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Glaston Corporation Stock Exchange Release 1 April 2019 at 15.30 EET
This stock exchange release may not be published or distributed, in whole or in part, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan, South Africa or the United States or any other country where such publication or distribution would violate applicable laws or rules or would require additional documents to be completed or registered or require any measure to be undertaken, in addition to the requirements under Finnish law. For further information, see “Important notice” below.
Glaston Corporation (“Glaston” or the “Company”) has today completed the acquisition of Swiss-German based globally operating high-end machinery, systems and services provider for the processing of glass, Bystronic Maschinen AG and Bystronic Lenhardt GmbH and their subsidiaries (“Bystronic glass”) for an enterprise value of EUR 68 million. The acquisition supports Glaston’s ambition to further strengthen its position in the glass processing value chain, adding offering in insulation for the architectural market as well as pre-processing for the automotive and display market. The acquisition was announced on 25 January 2019. The acquisition of a small Russian entity of Bystronic glass (generating annual revenues of less than EUR 1 million) has not yet been completed and is subject to the approval of the Russian competition authority which is expected shortly.
“This acquisition is a major step in the execution of our strategy. It will further strengthen our position in the glass processing value chain. As a result of this transformational acquisition, Glaston will have a unique and value adding offering benefitting its customers. We have fully complementary offerings, growth potential from cross-selling new equipment and broadening our services offering, as well as the ability to create further added value to our customers through product development and best practice sharing. I warmly welcome Bystronic glass’ employees to Glaston“, comments Arto Metsänen, President and CEO of Glaston Corporation.
Changes to the Executive Management Group
In connection with the completion of the acquisition, Glaston will make the following changes to the Executive Management Group. As of 1 April 2019, the Executive Management Group will consist of CEO Arto Metsänen, COO and integration lead Sasu Koivumäki, Burghard Schneider who will be responsible for Bystronic glass, and as of 1 May 2019 Juha Liettyä who will be responsible for Glaston technologies. Päivi Lindqvist continues in her position as CFO.
New long-term finance agreement and bridge financing
In connection with the acquisition, Glaston has signed a new long-term financing agreement to be used for the purposes of financing the transaction, refinancing of Glaston’s existing facilities as well as the group’s general working capital and guarantee purposes. The package comprises of borrowings by Glaston under senior secured credit facilities in an aggregate amount of EUR 75 million, comprising of (i) a term loan amounting to EUR 40 million and (ii) a revolving credit facility amounting to EUR 35 million, each with 3-year maturity from the closing of the acquisition. The arrangers of the financing are Nordea Bank Abp (“Nordea”) and OP Corporate Bank plc (“OP”). The financial covenants used in the financing agreement are gearing (net debt/equity) and leverage (net debt/EBITDA). The covenants will be monitored quarterly.
Furthermore, Nordea and OP have provided a bridge financing in an aggregate amount of EUR 32 million with 6-month maturity from the closing of the acquisition (the “Bridge Facility”) for the equity financing to be raised through the rights issue of approximately EUR 32 million (“Rights Issue”). Ahlstrom Capital B.V. has issued a guarantee for the liabilities of the Company under the Bridge Facility on market terms. In addition, Ahlstrom Capital B.V. has agreed to provide necessary financing to refinance the Bridge Facility, in the event the Rights Issue would not be fully subscribed for.
Shareholder value and financial benefits
The combination of Glaston and Bystronic glass is expected to result in significant benefits for stakeholders of the combined company, including creation of significant shareholder value through synergies in services sales and cross-selling new equipment and estimated annual cost synergies of approximately EUR 4 million, mainly in cost of goods sold, sales & marketing and administration, by year 2021. The transaction also provides additional synergy potential relating to product development, procurement, fixed cost leverage and best practice sharing. One-time costs and capital expenditure related to the achievement of synergies are estimated at EUR 7–8 million over the same period, and the majority of one-time costs is estimated to occur during the first year of integration.
The acquisition is expected to be accretive to Glaston’s earnings per share adjusted for transaction related one-time costs in 2019 and accretive to earnings per share from 2020. As a consequence of the transaction, net debt of the combined company will increase but remain moderate as the majority of the transaction will be financed by equity.
Bystronic glass financial information
Bystronic glass will be consolidated as a part of Glaston Corporation as of 1 April 2019 and consequently Glaston will have two reporting segments: Glaston and Bystronic glass. More detailed information on the impact of the acquisition to Glaston’s financial information and consolidated accounts will be announced during the second quarter of 2019. In addition, Glaston Corporation plans to publish unaudited pro forma financial information at the latest in connection with the planned Rights Issue, which is expected to be launched during the second quarter of 2019.
Key figures
| 2018 EUR million | 2018 CHF million | 2017 EUR million | 2017 CHF million | 2016 EUR million | 2016 CHF million | |
| Net sales | 115.4 | 133.3 | 107.3 | 119.3 | 98.1 | 106.9 |
| EBIT | 6.6 | 7.6 | 5.7 | 6.3 | 0.9 | 1.0 |
| EBIT% | 5.9% | 5.3% | 0.9% | |||
| Comparable EBIT* | 6.6 | 7.6 | 5.7 | 6.3 | 4.2 | 4.6 |
| Comparable EBIT% | 5.7% | 5.3% | 4.3% | |||
| Net operating assets** | 19.0 | 21.9 | 20.8 | 23.1 | 17.7 | 19.3 |
Bystronic glass figures include Bystronic glass’ minor Brazil operations, which is not included in the acquisition.
*Bystronic glass’ 2016 EBIT includes CHF 3.6 million (EUR 3.3 million) related to restructuring costs in connection with cost-reduction measures in Europe and global process optimization that are, based on management’s preliminary assessment, considered to be outside ordinary course of business and which are considered as adjusting items in accordance with Glaston’s principles.
**Net operating assets include the operating current and fixed assets (not including cash, cash equivalents and securities, non-operating financial assets and deferred tax assets) less operating liabilities (not including financial liabilities and deferred tax liabilities).
Basis of preparation
The selected financial information presented above is based on Bystronic glass’s financial information consisting of segment information of Bystronic glass included in the financial statements of Conzzeta AG for the financial years 2018, 2017 and 2016, prepared in accordance with Swiss GAAP FER. Bystronic glass's financial information above and all other financial figures in CHF in this release have been converted into EUR using the ECB EUR/CHF average January-December 2018 exchange rate (1.15491), average January-December 2017 exchange rate (1.11153) and January-December 2016 exchange rate (1.09018).
Helsinki 1 April 2019
Glaston Corporation
Board of Directors
For further information, please contact:
Arto Metsänen, President and CEO, tel. +358 10 500 6100
Päivi Lindqvist, CFO, tel. +358 10 500 500
Joséphine Mickwitz, VP, IR, Communications and marketing, tel. +358 10 500 5070
This is Glaston
Glaston is the glass processing industry’s innovative technology leader supplying equipment, services and solutions to the architectural, automotive, solar and appliance industries. The company also supports the development of emerging technologies integrating intelligence to glass.
As of April 2019, Bystronic glass is part of Glaston Group. Together we are committed to providing our clients with both the best know-how and the latest technologies in glass processing, with the purpose of building a better tomorrow through safer, smarter, and more energy efficient glass solutions. We operate globally with manufacturing, services and sales offices in 12 countries. Glaston’s shares (GLA1V) are listed on NASDAQ Helsinki Ltd.
Distribution: NASDAQ Helsinki Ltd, key media, www.glaston.net
IMPORTANT NOTICE
These materials are not an offer for sale of securities in the United States. Securities may not be sold in the United States absent registration with the United States Securities and Exchange Commission or an exemption from registration under the U.S. Securities Act of 1933, as amended. Glaston does not intend to register any part of the rights offering in the United States or to conduct a public offering of securities in the United States.
The distribution of this release may be restricted by law and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restrictions. The information contained herein is not for publication or distribution, directly or indirectly, in or into Australia, Canada, Hong Kong, Japan, South Africa or the United States. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. This release is not directed to, and is not intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction.
In the European Economic Area, with respect to any Member State, other than Finland, that has implemented Directive 2003/71/EC or Directive 2010/73/EU (together with any applicable implementing measures in any Member State, the "Prospectus Directive") this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the Prospectus Directive.
This communication is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (iii) high net worth companies, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). Any securities mentioned herein are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.
This release does not constitute a prospectus as defined in the Prospectus Directive and as such, does not constitute or form part of and should not be construed as, an offer to sell, or the solicitation or invitation of any offer to buy, acquire or subscribe for, any securities or an inducement to enter into investment activity.
No part of this release, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever. The information contained in this release has not been independently verified. No representation, warranty or undertaking, expressed or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. Glaston or any of its respective affiliates, advisors or representatives or any other person, shall have no liability whatsoever (in negligence or otherwise) for any loss however arising from any use of this release or its contents or otherwise arising in connection with this release. Each person must rely on their own examination and analysis of Glaston, its subsidiaries, its securities and the transaction, including the merits and risks involved.
This release includes “forward-looking statements.” These statements may not be based on historical facts, but are statements about future expectations. When used in this release, the words “aims,” “anticipates,” “assumes,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “should,” “will,” “would” and similar expressions as they relate to Glaston, Bystronic glass and the transaction identify certain of these forward-looking statements. Other forward-looking statements can be identified in the context in which the statements are made. Forward-looking statements are set forth in a number of places in this release, including wherever this release include information on the future results, plans and expectations with regard to the combined company’s business, including its strategic plans and plans on growth and profitability, and the general economic conditions. These forward-looking statements are based on present plans, estimates, projections and expectations and are not guarantees of future performance. They are based on certain expectations, which, even though they seem to be reasonable at present, may turn out to be incorrect. Such forward-looking statements are based on assumptions and are subject to various risks and uncertainties. Shareholders should not rely on these forward-looking statements. Numerous factors may cause the actual results of operations or financial condition of the combined company to differ materially from those expressed or implied in the forward-looking statements. Glaston or any of its affiliates, advisors or representatives or any other person undertakes no obligation to review or confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise after the date of this release.
This release includes estimates relating to the synergy benefits expected to arise from the transaction and the combination of the business operations of Glaston and Bystronic glass as well as the related integration costs, which have been prepared by Glaston and are based on a number of assumptions and judgments. Such estimates present the expected future impact of the transaction and the combination of the business operations of Glaston and Bystronic glass on the combined company’s business, financial condition and results of operations. The assumptions relating to the estimated synergy benefits and related integration costs are inherently uncertain and are subject to a wide variety of significant business, economic, and competitive risks and uncertainties that could cause the actual synergy benefits from the transaction and the combination of the business operations of Glaston and Bystronic glass, if any, and related integration costs to differ materially from the estimates in this release.