The process diluted existing shares by 90%. The process was instigated as an attempt to save the business, following a SEK17m commitment was discovered in the supplier’s accounts that it stated it had been previously unaware of. The commitment would have impacted cash flows in the third quarter of this year.
The issuing process was approved by shareholder vote on 1 September.
Alongside the share issue, Scout initiated a major restructuring of personnel – laying off 68 of 131 full time workers, including in the company’s Lviv, Ukraine office, leaving just 63 remaining staff.
Each of the business’ shareholders were offered the opportunity to purchase nine additional shares in the company at SEK0.50 per share
While the business stated that 202.7 million new shares would be issued as part of the process, 245.1 million were eventually subscribed for, meaning that the shares were oversubscribed. This removed the need to trigger underwriting proceedings, which had been drawn up between the business and certain existing major shareholders in the case that the share issue was undersubscribed.
The shareholders – Topline Capital Partners LP, Scobie Ward, Novobis AB, Knutsson Holdings AB and Erlinghundra AB – fully guaranteed the issue from the outset, agreeing to purchase SEK46m worth of shares and committing to buy the remaining SEK55m in the event that other shareholders did not choose to buy.
The new shares cannot be sold without Scout’s permission for nine months.
Of the SEK101m raised, SEK2.5m will be used to cover the cost of the issue itself, while approximately 40% will be used to repay bridge financing obligations – that is short term loans the company took out to buy time for a longer-term solution to be arranged.
The remaining 60% of the proceeds, roughly SEK59.1m, will be added to the company’s cash balance.