II PRODUCT GOVERNANCE REQUIREMENTS) MAY OTHERWISE HAVE WITH RESPECT THERETO, THE BONDS HAVE BEEN SUBJECT TO A PRODUCT APPROVAL PROCESS, WHICH HAS DETERMINED THAT: (I) THE TARGET MARKET FOR THE BONDS IS ELIGIBLE COUNTERPARTIES AND PROFESSIONAL CLIENTS ONLY, EACH AS DEFINED IN MIFID II; AND (II) ALL CHANNELS FOR DISTRIBUTION OF THE BONDS TO ELIGIBLE COUNTERPARTIES AND PROFESSIONAL CLIENTS ARE APPROPRIATE. ANY PERSON SUBSEQUENTLY OFFERING, SELLING OR RECOMMENDING THE BONDS (A “DISTRIBUTOR”) SHOULD TAKE INTO CONSIDERATION THE MANUFACTURERS’ TARGET MARKET ASSESSMENT; HOWEVER, A DISTRIBUTOR SUBJECT TO MIFID II IS RESPONSIBLE FOR UNDERTAKING ITS OWN TARGET MARKET ASSESSMENT IN RESPECT OF THE BONDS (BY EITHER ADOPTING OR REFINING THE MANUFACTURERS’ TARGET MARKET ASSESSMENT) AND DETERMINING APPROPRIATE DISTRIBUTION CHANNELS.

THE TARGET MARKET ASSESSMENT IS WITHOUT PREJUDICE TO THE REQUIREMENTS OF ANY CONTRACTUAL OR LEGAL SELLING RESTRICTIONS IN RELATION TO ANY OFFERING OF THE BONDS.

FOR THE AVOIDANCE OF DOUBT, THE TARGET MARKET ASSESSMENT DOES NOT CONSTITUTE: (A) AN ASSESSMENT OF SUITABILITY OR APPROPRIATENESS FOR THE PURPOSES OF MIFID II; OR (B) A RECOMMENDATION TO ANY INVESTOR OR GROUP OF INVESTORS TO INVEST IN, OR PURCHASE, OR TAKE ANY OTHER ACTION WHATSOEVER WITH RESPECT TO THE BONDS.

THE BONDS ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA OTHER THAN TO SELECTED NORWEGIAN RETAIL CLIENTS. FOR THESE PURPOSES, A RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF: (I) A RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF MIFID II; OR (II) A CUSTOMER WITHIN THE MEANING OF DIRECTIVE EU 2016/97 , WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT AS DEFINED IN POINT (10) OF ARTICLE 4(1) OF MIFID II. CONSEQUENTLY, NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014, AS AMENDED (THE “PRIIPS REGULATION”) FOR OFFERING OR SELLING THE BONDS OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE EEA HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE BONDS OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA MAY BE UNLAWFUL UNDER THE PRIIPS REGULATION.

IN ADDITION, IN THE UNITED KINGDOM THIS PRESS RELEASE IS BEING DISTRIBUTED ONLY TO, AND IS DIRECTED ONLY AT, QUALIFIED INVESTORS (I) WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS FALLING WITHIN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE “ORDER”) AND QUALIFIED INVESTORS FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE ORDER, AND (II) TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THIS PRESS RELEASE MUST NOT BE ACTED ON OR RELIED ON (I) IN THE UNITED KINGDOM, BY PERSONS WHO ARE NOT RELEVANT PERSONS, AND (II) IN ANY MEMBER STATE OF THE EEA OTHER THAN THE UNITED KINGDOM, BY PERSONS WHO ARE NOT QUALIFIED INVESTORS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS PRESS RELEASE RELATES IS AVAILABLE ONLY TO (A) RELEVANT PERSONS IN THE UNITED KINGDOM AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS IN THE UNITED KINGDOM AND (B) QUALIFIED INVESTORS IN MEMBER STATES OF THE EEA (OTHER THAN THE UNITED KINGDOM).

ANY DECISION TO PURCHASE ANY OF THE BONDS SHOULD ONLY BE MADE ON THE BASIS OF AN INDEPENDENT REVIEW BY A PROSPECTIVE INVESTOR OF THE COMPANY’S PUBLICLY AVAILABLE INFORMATION. NEITHER THE JOINT BOOKRUNNERS NOR ANY OF THEIR RESPECTIVE AFFILIATES ACCEPT ANY LIABILITY ARISING FROM THE USE OF, OR MAKE ANY REPRESENTATION AS TO THE ACCURACY OR COMPLETENESS OF, THIS PRESS RELEASE OR THE COMPANY’S PUBLICLY AVAILABLE INFORMATION. THE INFORMATION CONTAINED IN THIS PRESS RELEASE IS SUBJECT TO CHANGE IN ITS ENTIRETY WITHOUT NOTICE UP TO THE SETTLEMENT DATE.

EACH PROSPECTIVE INVESTOR SHOULD PROCEED ON THE ASSUMPTION THAT IT MUST BEAR THE ECONOMIC RISK OF AN INVESTMENT IN THE BONDS OR THE ORDINARY SHARES TO BE ISSUED OR TRANSFERRED AND DELIVERED UPON CONVERSION OF THE BONDS AND NOTIONALLY UNDERLYING THE BONDS (TOGETHER WITH THE BONDS, THE “SECURITIES”). NONE OF THE COMPANY OR THE JOINT BOOKRUNNERS MAKE ANY REPRESENTATION AS TO (I) THE SUITABILITY OF THE SECURITIES FOR ANY PARTICULAR INVESTOR, (II) THE APPROPRIATE ACCOUNTING TREATMENT AND POTENTIAL TAX CONSEQUENCES OF INVESTING IN THE SECURITIES OR (III) THE FUTURE PERFORMANCE OF THE SECURITIES EITHER IN ABSOLUTE TERMS OR RELATIVE TO COMPETING INVESTMENTS.

THE JOINT BOOKRUNNERS ARE ACTING ON BEHALF OF THE COMPANY AND NO ONE ELSE IN CONNECTION WITH THE BONDS AND WILL NOT BE RESPONSIBLE TO ANY OTHER PERSON FOR PROVIDING THE PROTECTIONS AFFORDED TO CLIENTS OF THE JOINT BOOKRUNNERS OR FOR PROVIDING ADVICE IN RELATION TO THE SECURITIES.

EACH OF THE COMPANY, THE JOINT BOOKRUNNERS AND THEIR RESPECTIVE AFFILIATES EXPRESSLY DISCLAIMS ANY OBLIGATION OR UNDERTAKING TO UPDATE, REVIEW OR REVISE ANY STATEMENT CONTAINED IN THIS PRESS RELEASE WHETHER AS A RESULT OF NEW INFORMATION, FUTURE DEVELOPMENTS OR OTHERWISE.