1 bravida holding ab (publ)

Transcription

BRAVIDA HOLDING AB (PUBL)
Prospectus regarding listing of
SEK 1,300,000,000 Senior Secured Floating Rate Notes due 2019
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IMPORTANT INFORMATION
On June 11, 2013, Bravida Holding AB (publ), a registered Swedish public limited liability company (the “Issuer”), issued (the “Issue”) €225 million aggregate
principal amount of its euro-denominated senior secured floating rate notes due 2019 (the “EUR Senior Secured Floating Rate Notes”) and SEK1,300 million aggregate
principal amount of its Swedish kronor-denominated senior secured floating rate notes due 2019 (the “SEK Senior Secured Floating Rate Notes” and, together with the EUR
Senior Secured Floating Rate Notes, the “Notes”). This prospectus (the “Prospectus”) has been prepared for the listing of the SEK Senior Secured Floating Rate Notes on the
regulated market of NASDAQ OMX Stockholm in Sweden (“NASDAQ OMX Stockholm”). This Prospectus does not contain and does not constitute an offer or a
solicitation to buy or sell the Notes. See the section “Certain Definitions” for the definitions of terms in this Prospectus.
The Prospectus has been approved and registered by the Swedish Financial Supervisory Authority (Finansinspektionen) (the “SFSA”) pursuant to the
provisions of Chapter 2, Sections 25 and 26 of the Swedish Financial Instruments Trading Act (lagen (1991:980) om handel med finansiella instrument) (the “Trading Act”).
Approval and registration by the SFSA does not imply that the SFSA guarantees that the information provided in the Prospectus is correct and complete.
This Prospectus is governed by Swedish law. The courts of Sweden have exclusive jurisdiction to settle any dispute arising out of or in connection with this
Prospectus.
This Prospectus may not be distributed in any jurisdiction where such distribution would require any additional prospectus, registration or measures other than
those required under Swedish law, or otherwise would conflict with regulations in such jurisdiction. Persons into whose possession this Prospectus may come are required to
inform themselves about, and comply with such restrictions. Any failure to comply with such restrictions may result in a violation of applicable securities regulations. The
SEK Senior Secured Floating Rate Notes have not been, and will not be, registered under the United States Securities Act of 1933 (the “Securities Act”) or the securities laws
of any state or other jurisdiction outside Sweden. Subject to certain exemptions, the SEK Senior Secured Floating Rate Notes may not be offered, sold or delivered within the
United States or to, or for the account or benefit of, U.S. persons.
No person has been authorised to provide any information or make any statements other than those contained in this Prospectus. Should such information or
statements nevertheless be furnished, it/they must not be relied upon as having been authorised or approved by the Issuer and the Issuer assumes no responsibility for such
information or statements. Neither the publication of this Prospectus nor the offering, sale or delivery of any SEK Senior Secured Floating Rate Notes implies that the
information in this Prospectus is correct and current as at any date other than the date of this Prospectus or that there have not been any changes in the Issuer’s business since
the date of this Prospectus. If the information in this Prospectus becomes subject to any material change, such material change will be made public in accordance with the
provisions governing the publication of supplements to prospectuses in the Trading Act.
Each potential investor in the SEK Senior Secured Floating Rate Notes must determine the suitability of that investment in light of its own circumstances. In
particular, each potential investor should:
(a) have sufficient knowledge and experience to make a meaningful evaluation of the SEK Senior Secured Floating Rate Notes, the merits and risks of
investing in the SEK Senior Secured Floating Rate Notes and the information contained or incorporated by reference in this Prospectus or any applicable supplement;
(b) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the SEK
Senior Secured Floating Rate Notes and the impact the SEK Senior Secured Floating Rate Notes will have on its overall investment portfolio;
(c) have sufficient financial resources and liquidity to bear all of the risks of an investment in the SEK Senior Secured Floating Rate Notes;
(d) understand thoroughly the terms of the SEK Senior Secured Floating Rate Notes and be familiar with the behaviour of any relevant financial markets; and
(e) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its
investment and its ability to bear the applicable risks.
The investment activities of certain investors are subject to legal investment laws and regulations, or review or regulation by certain authorities. Each potential
investor should consult its legal advisers to determine whether and to what extent:
(a) the SEK Senior Secured Floating Rate Notes are legal investments for it;
(b) the SEK Senior Secured Floating Rate Notes can be used as collateral by it for various types of borrowing; and
(c) other restrictions apply to its purchase or pledge of the SEK Senior Secured Floating Rate Notes.
Financial institutions should consult their legal advisers or the appropriate regulators to determine the appropriate treatment of the SEK Senior Secured
Floating Rate Notes under any applicable risk-based capital or similar rules.
Forward-looking statements
The Prospectus contains certain forward-looking statements that reflect the Issuer’s current views or expectations with respect to future events and financial and
operational performance. The words “intend”, “estimate”, “expect”, “may”, “plan”, “anticipate” or similar expressions regarding indications or forecasts of future
developments or trends, which are not statements based on historical facts, constitute forward-looking information. Although the Issuer believes that these statements are
based on reasonable assumptions and expectations, the Issuer cannot give any assurances that such statements will materialise. Because these forward-looking statements
involve known and unknown risks and uncertainties, the outcome could differ materially from those set out in the forward-looking statement.
Factors that could cause the Issuer’s actual operations, result or performance to differ from the forward-looking statements include, but are not limited to, those
described in “Risk Factors”. The forward-looking statements included in this Prospectus apply only to the date of the Prospectus. The Issuer undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law. Any subsequent
forward-looking information that can be ascribed to the Issuer or persons acting on the Issuer behalf is subject to the reservations in or referred to in this section.
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TABLE OF CONTENTS
BRIEFDESCRIPTIONOFTHEISSUERANDTHEISSUE ........................................................................................................... 4
RISKFACTORS ................................................................................................................................................................................... 21
PRESENTATIONOFINFORMATION ........................................................................................................................................... 48
EXCHANGERATEINFORMATION................................................................................................................................................ 52
USEOFPROCEEDS............................................................................................................................................................................ 53
CAPITALIZATION.............................................................................................................................................................................. 54
UNAUDITEDRECALCULATEDCONDENSEDCONSOLIDATEDFINANCIALINFORMATION..................................... 55
SELECTEDHISTORICALCONSOLIDATEDFINANCIALANDOTHERINFORMATION ................................................. 57
MANAGEMENT’SDISCUSSIONANDANALYSISOFFINANCIALCONDITIONANDRESULTSOFOPERATIONS.. 60
INDUSTRY ......................................................................................................................................................................................... 75
BUSINESS
......................................................................................................................................................................................... 79
BOARDOFDIRECTORS,MANAGEMENTANDAUDITOR..................................................................................................... 96
PRINCIPALSHAREHOLDER........................................................................................................................................................... 99
CERTAINRELATIONSHIPSANDRELATEDPARTYTRANSACTIONS ............................................................................100
DESCRIPTIONOFCERTAINFINANCINGARRANGEMENTS ..............................................................................................101
DESCRIPTIONOFTHESENIORSECUREDNOTES ................................................................................................................118
BOOK-ENTRY,DELIVERYANDFORM......................................................................................................................................184
CERTAINTAXCONSIDERATIONSINSWEDEN......................................................................................................................187
INCORPORATIONBYREFERENCE&DOCUMENTSONDISPLAY ...................................................................................189
LISTINGANDGENERALINFORMATION .................................................................................................................................190
CERTAINDEFINITIONS.................................................................................................................................................................192
ADDRESSES .......................................................................................................................................................................................195
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BRIEF DESCRIPTION OF THE ISSUER AND THE ISSUE
The following description highlights selected information from this Prospectus. The description does not contain all of
the information you should consider before you invest in the SEK Senior Secured Floating Rate Notes and should be read in
conjunction with, and is qualified in its entirety by, the more detailed information included elsewhere in this Prospectus. See
“Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” for
additional factors that you should consider before investing in the SEK Senior Secured Floating Rate Notes.
Overview
We are a leading provider of electrical, heating and plumbing, HVAC and other installation and services solutions in
Scandinavia, in terms of revenues. We operate in the Scandinavian Building Services Market, which has historically demonstrated
stability and resilience, having grown at a rate of approximately 4.5% per annum on average between 2006 and 2011. In 2011, we
were the leading provider of installation and services solutions in Sweden and number two and number three provider of such
services in Norway and Denmark, respectively, in each case in terms of revenue. With over 200 branches across 150 locations, we
are one of the few companies that provide installation and services solutions throughout Scandinavia. In the twelve months ended
March 31, 2013 on a Recalculation Basis, we recorded total net sales of SEK11,213 million (€1,301.0 million) and generated
Adjusted EBITDA of SEK632 million (€73.3 million).
We provide installation and services solutions for new construction as well as for renovation and maintenance projects.
Our installation business and our services business accounted for 48% and 52%, respectively, of our total net sales on a
Recalculation Basis for the twelve months ended March 31, 2013. Our strong presence in both the installation and services
markets enables us to cross-sell our offering to our customers in each of these business areas. Our installation business consists of
the new installation or the redevelopment of, and adaptations to, technical systems in buildings, plants and infrastructure. Our
services business consists of the operation, maintenance, repair, replacement, reconfiguration and monitoring of installations in
buildings, plants and infrastructure.
We operate our installation and services businesses in three principal fields of technology: electrical; heating and
plumbing; and HVAC.
•
Electrical. Our electrical installation and services solutions include integrated, energy-efficient solutions for the
supply of lighting, heating and energy, including the installation and servicing of electrical infrastructure in
buildings and industrial facilities. This field of technology accounted for 53% of our total net sales on a
Recalculation Basis for the twelve months ended March 31, 2013.
•
Heating and plumbing. Our heating and plumbing installation and services solutions include waterborne heating,
cooling, sanitation and sprinkler systems. This field of technology accounted for 27% of our total net sales on a
•
HVAC. Our HVAC installation and services solutions include ventilation systems for air handling, air
conditioning and climate control. This field of technology accounted for 16% of our total net sales on a
We also operate our installation and services businesses in a number of specialist areas, such as fire and safety,
technology consulting and technical services management. Our other specialty installation and service solutions accounted for 4%
of our total net sales on a Recalculation Basis for the twelve months ended March 31, 2013.
Our broad range of installation and services solutions for electrical, heating and plumbing and HVAC enables us to
execute projects for a variety of infrastructure and buildings, creating a “one-stop shop” for our customers. Our ability to provide
fully integrated, comprehensive installation and services solutions ensures that all elements of the solutions that we deliver to our
customers work well together, and we are able to assume responsibility for all stages of our installation and services projects, from
inception to completion. We are one of only a small number of service providers in the market able to compete effectively for
both large, complex projects and smaller projects, owing to our range of expertise, ability to deliver comprehensive solutions and
our long-standing local relationships.
We have built a strong and diversified customer base across Scandinavia of over 50,000 customers, ranging from small
and medium-sized enterprises that generate annual revenues of €50 million or less, to large corporations and public entities that
typically generate much higher revenues. We serve a wide range of end-markets across Scandinavia, including the construction,
real estate, industrial and the public sector end markets. With a workforce of 7,868 employees, consisting of over 6,000 installers
spread across Scandinavia, we have the ability to carry out a variety of projects ranging from small-scale, local projects to largescale, complex projects across multiple sites.
Our customers are located in five main geographic divisions: Stockholm; northern Sweden; southern Sweden; Norway;
and Denmark. These regions also constitute our reporting segments, consisting of: (i) the Stockholm division; (ii) the Sweden–
North division; (iii) the Sweden–South division; (iv) the Norway division; and (v) the Denmark division.
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The table below shows the proportion of our net sales and EBITDA, respectively, generated by each of our divisions
for the twelve months ended March 31, 2013 on a Recalculation Basis.
Division
Total Net Sales%
Sweden (total) ..................................
Sweden–North division .
Sweden–South division .
Stockholm division ........
Norway division...............................
Denmark division.............................
65
18
28
19
23
12
EBITDA%
72
22
31
19
18
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The following map shows the footprint of our local network, representing the locations in which we operated in
Scandinavia as of March 31, 2013.
Competitive Strengths
Leading Market Positions in the Scandinavian Market Benefiting from Our Large Scale
We are a leading provider of electrical, heating and plumbing, HVAC and other installation and service solutions in
Scandinavia in terms of revenue. In 2011, we were the leading provider of installation and service solutions in Sweden and the
number two and number three provider of such services in Norway and Denmark, respectively, in each case in terms of revenue.
We believe that we have achieved our leading market positions primarily due to our size and scale, wide reach and presence at the
local level, broad service offering, long-standing customer relationships, strong brand recognition and reputation for quality. Our
leading market positions provide us with a number of significant competitive advantages including, among others, strong brand
recognition in the markets in which we operate and the ability to attract and retain key personnel and customers.
In addition to our leading market positions, we believe that we also benefit from our size and scale. We are one of a
small number of service providers in the Scandinavian Building Services Market that competes on large, complex projects while
also competing effectively on smaller projects, which we attribute primarily to our deep local relationships. We have an extensive
geographic presence in Scandinavia, with approximately 200 branches in approximately 150 locations, which has helped us
maintain and develop a strong customer base. With a workforce of 7,868 employees, we have the ability to carry out a variety of
projects ranging from small-scale, local projects to large-scale, complex projects. Due to our size and scale, we have been able to
develop a broad offering of installation and services solutions. This has enabled us to execute projects for many different types of
infrastructure and buildings, including hospitals, shopping centers, schools, residential buildings and industrial buildings, making
us a “one-stop shop” for our customers. We believe our size and scale also allow us to command favorable pricing and rebate
terms from our suppliers compared to our smaller competitors, enabling us to consistently achieve higher margins and offer more
attractive pricing terms to our customers.
As a result of our market leading positions, broad service offering, reputation for quality and one-stop shop capabilities,
we believe we have become the supplier of choice to many of our large customers who have large-scale, multi-site, complex
projects. We believe we are attractive to these customers because we are able to assume responsibility for all stages of their
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installation and service projects. Our broad offering also gives us the opportunity to cross-sell our installation and services
businesses and our different fields of technology to our customers.
Favorable Macroeconomic Environment in Scandinavia and Attractive Industry Characteristics
We operate in Sweden, Norway and Denmark, which have historically exhibited greater stability and resilience
compared to other European nations. Between 2010 and 2012, for example, these countries experienced a real average GDP
growth rate exceeding 2.0% per year, compared with the European Union which experienced a real average GDP growth rate of
1.1% per year. Scandinavian economies also benefit from relatively robust public finances and lower levels of sovereign
indebtedness than most developed countries. In 2011, Sweden, Norway and Denmark had an average sovereign debt to GDP ratio
of 4.0% (surplus) to 4.4% (deficit) across the European Union. We have historically generated significant net sales from public
sector projects (22% of our total net sales for the year ended December 31, 2012 were attributable to public sector projects), and
have benefitted from the strong and resilient economic performance of the Scandinavian countries.
In addition to relatively stable macroeconomic conditions in Scandinavia compared to other European nations, we have
also benefitted from certain growth drivers in the construction market. Installation costs as a percentage of total construction costs
have increased in Scandinavia. We believe this is the result of increasingly stringent energy efficiency regulations in Scandinavia
and a growing demand for technically sound and sophisticated building services providers who are able to deliver complex
installation solutions to customers. This increased complexity of installation projects has led to a growing need for service
providers who are able to provide comprehensive installation solutions that can be adapted to the particular needs of the customer.
We also have a distinct advantage in being able to partner with major construction companies in our markets to tender jointly,
often on a cost-plus basis, for larger projects. We believe that our strong historical relationships with key construction companies
in Scandinavia, such as NCC, Skanska and PEAB, have positioned us well to capitalize on this advantage in the future. Various
market segments within the broader construction market in Scandinavia have also demonstrated resilience during the recent
periods of economic uncertainty. For example, the Scandinavian Building Services Market in which we operate grew at a rate of
4.5% per annum on average between 2006 and 2011. We benefit from a strong presence in the renovation and maintenance market
in Scandinavia, which represents approximately 59% of the Scandinavian Construction Market and has remained resilient through
the recent economic downturns and the decline in demand in Scandinavia’s new construction market of approximately 22%
between 2008 and 2012.
Diversified Operations with a Large Share of Recurring Revenues
We believe that our diversified operations, including our broad customer base, various end-markets, wide-ranging
service offering, extensive local networks, focus on maintenance services and small average order sizes, provide us with recurring
and relatively predictable revenues. For the year ended December 31, 2012, our top ten customers represented 20% of our total net
sales, and our largest customer represented 6% of our total net sales. Our customers’ businesses range from construction, the
public sectors and industrial sectors to private real estate, which has helped us to withstand adverse conditions in any single
customer industry. Our customer base spans Sweden, Norway and Denmark and, as a result, our exposure to the effects of
macroeconomic volatility experienced in any single country is reduced. Our broad range of installation and service solutions in the
electrical, heating and plumbing and HVAC fields also protects us against a decline in demand in any one of these fields. We
believe that such diversification reduces volatility in our results, limits our exposure to any single industry, country or field, and
provides us with the flexibility to respond promptly to changing trends and customer requirements.
We also benefit from a portfolio made up of a large number of small contracts. For the year ended December 31, 2012,
for example, 75% of our projects individually generated less than SEK10 million in revenues and 44% of our projects generated
less than SEK1 million in revenues. A significant portion of our revenues are attributable to renovation and maintenance projects,
which have historically exhibited resilient and stable growth, and consequently more-predictable revenues compared to our
revenues from new construction. For the year ended December 31, 2012, 45% of our total net sales from our installation business
was generated from renovation and maintenance projects with the remaining 55% generated by new construction. With a strong
presence in both the installation and services markets, we are able to cross-sell our offering in each of these business areas to
customers. Moreover, our expertise in the electrical, heating and plumbing, and HVAC fields has enabled us to sell multiple addon services to customers who initially approached us for our services in only one field. We prioritize maintenance services
contracts with our customers, the demand for which we have found to be relatively inelastic.
Proven Ability to Sustain Profitable Operations Owing to High Revenue Visibility, a Variable Cost Structure and Effective
Operational Structure
We have historically demonstrated our ability to maintain stability in our EBITDA performance and EBITDA margins,
including during times of macroeconomic volatility. Our ability to sustain profitable operations is underpinned in large part by our
strong order book and high incidence of repeat business, which together provide high revenue visibility. As of December 31,
2012, our order backlog was SEK4,809 million, which represented 82% of our installation net sales for the year ended
December 31, 2012, and as of March 31, 2013, our order backlog was SEK4,914 million, which included net sales likely to occur
beyond 2013 and represented 85% of our installation net sales for the twelve months ended March 31, 2013. We also benefit from
a high rate of repeat business. For example, customers who did business with us in 2011 represented over 90% of our net sales for
the year ended December 31, 2012. In addition, the majority of our net sales from our services business is attributable to recurring
service agreements which typically have terms of between one and three years, offering consistent and predictable revenue
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generation. We also have the ability to systematically pass through raw material price increases, such as price increases in
petroleum, copper, steel and aluminum, to our customers, consequently limiting the impact of raw material price volatility on our
revenue flow.
We usually experience the impact of adverse economic conditions late in the macroeconomic cycle, which allows for
timely adjustments to our cost structure. For example, in 2009, during the most recent economic downturn in Sweden, we
successfully initiated cost rationalization programs early in the cycle with the aim of reducing our administrative expenses in
anticipation of lower levels of business activity. Additionally, we have in the past been able to relocate our personnel from regions
experiencing lower demand for our services to regions experiencing higher demand, which gave us the flexibility to reallocate our
resources based on market conditions and customer requirements. For example, in March 2013, we relocated a team of installers
from our Sweden–South division to Norway, where we were experiencing higher demand for our services but had limited
numbers of skilled personnel available. At the same time, we made a concerted effort to grow our more stable services business,
signing agreements for a number of major service projects while market prices were still relatively favorable and performing those
contracts later in the cycle. We also benefit from low fixed costs, because most of our costs are highly variable.
We believe that our management structure also contributes to the profitability of our operations. Our decentralized
management model promotes enterprise and accountability at all levels of our structure and encourages local branches to operate
as individual profit centers. We believe that the autonomy that we offer our branch managers incentivizes them to capitalize on
their local market knowledge and to deliver strong results. We encourage our local offices to grow sales by collaborating with
offices located nearby to increase the share of projects covering more than one field of technology. In a market that is
predominantly customer-facing, the quality of our branch managers is fundamental to building and maintaining strong and lasting
customer relationships. We believe that, due to our leadership position, brand visibility, national and local reputation and
involvement in industry-leading projects, we have been able to attract and retain some of the leading talent in the industry. We
closely monitor branch performance to identify under-performing branches, enabling us to quickly determine whether to
restructure under-performing branches or to close them.
Strong Track Record of High Cash Flow Generation
We have historically demonstrated consistently strong cash flow generation, which we believe has been driven
primarily by our negative working capital requirements due to required customer prepayments for installation projects and our
historically low capital expenditure requirements. As a services company, our business is characterized by low capital
expenditures, representing less than 0.1% of our total net sales for each of the years ended December 31, 2010, 2011 and 2012.
Our strong cash flow generation has allowed us to pursue our external growth strategy, and we have made more than 28
acquisitions since 2007. Our cash conversion ratio was 67.5%, 97.7% and 80.6% for the years ended December 31, 2010, 2011
and 2012, respectively.
Acquisitions in a Consolidating Market Supplement Organic Growth
We have a strong track record of organic growth, which is complemented by growth through acquisitions. We believe
that our leading market positions give us an advantage in pursuing attractive acquisition opportunities, because providers of
building services who may be contemplating selling their businesses are more likely to contact us rather than, or prior to, our
smaller or lesser-known competitors. The Scandinavian Building Services Market is a highly fragmented market with more than
33,000 operators. We have market share of approximately 6% in Sweden, 3% in Norway and 3% in Denmark. The Scandinavian
Building Services Market is composed of a large number of small companies, although approximately 89% of operators in the
market had fewer than ten full-time employees on their payroll in 2010, which we believe presents attractive consolidation
opportunities to complement our current offering. We believe we are well positioned to take advantage of this increasing
consolidation in a fragmented market to grow our market share and presence. We have a strong track record of growth through
acquisitions, having completed and integrated more than 28 acquisitions since 2007. We operate an organizational structure that
encourages regional and local managers to identify and pursue accretive bolt-on acquisitions that lead to operational synergies,
while maintaining group-level oversight over larger acquisitions. We follow a disciplined acquisition strategy focused on the
retention of key personnel and the expansion of our geographic footprint and our technical capabilities, with a focus on
attractively priced businesses that offer significant opportunities for margin improvements. We work to systematically improve
our target companies’ performance by aligning their operations with our business model, minimizing non-core activities,
increasing shares of recurring business, expanding customer bases and rationalizing low-profit, high-risk projects. We have also
sought to improve the profitability and cash flow of the companies we acquire by realizing synergies, particularly in purchasing
and rationalizing their cost structure and support functions such as human resources, procurement and administration, as well as
improving their working capital management.
Experienced Management Team, Incentivized Employees and Shareholder Support
Our senior management team is led by our chief executive officer Staffan Påhlsson, who has extensive experience in
managing installation and services businesses, integrating acquired companies and rationalizing operational costs. Mr. Påhlsson
has been with us for more than 30 years in various capacities, having begun as an electrical installer in our organization. Our
senior management also includes a strong team of executive officers, including heads of our geographic divisions, who on average
have over 20 years of industry experience. We believe that the incentives of our management are aligned with our long-term
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goals, with over 125 key employees holding an equity stake in our group. We also benefit from the extensive market expertise,
business relationships and ongoing strong support of our shareholder, Bain Capital.
Our Strategy
Continue to Grow Our Leading Market Positions by Focusing on Our Local Operations and Investing in Our Employees
We aim to be the largest or second-largest operator in at least one of our fields of technology in each of the localities in
which we do business. We believe that we are well positioned to grow our leading market positions throughout Scandinavia and
strong local market positions by continuing to provide high-quality services and support to our customers and employees, and by
focusing on our local operations. We intend to continue to operate a large, decentralized organization, with local branch units
operating as individual profit centers. Maintaining a well-established, local presence throughout Scandinavia also provides our
customers with a large number of local access points. We intend to continue to leverage our strong customer relationships and
local market knowledge to meet our customers’ needs promptly and efficiently, in order to establish ourselves as the provider of
choice in the markets in which we operate.
Our employees are key to maintaining and growing our leading-market positions. We also intend to utilize our
reputation, brand awareness and scale to continue to recruit and retain the best talent in the industry and to position us as the
employer of choice. We intend to improve the performance of our managers and technicians by continuing to develop professional
and technical training programs and by assigning our engineers and technicians to a wide range of fields. We also intend to
continue to incentivize our managers and technicians by maintaining a performance-based compensation structure.
Continue to Improve Profitability Through Operational Excellence and Economies of Scale
While we differentiate our offering by providing consistent, high-quality installation and technical services and offering
a wide range of services to our customers, we believe we also are able to drive cost savings by standardizing, simplifying and
sharing systems and best practices across our group. In order to continue to improve our margins and cash flow, we intend to
pursue the following initiatives:
•
Sales initiatives. We intend to focus our sales initiatives on cross-selling opportunities across the electrical,
heating and plumbing, and HVAC fields and on increasing the total number of customers that utilize our
installation and technical services offering.
•
Cost-saving initiatives. Our competitiveness and long-term profitability depend, to a significant degree, on our
ability to control costs and maintain efficient operations. We believe that we are well positioned to leverage our
scale to optimize our cost structure. In particular, we intend to continue to reduce our costs by using our scale to
negotiate volume discounts in supply chain sourcing and procurement, to focus on the disciplined management of
our administrative costs and improve the efficiency of our workforce.
•
Operational initiatives. We intend to focus our operational initiatives on developing local logistical capabilities in
order to reduce onsite downtime, on effectively monitoring project costs and working capital requirements and on
streamlining our operations across our network of branch offices. We recently completed an extensive diagnostic
review of our operations and have identified several opportunities to improve operational excellence in these
areas. We also plan to continue our strategy of rationalizing our operations that were loss-making.
Continue to Leverage Our Comprehensive, Integrated Offering
Many of our large customers are increasingly seeking providers who are able to operate in electrical, heating and
plumbing, and HVAC, due to the technical complexity of the systems and cost pressures. Many customers are also making their
purchasing decisions at the group level rather than on a facility-by-facility basis. This has resulted in a growing number of multisite contracts that require experience with different fields of technology, as well as the scale to enable the efficient management of
complex logistics that are a part of large, multi-site projects. Our multiple locations and broad local network allow us to remain
responsive to customers’ needs, and to optimize our response to demand for increasingly complex installations. We believe that
we are well positioned to benefit from these market trends and that our wide range of expertise across various fields of
technology, our technical and logistical expertise and our dense local network will continue to provide a “one-stop” installation
and service offering.
Continue to Focus on Recurring Revenues
We believe that the diversity of our customers and our contract portfolio across our operating segments result in strong,
recurring revenues, which help us withstand negative business cycles in any single aspect of our business. Under our business
model, we avoid riskier, large one-off contracts, which we view as riskier than relatively small contracts for recurring services.
We intend to increase our share of recurring projects with all of our customers by continuing to focus on small installation projects
and maintenance service contracts. We intend to extend this strategy to the companies we acquire. We also plan to maintain a
balance between our installation and services businesses and to continue to capitalize on our ability to provide add-on
maintenance services following the completion of our installation projects.
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Continue to Leverage “Green Economy” Initiatives
As energy prices rise and concerns over climate change increase, local, national and regional authorities, corporate
customers and the public are increasingly demanding socially responsible energy consumption. We believe that we are well
positioned to take advantage of growth in the “green economy.” The energy consumption of a building is significantly influenced
by the design of its electrical, heating and plumbing, and HVAC systems. As a leading Scandinavian installer and servicer of these
systems, we are able to support customers seeking to optimize energy utilization in both new and existing buildings. We also offer
energy efficiency solutions for several different types of power generation. We aim to increase our revenues attributable to the
“green economy” by further developing innovative installation and service offerings in the area of energy efficiency.
Continue to Grow Our Market Presence Through Bolt-on Acquisitions and Continued Participation in Industry Consolidation
The installation and technical services industry remains highly fragmented, presenting us with attractive acquisition
opportunities. We continually evaluate opportunities to acquire and integrate other installation and technical services providers in
Scandinavia in order to strengthen our competitive position, broaden the range of our offering and increase our presence in our
existing markets. We make acquisition decisions at the branch level or centrally, depending on the size of the target and pursue
acquisition opportunities that meet our strategic goals on terms acceptable to us. We believe we have significant experience in
identifying, executing and integrating acquisitions while remaining focused on our financial policies. We intend to continue to
grow through strategic bolt-on acquisitions by pursuing a two-prong acquisition strategy. First, in our core geographic markets, we
intend to continue to consolidate our leading position through bolt-on acquisitions. In these markets, we intend to focus on targets
that provide access to technical capabilities or geographic coverage that complements our existing capabilities and address any
gaps within our current offering, particularly in Sweden and Norway. We also plan to identify targets based on their potential to
supplement our offering in our strategic geographic locations. Secondly, we intend to grow selectively within complementary
geographic markets, where we believe we will be able to efficiently replicate our core business model. We aim to continue to
realize the operational synergies offered by the companies we acquire and to improve their performance by aligning their
operations with our business.
The Sponsor
Bain Capital is a leading global private investment firm, whose affiliates advise or manage several pools of capital,
including private equity, venture capital, public equity, global macro and leveraged debt assets. Since its inception in 1984, Bain
Capital and its affiliated funds have completed over 370 transactions in a broad set of industries, including such leading
companies as Securitas, Edcon, IMCD, WorldPay, TeamSystem, Brenntag, SigmaKalon, Toys “R” Us, Burger King, Staples,
Burlington Coat Factory, Domino’s Pizza, Michaels and Gymboree. Headquartered in Boston, Bain Capital has offices in New
York, Palo Alto, London, Luxembourg, Munich, Hong Kong, Mumbai, Shanghai and Tokyo.
The Refinancing
The proceeds of the Issue have been used to repay in full the amounts outstanding under the Existing Credit Facilities,
to pay fees and expenses related to the Issue and the Refinancing and will be used for general corporate purposes, which may
include the financing of acquisitions from time to time. If we are unable to identify suitable acquisition opportunities, we may use
all or part of the proceeds from the Issue retained as cash on balance sheet, together with other cash reserves, to fund distributions
to our shareholders. See “Use of Proceeds.”
As part of the Refinancing, we have entered into the Revolving Credit Facility Agreement, which provides up to
SEK550 million of senior secured borrowing capacity and will mature in 2019.
Summary Corporate and Financing Structure
The following diagram presents our simplified corporate and financing structure as adjusted for the Issue and the
application of the net proceeds therefrom, as described under “Use of Proceeds.” Percentages shown in the diagram below refer to
the percentage ownership. For more information, see “Description of Certain Financing Arrangements” and “Description of the
Senior Secured Notes.”
9
Bain Capital(1)
Issuer
Management(1)
Guarantors
98.0%
2.0%
Restricted Group
Parent(2)
Goldcup 8768 AB
€225 million
Senior Secured
Floating Rate Notes
issued through the
Issue(3)(5)
100%
SEK550 million
Revolving Credit
Facility(4)(5)
Issuer
SEK1,300 million
Senior Secured
Floating Rate Notes
issued through the
Issue(3)(5)
100%
Intermediate Holding Companies(6)
100%
Bravida AB(7)(8)
Non-Guarantor Subsidiaries(11)
Bravissima AS(9)
Subsidiary Guarantors(10)
Subsidiary Guarantors(10)
Non-Guarantor Subsidiaries(11)
(1)
Funds advised by Bain Capital and certain members of management beneficially own 100% of the issued share capital of the Issuer indirectly through their interests in
Goldcup 8768 AB (renamed as Bravissima Holding AB). See “Principal Shareholder.”
(2)
Prior to the Issue Date, the Parent contributed the shares that it held in the Issuer to Goldcup 8768 AB by way of an unconditional shareholder contribution. At the same
time, the Parent transferred all equity certificates issued by the Issuer to Goldcup 8768 AB and Goldcup 8768 AB converted these equity certificates into ordinary
shares by way of an unconditional shareholder contribution.
(3)
Through the Issue we issued €225 million in aggregate principal amount of Senior Secured Floating Rate Notes due 2019 and SEK1,300 million in aggregate principal
amount of Senior Secured Floating Rate Notes due 2019.
(4)
In connection with the Issue, we entered into a new senior secured revolving credit facility that provides for borrowing capacity of up to SEK550 million.
(5)
The Notes and the Revolving Credit Facility are each guaranteed on a senior basis by the Guarantors. The Note Guarantees are subject to contractual and legal
limitations and may be released under certain circumstances. See “Description of the Senior Secured Notes—Note Guarantees.” The Notes and the Note Guarantees,
subject to certain exceptions and permitted liens, are secured by first-priority security interests ranking pari passu with the security interests securing super senior
obligations under the Revolving Credit Facility and certain hedging arrangements over the same assets that secure such super senior obligations (the “Collateral”). See
“Description of the Senior Secured Notes—Security.” However, under the terms of the Intercreditor Agreement, in the event of enforcement of the security interests in
the Collateral, holders of the Notes will receive proceeds from the Collateral only after these super senior obligations have been repaid.
(6)
The Intermediate Holding Companies comprise Bravida Installation och Service AB (formerly Bravissima Acquisition AB), Scandinavian Installation Refi AB and
Scandinavian Installation Acquisition AB.
(7)
As of and for the years ended December 31, 2010, 2011 and 2012 and the three months ended March 31, 2012, this Prospectus presents the historical financial
information for Bravida AB, the Issuer’s predecessor, and its consolidated subsidiaries. This Prospectus further presents the historical financial information of the
Issuer and its consolidated subsidiaries, including the historical financial information as of and for the three months ended March 31, 2013.
(8)
Around the Issue Date, Bravida AB, a Guarantor under the Notes, has merged with and into Scandinavian Installation Acquisition AB, whch is a Guarantor under the
Notes. The merger was being undertaken for tax efficiency reasons and to simplify our corporate structure. Following the completion of the merger, Scandinavian
Installation Acquisition AB remains in existence as the surviving entity and as a Guarantor, and the shares of Bravida Sverige AB, held by Bravida AB prior to the
merger, are held by Scandinavian Installation Acquisition AB and continue to be pledged as security for the Notes and Note Guarantees.
(9)
Bravissima AS, a direct subsidiary of one of the Intermediate Holding Companies, was incorporated in June 2012 in connection with the Acquisition Transactions. For
the year ended December 31, 2012, the results of operations of Bravissima AS were not included in the consolidated financial statements of our Predecessor (as defined
herein). Bravissima AS did not conduct material operations for the year ended December 31, 2012 and acquired ownership of its existing subsidiaries in January 2013.
(10) For the twelve months ended March 31, 2013 on a Recalculation Basis, the Guarantors represented 93.0% of our consolidated net sales and 90.7% of our consolidated
EBITDA, and as of March 31, 2013, the Guarantors represented 91.4% of our consolidated total tangible assets.
(11) Our subsidiaries that are not guaranteeing the Notes are immaterial subsidiaries that are 100% owned or majority owned by the Parent. For the twelve months ended
March 31, 2013 on a Recalculation Basis, our subsidiaries not guaranteeing the Notes represented 7.0% of our consolidated net sales and 9.3% of our consolidated
EBITDA, and as of March 31, 2013, such subsidiaries represented 8.6% of our consolidated total tangible assets.
10
THE ISSUE
The following summary of the Issue that was carried out on June 11, 2013 contains basic information about the Notes,
the Note Guarantees and the Collateral. It is not intended to be complete and it is subject to important limitations and exceptions.
For a more complete understanding of the Notes and the Note Guarantees, including certain definitions of terms used in this
summary, see “Description of the Senior Secured Notes.”. This Prospectus has been prepared for the listing of the SEK Senior
Secured Floating Rate Notes on the regulated market of NASDAQ OMX Stockholm. This Prospectus does not contain and does
not constitute an offer or a solicitation to buy or sell the Notes.
Issuer
Bravida Holding AB (publ).
Notes Issued
EUR Senior Secured Floating Rate Notes
€250,000,000 aggregate principal amount of senior secured floating rate notes
due 2019.
SEK Senior Secured Floating Rate Notes
SEK1,300,000,000 aggregate principal amount of senior secured floating rate
notes due 2019.
Issue Date
On June 11, 2013.
Issue Price
100.000% (plus accrued and unpaid interest from the Issue Date).
100.000% (plus accrued and unpaid interest from the Issue Date).
Interest Rates
Interest on the EUR Senior Secured Floating Rate Notes paid at a rate equal to
the sum of (i) three-month EURIBOR plus (ii) 5.000%, as determined by the
Calculation Agent, reset quarterly.
Interest on the SEK Senior Secured Floating Rate Notes paid at a rate equal to
the sum of (i) three-month STIBOR plus (ii) 5.375%, as determined by the
Calculation Agent, reset quarterly.
Maturity Date
June 15, 2019.
June 15, 2019.
Interest Payment Dates
Quarterly in arrears on each September 15, December 15, March 15 and June 15,
commencing September 15, 2013. Interest accrues from the Issue Date.
Quarterly in arrears on each September 15, December 15, March 15 and June 15,
commencing September 15, 2013. Interest accrues from the Issue Date.
Denominations
The EUR Senior Secured Floating Rate Notes have a minimum denomination of
€100,000 and integral multiples of €1,000 in excess thereof.
The SEK Senior Secured Floating Rate Notes have a minimum denomination of
SEK1,000,000 and integral multiples of SEK10,000 in excess thereof.
Ranking of the Notes
The Notes are the general senior obligations of the Issuer and:
• rank pari passu in right of payment with any existing and future
indebtedness of the Issuer that is not subordinated in right of
payment to the Notes, including the obligations of the Issuer under
the Revolving Credit Facility and certain hedging obligations;
11
• rank senior in right of payment to any existing and future
indebtedness of the Issuer that is expressly subordinated in right of
payment to the Notes;
• are guaranteed on a senior secured basis by the Guarantors;
• are effectively subordinated to any existing or future indebtedness
or obligation of the Issuer and its subsidiaries that is secured by
property and assets that do not secure the Notes, to the extent of the
value of the property and assets securing such indebtedness; and
• are structurally subordinated to any existing or future indebtedness
of the subsidiaries of the Issuer that are not Guarantors, including
obligations to trade creditors.
Note Guarantees
The Issuer’s obligations under the Notes and the Indenture are guaranteed
(collectively, the “Note Guarantees”) by Bravida Installation och Service AB,
Scandinavian Installation Acquisition AB, Bravida Sverige AB, Bravida Prenad
AB, Bravissima AS, Bravida AS, Bravida Norge AS and Bravida Danmark A/S
(collectively, the “Guarantors”).
Ranking of the Note Guarantees
The Note Guarantee of each Guarantor is a general senior obligation of such
Guarantor and:
•
ranks pari passu in right of payment with any existing and future
indebtedness of such Guarantor that is not subordinated in right of
payment to such Note Guarantee, including indebtedness under
the Revolving Credit Facility;
•
ranks senior in right of payment to any existing and future
indebtedness of such Guarantor that is expressly subordinated in
right of payment to such Note Guarantee; and
•
is effectively subordinated to any existing or future indebtedness
or obligation of such Guarantor that is secured by property and
assets that do not secure such Note Guarantee, to the extent of the
value of the property and assets securing such indebtedness.
For the twelve months ended March 31, 2013 on a Recalculation Basis, the
Guarantors represented 93.0% of our consolidated net sales and 90.7% of our
consolidated EBITDA, and as of March 31, 2013, the Guarantors represented
91.4% of our consolidated total tangible assets.
The Note Guarantees are also subject to the terms of the Intercreditor
Agreement. The Note Guarantees are subject to release under certain
circumstances. See “Description of the Senior Secured Notes—Note
Guarantees—Note Guarantees Release.”
Collateral
On the Issue Date, the Notes and the Note Guarantees, together with obligations
under the Revolving Credit Facility and certain hedging obligations, are secured
by security interests granted on an equal and ratable first-priority basis over all
of the shares of the Guarantors and certain material subsidiaries of Bravida
Sverige AB, together with security over certain material real estate, downstream
intra-group loans, bank accounts of the Issuer and Bravida Installation och
Service AB not connected to the Group’s cash pooling arrangements, certain
Swedish business mortgage certificates and certain Norwegian floating charges.
Intercreditor Agreement
Pursuant to the Intercreditor Agreement, the liens securing the Notes deem to
rank equally with the liens that secure (i) obligations under the Revolving Credit
Facility, (ii) certain obligations under hedging arrangements and (iii) certain
other future indebtedness permitted to be incurred under the Indenture. Such
liens are, or will be, evidenced by security documents for the benefit of (through
the Security Agent) the holders of the Notes, the lenders under the Revolving
Credit Facility and the holders of certain hedging obligations and future
indebtedness. Under the terms of the Intercreditor Agreement, the holders of the
Notes will receive proceeds from enforcement of the Collateral only after certain
12
super senior priority obligations, including obligations under the Revolving
Credit Facility and certain hedging obligations, have been repaid.
Optional Redemption
The Issuer may redeem all or part of the SEK Senior Secured Floating Rate
Notes on or after June 15, 2015, at the redemption prices described under
“Description of the Senior Secured Notes—Optional Redemption.”
In addition, prior to June 15, 2015 the Issuer may redeem all or part of
the SEK Senior Secured Floating Rate Notes by paying a “make-whole”
premium described under “Description of the Senior Secured Notes—
Optional Redemption.”
Additional Amounts; Tax Redemption
All payments in respect of the Notes or with respect to any Note Guarantee will
be made without withholding or deduction for any taxes or other governmental
charges, except to the extent required by law. If withholding or deduction is
required by law, subject to certain exceptions, the Issuer, or the relevant
Guarantor, as applicable, will pay additional amounts so that the net amount you
receive is no less than that which you would have received in the absence of
such withholding or deduction. See “Description of the Senior Secured Notes—
Withholding Taxes.” The Issuer may redeem the Notes in whole, but not in part,
at any time, upon giving prior notice, if certain changes in tax law impose
certain withholding taxes on amounts payable on the Notes and, as a result, the
Issuer or a Guarantor is required to pay additional amounts with respect to such
withholding taxes. If the Issuer decides to exercise such redemption right, it
must pay you a price equal to the principal amount of the Notes plus interest and
additional amounts, if any, to the date of redemption. See “Description of the
Senior Secured Notes—Redemption for Taxation Reasons.”
Change of Control
Upon certain events defined as constituting a change of control, the Issuer will
be required to offer to repurchase the Notes at 101% of their principal amount
plus accrued interest and additional amounts, if any, to the date of such
repurchase. A change of control will not be deemed to have occurred if a
specified consolidated leverage ratio is not exceeded immediately prior to and
after giving pro forma effect to such event. See “Description of the Senior
Secured Notes—Change of Control.”
Certain Covenants
The Issuer has issued the Notes under the Indenture. The Indenture limits,
among other things, the ability of the Issuer and its restricted subsidiaries to:
• incur or guarantee additional indebtedness and issue certain
preferred stock;
• pay dividends, redeem capital stock and make certain investments;
• make certain other restricted payments;
• create or permit to exist certain liens;
• impose restrictions on the ability of its restricted subsidiaries to pay
dividends or make other payments to us;
• transfer, lease or sell certain assets, including subsidiaries’ stock;
• enter into certain transactions with affiliates;
• merge or consolidate with other entities;
• impair the security interests for the benefit of the holders of the
Notes; and
• guarantee certain other indebtedness without guaranteeing the
Notes.
Each of these covenants is subject to a number of significant exceptions and
qualifications. See “Description of the Senior Secured Notes—Certain
13
Covenants” and the related definitions.
Use of proceeds
We have used the proceeds from the Issue to: (i) repay in full all amounts
outstanding under our Existing Credit Facilities Agreement; and (ii) pay related
fees and expenses; and will use the proceeds for (iii) for general corporate
purposes, which may include the financing of acquisitions from time to time. If
we are unable to identify suitable acquisition opportunities, we may use all or
part of the proceeds from the Issue retained as cash on balance sheet, together
with other cash reserves, to fund distributions to our shareholders. See “Use of
Proceeds.”
Transfer restrictions
The Notes and the Note Guarantees have not been, and will not be, registered
under the U.S. Securities Act or the securities laws of any other jurisdiction. The
Notes are subject to restrictions on transfer and may only be offered or sold in
transactions that are exempt from the registration requirements of the U.S.
Securities Act. See “Important information.”
Absence of a public market for the Notes
The Notes are new securities for which there is currently no market. Although
the Initial Purchasers have informed us that they intend to make a market in the
Notes, they are not obligated to do so and they may discontinue market-making
at any time without notice. Accordingly, we cannot assure you that a liquid
market for the Notes will develop or be maintained.
Listing
Following the Issue Date, we intend to make an application to also list the SEK
Senior Secured Floating Rate Notes on NASDAQ OMX Stockholm. Application
has also been made to list the Notes on the Official List of the Irish Stock
Exchange and for the Notes to be admitted to trading on the Global Exchange
Market thereof and trading has commenced on October 22, 2013. Accordingly,
the SEK Senior Secured Floating Rate Notes will be listed both on the Irish
Stock Exchange and on NASDAQ OMX Stockholm, subject to acceptance of
the application to list the SEK Senior Secured Floating Rate Notes on NASDAQ
OMX Stockholm for which there can be no assurance.
Trustee
Deutsche Trustee Company Limited.
Registrar and Transfer Agent
Deutsche Bank Luxembourg S.A.
Principal Paying Agent and Calculation Agent Deutsche Bank AG, London Branch.
Security Agent
Deutsche Bank AG, London Branch.
Governing law of the Indenture, Notes and
Note Guarantees
The State of New York.
Governing law of the Revolving Credit
Facility Agreement and the Intercreditor
Agreement
England and Wales.
Governing law of the Security Documents
Sweden, Norway and Denmark, as applicable.
Risk Factors
Investing in the Notes involves substantial risks and prospective investors should
refer to “Risk Factors” for a discussion of certain factors that they should
carefully consider before deciding to invest in the Notes.
14
SUMMARY CONSOLIDATED HISTORICAL AND RECALCULATED FINANCIAL AND OTHER INFORMATION
The following tables present certain summary consolidated historical and recalculated financial information and other
financial information as of and for the dates indicated. The historical financial information of the Predecessor as of and for the
years ended December 31, 2010, 2011 and 2012 presented below has been derived or extracted from the Predecessor’s audited
consolidated financial statements as of and for the years ended December 31, 2010, 2011 and 2012, which are incorporated
through reference into this Prospectus.
The historical unaudited condensed consolidated financial information as of and for the three months ended March 31,
2012 has been derived or extracted from the Predecessor’s unaudited interim condensed consolidated financial statements as of
and for the three months ended March 31, 2012, which are incorporated through reference into this Prospectus. The historical
unaudited condensed consolidated financial information as of and for the three months ended March 31, 2013 has been derived or
extracted from the Issuer’s unaudited interim condensed consolidated financial statements as of and for the three months ended
March 31, 2013, which are incorporated through reference into this Prospectus. Results of operations for the three months ended
March 31, 2012 and 2013 are not necessarily indicative of results for a full fiscal year, or for any other periods.
We have also presented unaudited recalculated condensed consolidated financial information and other financial
information for the three months ended March 31, 2012 and for the year ended December 31, 2012, which have been prepared on
a Recalculation Basis. The unaudited recalculated statements of income for the year ended December 31, 2012 give effect to the
Acquisition Transactions as if they had occurred on January 1, 2012.
The recalculation adjustments are based upon available information and certain assumptions that we believe are
reasonable. The summary unaudited recalculated consolidated financial and other data are for information purposes only and do
not purport to represent what our results of operations or other financial information actually would have been if the Acquisition
Transactions had occurred at any date, and such data do not purport to project the results of operations for any future period. In
addition, due to the accounting impact of the Acquisition Transactions and the acquisition accounting-related adjustments that
affect the results and other items of the Successor such as the increased interest expense resulting from the Acquisition
Transactions, the recalculation results are not directly comparable to our Predecessor’s results presented in this Prospectus.
We also present below as adjusted data which give effect to the issuance of the Notes and the application of the net
proceeds therefrom, as set forth under the heading “Use of Proceeds.” Such recalculated information as adjusted data has been
provided for illustrative purposes only and do not purport to represent what our actual results would have been if the Issue had
occurred on April 1, 2012, in the case of income statement data.
The unaudited recalculated financial information for the twelve months ended March 31, 2013 has been derived on a
Recalculation Basis and by adding the unaudited financial information for three months ended March 31, 2013 to the unaudited
recalculated financial information for the year ended December 31, 2012 and subtracting our unaudited recalculated financial
information for the three months ended March 31, 2012. This information has been prepared for illustrative purposes only and is
not prepared in the ordinary course of our financial reporting. Such compilation has not been audited or reviewed.
We also present certain key EBITDA Metrics and operating metrics, in addition to our IFRS measures, used by our
management to evaluate, monitor and manage our business. None of these terms are measures of financial performance under
IFRS, and so they should not be considered to be alternatives to our IFRS results. These terms may not be comparable to similar
terms used by competitors or other companies. See “Presentation of Information—Non-IFRS Financial and Operating
Information.”
Prospective investors below should read the summary data presented below in conjunction with “Use of Proceeds,”
“Capitalization,” “Unaudited Recalculated Condensed Consolidated Financial Information,” “Selected Historical Consolidated
Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and our consolidated financial statements and the related notes which are incorporated through reference into this Prospectus.
Consolidated Income Statement
Predecessor
Successor
Historical
For the year ended
December 31,
2010
2011
2012
(audited)
Recalculated
For the three
months ended
March 31,
For the year
ended
December 31,
For the
three
months
ended
March 31,
2012
2012
2012
(unaudited)
10,768
5,489
5,279
(8,573
11,400
5,514
5,886
(9,165
Recalculated
For the
three
months
ended
March 31,
For the twelve months
ended
March 31,
2013
2013
(unaudited)
(SEK millions)
Net sales......................
10,345
Services .............
4,952
Installation ........
5,393
Costs of
(8,205
Historical
(SEK
millions)
(SEK millions)
2,916
1,444
1,472
(2,358
11,400
5,514
5,886
(9,164
15
2,916
1,444
1,472
(2,358
2,729
1,337
1,392
(2,181
11,213
5,407
5,806
(8,988
(euro
millions)(1)
1,301
627
674
(1,043
Predecessor
Successor
Historical
Recalculated
For the year ended
December 31,
2010
2011
2012
(audited)
For the three
months ended
March 31,
For the year
ended
December 31,
For the
three
months
ended
March 31,
2012
2012
2012
(unaudited)
)
Recalculated
For the
three
months
ended
March 31,
For the twelve months
ended
March 31,
2013
2013
(unaudited)
(SEK millions)
production ..............
Historical
(SEK
millions)
(SEK millions)
(euro
millions)(1)
)
)
)
)
)
)
)
)
2,195
2,236
558
2,236
558
548
2,225
258
—
—
—
—
—
—
—
—
(1,531
)
(410
)
(400
)
—
(1,683
)
(33
)
(458
)
—
(1,633
)
(33
)
—
—
(1,625
)
(33
)
(189
)
(4
)
Operating
profit/(loss)............ 621
Financial income......... 12
Financial
(60
expenses ................. )
663
10
(57
)
570
9
(40
)
148
3
(7
)
520
6
(546
)
100
3
(344
)
148
1
(65
)
567
4
(267
)
66
—
(31
)
Net financial
(48
income/(expe
nse)......................... )
(48
)
(31
)
(4
)
(540
)
(341
)
(64
)
(263
)
(31
)
Earnings before
tax .......................... 573
Tax on profit for
(161
the period ............... )
616
(106
)
539
(145
)
143
(38
)
(20
)
(27
)
(241
)
48
84
(19
)
304
(93
)
35
(11
)
Profit/(loss) for
the period .............. 412
510
394
105
(47
)
(193
)
65
211
24
Gross
2,139
profit/(loss)............
Other operating
income.................... —
Administrative
(1,519
and selling
expenses ................. )
Other operating
expenses ................. —
Consolidated Balance Sheet
Predecessor
Successor
Historical
Historical
As of
March 31,
As of December 31,
2010
2011
2012
(audited)
(SEK millions)
As of
March 31,
2012
2013
(unaudited)
(unaudited)
(SEK millions)
(euro millions)(1)
Intangible assets ............
Other non-current assets
Total non-current assets
Trade receivables ..........
Receivables from the parent company and the
group companies ......
Accrued but not invoiced income
Other current assets.......
Cash and cash equivalents
Total current assets .......
2,134
444
2,578
1,652
2,203
410
2,613
1,845
2,276
358
2,634
1,901
2,209
404
2,613
1,689
6,728
283
7,011
1,684
804
34
838
201
—
544
270
35
2,501
418
685
282
76
3,306
1,826
763
271
50
4,811
446
784
272
77
3,267
—
865
295
255
3,099
—
103
35
30
370
Total assets...................
5,079
5,919
7,445
5,880
10,110
1,208
Equity (including non- controlling interests)
Non-current provisions .
Non-current liabilities ...
Current interest-bearing liabilities
Trade payables ..............
Invoiced but not accrued income
1,355
210
—
469
852
797
2,121
221
—
202
1,111
982
1,654
207
—
—
985
1,085
2,225
221
—
—
1,001
1,005
3,432
295
2,788
—
1,051
1,049
410
35
333
—
126
125
16
Predecessor
Successor
Historical
Historical
As of
March 31,
As of December 31,
2010
2011
2012
(audited)
(SEK millions)
As of
March 31,
2012
2013
(unaudited)
(unaudited)
(SEK millions)
(euro millions)(1)
Liabilities to parent company and group companies
.................................
Other current liabilities .
Total current liabilities..
29
1,368
3,515
—
1,281
3,576
2,105
1,409
5,584
—
1,428
3,434
—
1,495
3,595
—
179
430
Total equity and liabilities
5,079
5,919
7,445
5,880
10,110
1,208
Consolidated Cash Flow Statement
Predecessor
Successor
Historical
Historical
For the year ended
December 31,
2010
2011
For the three
months ended
March 31,
For the three
months ended
March 31,
2012
2013
(unaudited)
(unaudited)
(SEK millions)
(euro millions)(1)
2012
(audited)
(SEK millions)
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
398
559
424
19
(66) (37)
(1,244) (453) (408)
240
(7)
(229)
254
(39)
(50)
30
(5)
(6)
19
Cash flow for the period ...
(827)
Cash and cash equivalents at beginning of period
.......................................
Foreign exchange difference in cash and cash
equivalents .....................
41
(21)
4
165
11
905
35
76
76
97
(42)
—
(5)
(2)
(6)
(1)
30
Cash and cash equivalents at end of period
.......................................
35
76
50
77
255
Other Financial Data
Predecessor
Successor
Historical
As of and for the
year ended
December 31,
2010
2011
2012
(audited)
Recalculated
As of and for
the three
months ended
March 31,
As of and
for the year
ended
December 31,
As of and
for the
three
months
ended
March 31,
2012
2012
2012
(unaudited)
Recalculated
As of and
for the
three
months
ended
March 31,
As of and for the twelve
months ended
March 31,
2013
2013
(unaudited)
(SEK millions, except ratios and
percentages)
Other profit and
cash flow
data (nonIFRS)
EBITDA(2) ...........................
635
Adjusted
EBITDA(3).......................
EBITDA
6.1
margin(4) ..........................
%
Adjusted
EBITDA
margin(5) ..........................
Historical
(SEK
millions,
except
ratios and
percentages)
percentages)
(euro
millions)(1)
677
582
150
531
103
151
580
67
151
5.1
%
628
4.7
%
150
3.5
%
155
5.5
%
632
5.2
%
73
6.3
%
628
5.1
%
5.5
%
5.2
%
5.5
%
5.1
%
5.7
%
5.6
%
17
Predecessor
Successor
Historical
Recalculated
As of and for the
year ended
December 31,
2010
2011
Historical
As of and for
the three
months ended
March 31,
As of and
for the year
ended
December 31,
As of and
for the
three
months
ended
March 31,
2012
2012
2012
2012
(audited)
(unaudited)
Recalculated
As of and
for the
three
months
ended
March 31,
As of and for the twelve
months ended
March 31,
2013
2013
(unaudited)
percentages)
(SEK
millions,
except
ratios and
percentages)
percentages)
Gross profit
20.7
20.4
19.6
19.1
19.6
19.1
margin(6) ..........................
%
%
%
%
%
%
Capital
(4)
(7)
(11)
(3)
expenditures(7) .................
Maintenance
capital
(4)
(7)
(11)
(3)
expenditures(7) .................
Net debt(8) ............................
Working capital(9) (387)
(471)
(407)
(604)
Free cash flow(10)..................
428
661
470
244
Cash
67.5
97.7
80.6
162.5
conversion(11) ...................
%
%
%
%
Other debt and
credit data
Recalculated net total debt(12) ....................................................................................................
Recalculated net senior secured debt(13) ....................................................................................
Recalculated interest expense(14) ...............................................................................................
Ratio of recalculated net total debt to Adjusted EBITDA(12) ....................................................
Ratio of recalculated net senior secured debt to Adjusted EBITDA(13) ....................................
Ratio of Adjusted EBITDA to recalculated interest expense(14) ...............................................
Other Non-IFRS
data
Total number of
199
200
200
206
branches(15) ......................
Total number of
7,834 7,955 8,139
7,952
employees(16) ...................
Net sales per
1.3
1.4
1.4
0.4
employee(17) .....................
20.1
%
(euro
millions)(1)
19.8
%
(4)
(4)
2,534
(633)
334
221.5
%
2,628
2,628
195
4.2x
4.2x
3.2x
314
314
23
206
7,868
0.3
(1)
The consolidated income statement data and other profit and cash flow data for the twelve months ended March 31, 2013 have been translated for convenience only at
the rate of SEK8.6185 = €1.00, which represents the average exchange rate for the twelve months ended March 31, 2013 as published by Bloomberg (London
Composite Rate). The consolidated balance sheet data net debt, recalculated net debt and recalculated net senior secured debt as of March 31, 2013 has been translated
for convenience only at the rate of SEK8.3679 = €1.00, which represents the rate of exchange as of March 31, 2013 as published by Bloomberg (London Composite
Rate). The consolidated cash flow data for the three months ended March 31, 2013 has been translated for convenience only at the rate of SEK8.4969 = €1.00, which
represents the average exchange rate for the three months ended March 31, 2013 as published by Bloomberg (London Composite Rate).
(2)
EBITDA represents profit/(loss) before net financial income/expense, tax on profit for the period, depreciation of tangible assets and amortization of intangible assets.
Accordingly, EBITDA can be extracted from our consolidated financial statements by taking profit/(loss) and adding back net financial income/expense, tax on profit
for the period, depreciation of tangible assets and amortization of intangible assets.
The following table reconciles EBITDA to profit/(loss):
Predecessor
Successor
Historical
For the year
ended
December 31,
2010
2011
2012
(audited)
Recalculated
For the
three months
ended
March 31,
For the year
ended
December 31,
For the
three months
ended
March 31,
2012
2012
2012
(unaudited)
Recalculated
For the
three months
ended
March 31,
For the
twelve months
ended
March 31,
2013
2013
(unaudited)
(SEK millions)
Profit/(loss) ...........................412
Tax on profit for the
period ...............................161
Net financial
income/(expense) ............. 48
Historical
(SEK millions)
(SEK
millions)
(euro
millions)(1)
510
394
105
(47)
(193)
65
211
24
106
145
38
27
(48)
19
93
11
48
31
4
540
341
64
263
31
18
Predecessor
Successor
Historical
For the year
ended
December 31,
2010
2011
Recalculated
For the
three months
ended
March 31,
For the year
ended
December 31,
For the
three months
ended
March 31,
2012
2012
2012
2012
(audited)
(unaudited)
EBITDA ...............................635
Recalculated
For the
three months
ended
March 31,
For the
twelve months
ended
March 31,
2013
2013
(unaudited)
(SEK millions)
Depreciation of tangible
assets ................................ 14
Amortization of
intangible assets ............... 1
Historical
(SEK millions)
(SEK
millions)
(euro
millions)(1)
13
11
3
11
3
3
12
1
—
1
—
1
—
—
1
—
677
582
150
531
103
151
580
67
We are not presenting EBITDA and other EBITDA-based measures as measures of our results of operations. EBITDA and other EBITDA-based measures have
important limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations. EBITDA, Adjusted
EBITDA and related leverage and coverage ratios are not measurements of financial performance under IFRS and should not be considered as alternatives to other
indicators of our operating performance, cash flows or any other measure of performance derived in accordance with IFRS. Our management believes this information,
along with comparable IFRS measures, is useful to investors because it provides a basis for measuring the operating performance in the periods presented. Our
EBITDA and our other EBITDA-based measures may not be comparable to similarly titled measures used by other companies.
(3)
Adjusted EBITDA represents EBITDA as adjusted for certain non-recurring charges and costs identified in the table below.
The following table reconciles Adjusted EBITDA to EBITDA:
Predecessor
Successor
Historical
For the
year ended
December 31,
2010 2011
Recalculated
For the three
months ended
March 31,
For the year
ended
December 31,
For the
three
months
ended
March 31,
2012
2012
2012
2012
(audited)
(unaudited)
Historical
Recalculated
For the
three
months
ended
March 31,
For the
twelve
months
ended March 31,
2013
2013
2013
(unaudited)
(SEK millions)
(euro
millions)(1)
(SEK millions)
EBITDA...............................
Loss on sale of subsidiary(A) .
Business review costs(B) ........
Relocation costs(C) ................
Additional audit fees(D) .........
Severance payment for
CEO(E) ..............................
Acquisition Transactions
costs(F) ..............................
582
32
1
2
—
150
—
—
1
—
531
32
14
2
2
103
—
—
—
1
151
—
4
—
—
580
32
18
2
—
9
—
9
9
—
—
2
—
37
37
—
—
—
Adjusted EBITDA..............
628
151
628
150
155
632
73
(A)
(B)
(C)
(D)
(E)
(F)
67
4
2
—
Loss recorded in our income statement in connection with the sale of Aug Larsen AS, one of our Norwegian subsidiaries. We completed the sale of Aug Larsen
AS in November 2012.
Consists of consulting costs associated with the review of our business initiated following the Acquisition Transactions.
Consists of costs associated with the relocation of our offices in Oslo and Gothenburg, which occurred in 2012.
Consists of additional audit fees in connection with the Acquisition Transactions.
Consists of severance payments in connection with the termination of our previous CEO.
Consists primarily of bonuses paid to certain members of our senior management in connection with the Acquisition Transactions.
(4)
Represents EBITDA divided by net sales.
(5)
Represents Adjusted EBITDA divided by net sales.
(6)
Represents gross profit divided by net sales.
(7)
For a detailed description of our capital expenditures, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Capital
Expenditures.”
(8)
Net debt represents total long-term interest bearing debt minus cash and cash equivalents.
(9)
Working capital represents current assets minus current liabilities.
(10) Free cash flow represents earnings before tax adjusted for non-cash items, add back of interest expense and cash flow from change in working capital, less acquisition
of intangible assets, less maintenance capital expenditures, plus sale of maintenance capital expenditures.
(11) Cash conversion represents free cash flow divided by EBITDA.
(12) Represents total long-term interest bearing debt less cash and cash equivalents after giving effect to the Issue.
(13) Represents total senior secured borrowings less available cash and cash equivalents after giving effect to the Issue.
(14) Represents our interest expense for the last twelve months ended March 31, 2013 after giving recalculation effect to the Refinancing as if it had occurred on April 1,
2012 and further assuming that (i) the Revolving Credit Facility remained undrawn during such period, (ii) a constant three-month EURIBOR rate of 0.2000% (the
19
Bloomberg closing rate as of June 3, 2013), (iii) a constant three-month STIBOR rate of 1.2120% (the Bloomberg closing rate as of June 3, 2013), (iv) no costs of
hedging, and (v) a SEK to euro convenience translation rate of SEK8.6185 = €1.00, which represents the average exchange rate for the twelve months ended March 31,
2013 as published by Bloomberg (London Composite Rate). The recalculated interest expense includes the commitment fee payable in respect of the Revolving Credit
Facility. Recalculated interest expense has been presented for illustrative purposes only and does not purport to reflect what our interest expense would have actually
been had the Refinancing occurred on the date assumed, nor does it purport to project our interest expense for any future period or our financial condition at any future
date.
(15) Total number of branches represents our estimate of the total number of our branches as of the date mentioned. The total number of our branches changes from time to
time and it is not possible for us to accurately present the exact number of our branches at any given time.
(16) Total number of employees represents average number of employees.
(17) Represents net sales divided by total number of employees.
20
RISK FACTORS
You should carefully consider the risks described below as well as the other information contained in this Prospectus
before making an investment decision. Any of the following risks may have a material adverse effect on our business, financial
condition or results of operations, and as a result you may lose all or part of your original investment. The risks described below
are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be
immaterial may also have a material adverse effect on our business, financial condition or results of operations.
Risks Related to Our Business and Industry
Our business may be adversely affected by difficult economic conditions and other factors beyond our control.
Our results of operations are materially affected by conditions in the Scandinavian, European and global economies.
The demand for our services tends to be cyclical and can be significantly lower in an economic environment characterized by
lower household income and corporate earnings and lower levels of government and business spending. Demand for our services
depends in particular on spending in residential and commercial construction in the Scandinavian region as well as renovation and
maintenance in industrial and infrastructure markets in that region, and a prolonged period of slow growth or economic
contraction may reduce demand for our services. The level of activity in these end-markets depends on a variety of factors that we
cannot control, including:
•
local, regional and general economic conditions, slowdowns and recessions;
•
the policies of the countries in which we operate, including the policies of the central banks of Sweden, Norway
and Denmark;
•
the policies of transnational institutions, such as the European Central Bank and other institutions of the
European Union, which influence the performance of national economies in countries in which we operate; and
•
the level of demand in construction and in manufacturing and process industries, demographic trends, capital
spending and consumer confidence.
Unfavorable developments with respect to any or all of these or other factors can have a significant impact on the
demand for the services that we offer, both in terms of decreased volumes and price levels.
One of our main market drivers is activity in the new construction market, which is sensitive to general business and
economic conditions both regionally and worldwide, including the availability of credit, interest rates, inflation, fluctuations in
capital, the credit and mortgage markets, changes in tax laws affecting the real estate industry, unemployment levels, and business
and consumer confidence. The demand for some of our services is cyclical to the construction market.
We also provide our services to the renovation and maintenance and related services market, which has historically
been more resilient to macroeconomic changes and tends to be countercyclical. However, high mortgage delinquency and
foreclosure rates and limitations in the availability of home improvement financing may limit consumers’ spending during
economic downturns, particularly on discretionary items, and affect their confidence level, leading to continued reduced spending
on home improvement projects. The impact of these economic factors specific to the renovation and maintenance market may be
further exacerbated by unemployment levels.
There was a significant decline in global economic growth beginning in the second half of 2008 and continuing through
2009. In addition, volatility and disruption in the capital markets during that period reached unprecedented levels, with stock
markets falling dramatically and credit becoming very expensive or unavailable to many companies. As a result of these
developments, many lenders and institutional investors reduced, and in some cases ceased, to provide funding to borrowers. When
the liquidity of our customers declines, their ability to purchase our services also declines.
Although industry conditions began to improve, with Sweden’s GDP in particular growing to 6.6% in 2010 from a
negative growth rate of 5.0% in 2009, weakening economic conditions in the Scandinavian countries beginning in the second half
of 2012 had a negative impact on our revenues compared to the prior period. Adverse developments in global financial markets
and general business and economic conditions, including economic recessions, downturns or negative developments or general
weakness in the economies of the Scandinavian countries could have a material adverse effect on our business, financial
condition, cash flows and results of operations.
A key element of our growth strategy involves acquisitions, and we may experience difficulties identifying acquisition targets,
integrating acquired businesses and achieving anticipated synergies.
Growth through acquisitions is one of our key growth strategies. We regularly identify and evaluate acquisition
opportunities. Although we have not currently entered into binding agreements with respect to any potential acquisitions, we may
in the future, including prior to the completion of the Offering, enter into binding agreements to acquire additional businesses that
we expect to complement or augment our existing operations. There can be no assurance, however, that suitable acquisition
targets will be identified in the future, or that we will be able to finance such acquisitions on favorable terms. Furthermore,
21
acquisitions we have already made or future acquisitions may not be integrated successfully into our operations and may not
achieve desired financial objectives. Any acquisitions of businesses entail numerous operational and financial risks, including:
•
higher than expected acquisition and integration costs;
•
the possibility that we could pay more than the acquired company or its assets are worth;
•
the possibility that we may not identify appropriate acquisition targets, complete future acquisitions on
satisfactory terms or realize expected synergies or cost savings within expected timelines;
•
unforeseen expenses, delays or conditions may be imposed upon the acquisition, including due to required
regulatory approvals or consents;
•
exposure to unknown liabilities;
•
difficulty and cost in combining the operations and personnel of acquired businesses with our existing operations
and personnel;
•
diversion of management’s attention from our day-to-day business;
•
impairment of relationships with key suppliers or customers of acquired businesses due to changes in
management and ownership and the restructuring of logistics and information technology systems;
•
the inability to retain key employees of acquired businesses;
•
difficulty avoiding labor disruptions in connection with any integration, particularly in connection with any
headcount reduction; and
•
the incurrence of substantial debt.
The occurrence of any such event could have a material adverse effect on our results of operations and financial
condition.
In addition, there can be no assurance that, following integration into our group, an acquired operation will be able to
maintain its customer base consistent with expectations or generate the expected margins or cash flow. Although we analyze each
acquisition target, our assessments are subject to a number of assumptions concerning profitability, growth, interest rates and
company valuations. We may have difficulties in implementing our business model within an acquired company due to various
factors, including conflicting corporate culture. There can be no assurance that our assessments of and assumptions regarding
acquisition targets will prove to be correct and actual developments may differ significantly from our expectations.
In agreeing to acquire entities, we generally make certain assumptions and determinations on, among other things,
future net sales and earnings, based on our investigation of the respective businesses and other information then available. We
cannot assure you that our assumptions and determinations will prove to be correct or that liabilities, contingencies or other risks
previously not known to us will not arise. In addition, we may be limited in our ability to acquire companies depending on the
concentration of ownership in specific markets and our relative market position. Any such unanticipated risks, liabilities,
contingencies, losses or issues, if realized, could have a material adverse effect on our business, results of operations and financial
condition.
Furthermore, acquisitions of companies expose us to the risk of unforeseen obligations with respect to employees,
customers, suppliers and subcontractors of acquired businesses, public authorities and other parties. We cannot ensure that there
will not be unexpected risks or obligations. Such obligations, were they to materialize, could have a material adverse effect on our
business, results of operations or financial condition.
We may not be able to successfully manage future growth.
Our ability to manage our growth and integrate operations, technologies, services and personnel depends on our
administrative, financial and operational controls and our ability to create the infrastructure necessary to exploit market
opportunities for our services, as well as our financial resources. In order to compete effectively and to grow our business
profitably, we will need, on a timely basis, to maintain and improve our financial and management controls, reporting systems and
procedures, implement new systems as necessary, attract and retain adequate management personnel, and hire, retain and train a
highly qualified workforce. Furthermore, we expect that as we continue to introduce new services and enter new markets, we will
be required to manage an increasing number of relationships with various customers and other third parties. This would typically
require us to attract, train and retain increasing numbers of highly skilled technical personnel and branch managers. The failure or
delay of our management in responding to these challenges could have a material adverse effect on our business, financial
condition and result of operations.
22
We operate in highly competitive markets.
The market for installation and services is highly competitive. There are currently a large number of small, local
companies and a smaller number of relatively large regional, national and multinational companies operating in our markets. We
also expect that new competitors may develop over time as smaller enterprises become more established and reliable and refine
their service capabilities.
Competition varies depending on business area, customer classification and geographic area. The principal competitive
factors in our business include the following:
•
the availability and cost of materials and supplies;
•
technical product knowledge and expertise as to application and usage;
•
consulting and other service capabilities;
•
the ability to build and maintain customer relationships;
•
the effective use of technology to identify net sales and operational opportunities;
•
same-day delivery capabilities for certain services; and
•
the pricing of services and the provision of credit.
Some of our current or future competitors may have greater resources than we do, and may use this advantage to further
increase their market share. Competitors may also engage in aggressive pricing tactics, which may lead to us having to reduce our
prices in order to compete with them. We may not be able to maintain our competitive position in the different markets in which
we operate. If we were to face such competition, our net sales, profitability and market shares may decline, which would have a
material adverse effect on our business, results of operations and financial condition.
In addition, the nature of the markets in which we compete may attract new entrants, particularly from countries with
low-cost employment. Although we consider this risk to be relatively limited, competition with service providers that benefit from
lower cost structures may challenge our competitive position. Furthermore, in recent years, new construction methods have led to
the introduction of a range of new low-cost installation solutions. For example, as low-cost prefabricated housing construction
becomes more common, the demand for prefabricated building and housing components with pre-built low-cost installations may
increase, which may have an adverse impact on the demand for our services. If we are unable to respond to these shifts in demand,
our sales may decline, which could have an adverse effect on our financial condition and results of operations.
We also may expend significant time and resources in order to prepare a bid or participate in a bidding process, at the
end of which we may not be retained. Even if we are awarded a contract, it may not yield the expected results. The timetable
and/or cost structure of our projects can differ from bid estimates because both depend on a wide range of parameters, some of
which are difficult to forecast at the beginning of a project, such as the accessibility of the work site, the availability of qualified
personnel, adverse weather conditions and increases in the prices of petroleum or raw materials used in the materials we purchase
for installation in our customers’ sites (for example, copper with respect to cables) which we may not be able to pass on through
re-invoicing to our customers. Our inability to accurately predict the actual cost of providing our services could result in a
decrease in our margins, which would have a material adverse effect on our results of operations.
The Scandinavian Building Services Market has low barriers to entry at the local branch level and we may face a loss of
market share or a decrease in margins from increased price competition in certain local markets.
The market for installation and services is highly fragmented, with low barriers to entry at the local level. Our local
branches compete with a large number of relatively small local installers and service providers, some of whom benefit from
operating efficiencies or lower overhead costs than us, which enables them to offer lower prices than we do. This has in the past
and may continue to result in a high degree of competition at the local or regional level in the Scandinavian Building Services
Market. Increased industry competition could result in increased price competition, lower profit margins, a decline in our market
share and greater competition for qualified personnel. If we were to face such competition, our net sales, profitability and market
shares may decline, which would have a material adverse effect on our business, results of operations and financial condition.
Our competitors continue to consolidate, which could cause the markets in which we operate to become more competitive and
could negatively impact our business.
There has been an increase in consolidation activity among our competitors in the markets in which we operate. This
consolidation is being driven primarily by customer need and supplier capabilities, which could cause our markets to become
more competitive as greater economies of scale are achieved by our competitors. Customers are increasingly aware of the total
costs of not having access to consistent sources of supply at multiple locations. We believe these customer needs could result in
fewer numbers of competitors in the market as our remaining competitors become larger and capable of supplying their services
on a more consistent and comprehensive basis.
23
We may fail to effectively participate in the industry consolidation for a variety of reasons, including antitrust
restrictions, which may limit the degree to which a large market participant such as us can acquire additional competitors, as well
as our substantial indebtedness. In addition, industry consolidation could make it more difficult for us to maintain operating
margins and could also increase competition for our acquisition targets and result in higher purchase price multiples. We may also
face increased difficulty in growing and maintaining our market share and increasing our growth prospects.
A majority of our balance sheet assets consist of intangible assets, which are subject to impairment testing and may affect
future results of operations.
Our intangible assets are substantial and represented approximately SEK2,276 million as of December 31, 2012. Our
intangible assets consist primarily of goodwill.
We capitalize goodwill relating to acquisitions, which is calculated as the difference between the historical cost and fair
value of an acquired business and the fair value of our share of the acquired business’s identifiable net assets at the time of
acquisition. Goodwill from the acquisition of operations is recognized as an intangible asset. Goodwill is tested annually for
impairment and stated at cost less accumulated impairment losses.
Goodwill is not amortized but is subject to impairment testing at least annually. The identification and measurement of
impairment involves the estimation of the fair value of reporting units. Accounting for impairment contains uncertainty because
management must use judgment in determining appropriate assumptions to be used in the measurement of fair value. The
estimates of fair value of reporting units are based on the best information available as of the date of the assessment and
incorporate management assumptions about expected future cash flows and contemplate other valuation techniques. For more
information see our financial statements included in this Prospectus. An adverse development in our business activities may
require us to recognize impairment charges to write off all or a part of the carrying amount of our goodwill and other intangible
assets. If an expense or impairment loss must be recognized, it could have a material adverse effect on our business, financial
condition and results of operations.
Our decentralized management structure requires us to maintain effective internal controls, and if we are not able to continue
to do so our business could be adversely impacted.
We have a decentralized management structure, and our business strategy emphasizes local decision-making and
responsibility in order to adapt to regional and local conditions. We have grown, in part, due to our acquisitions, which have
required us to integrate service providers from a wide range of backgrounds who are accustomed to a range of different practices
and policies. We cannot assure you that we will succeed in standardizing and enforcing best practices throughout our group. As a
result of the depth and breadth of our operations in Scandinavia and the extent of autonomy that we grant to our local
management, we cannot assure you that we will not face considerable challenges in implementing uniform and cohesive
management practices in the future or before they negatively affect our business, financial condition and results of operations.
Our decentralized sales, limited legal and compliance structures, geographic breadth and acquisition strategy exposes us to
challenges at local levels that we may fail to identify and address in a timely manner.
We operate through a network of approximately 200 local branch offices in 150 locations throughout Scandinavia and
our sales processes are not centralized. Our branch offices operate with a high degree of autonomy and we do not control all of
their day-to-day business operations. A branch office may procure contracts on unfavorable economic terms or in violation of
applicable rules and regulations, such as applicable anti-competition, anti-cartel, anti-bribery and money laundering rules and
regulations, for which we could potentially be held liable. In addition, we have historically grown through acquisitions, which
have required us to integrate the acquired businesses with a wide range of practices and policies. We may not succeed in
integrating the acquired businesses and standardizing and implementing our practices. Given our decentralized sales processes,
limited legal and compliance structures and the geographic breadth of our operations, substantial problems could arise in the
future and we may fail to identify and address problems before they materially adversely affect our business, results of operations
and financial condition.
We bear the risk of cost overruns in many of our projects and, as a result, we may experience reduced profits or, in some cases,
losses under these projects if the cost increases are above our estimated amounts.
We base our prices for our fixed-price contracts largely upon estimates and assumptions of projected costs, including
assumptions about future economic conditions, raw material prices, the availability of labor, equipment and materials, and other
factors outside of our control. If our estimates or assumptions prove to be inaccurate or if circumstances change in a way that
renders our assumptions and estimates inaccurate, we may incur costs higher than those that we estimated, cost overruns may
occur and we could experience reduced profits or a loss for affected projects. We also are exposed to increases in energy prices
and prices for raw materials that we may be unable to pass on to our customers. Additionally, in certain circumstances, we
guarantee project completion or the achievement of certain acceptance and performance testing levels by a scheduled date. Failure
to meet schedule or performance requirements typically results in additional costs to us, and, in some cases, it may create liability
for consequential and liquidated damages. Performance problems for existing and future projects could cause our actual results of
operations to differ materially from those we anticipate and could damage our reputation within our industry and our customer
base.
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Based on economic and other conditions impacting the markets in which our facilities are located, as well as the overall
performance of individual branch locations, we may be required to close or dispose of under-performing branches.
We may have to close under-performing branches from time to time as warranted by general economic conditions
and/or weakness in the local markets in which we operate. For example, during the global financial crisis beginning in 2008, we
closed certain of our branches and terminated the employment of certain of our employees as part of our restructuring and
rationalization efforts. In addition, we engage in periodic reviews of branch performance and may decide to close or dispose of
branches based on under-performance, poor cash flow and other considerations. Our under-performing branches may not be
successful in generating future profits. Future branch closures could result in our reduced presence in certain of our local markets,
which could potentially have an adverse effect on our ability to provide our customers comprehensive services throughout
Scandinavia, which could adversely impact our reputation and results of operations. In addition, branch closures may result in
administrative and restructuring costs that could have a significant adverse impact on our financial condition, results of operations
and cash flows.
Our success is highly dependent on the ability to recruit and retain technical and other key personnel.
Our future success depends on our ability to continue to identify, attract, train, retain and motivate a sufficient number
of highly skilled technical personnel. Competition for these personnel is intense. We may be unable to successfully attract,
assimilate or retain sufficiently qualified personnel. Failure to do so could harm our business and growth, and ultimately our
profitability. In particular, it may be difficult to find qualified personnel in regions that are experiencing a growth in demand for
the services that we provide, such as in Stockholm, Oslo and Copenhagen. In addition, our continued success depends largely on
our ability to retain our technical and key personnel. The departure of significant numbers of our highly skilled personnel could
impair our ability to execute our business plan and growth strategy, cause a loss of customers, reduce revenues and adversely
affect employee morale. There can be no assurance that we will be able to retain or attract an adequately skilled labor force
necessary to operate efficiently and to support our business strategy or that labor expenses will not increase as a result of a
shortage in the supply of these skilled personnel.
In addition, our activities require a wide range of continually evolving skills in order to keep up with changes in the
sectors in which we operate. We may be unable to find qualified candidates, train staff in new methods, and recruit and train
managers.
We may also incur significant costs in maintaining employee health and safety requirements and, as our operations
expand, we may face increased work accidents and illness (both in frequency and severity). In addition, during periods of rapid
economic growth, we may encounter problems in recruiting and retaining qualified employees. We may also experience increased
staff costs during these periods, or a decrease in the quality of the services we provide, all of which could negatively affect our
business, results of operations and financial condition.
Our business depends extensively on recruiting and retaining qualified branch managers. If we are not able to attract a
sufficient number of qualified branch managers, our future growth and financial performance may suffer.
We rely heavily on our branch managers for the success of a branch. Each branch manager has the responsibility for
recruiting and retaining a quality workforce and cultivating customer loyalty. Each branch manager manages the operations of the
branch, which include recruiting, dispatching and paying of employees, meeting the needs of our customers, maintaining customer
satisfaction, selling our services to new customers, as well as controlling costs through accident prevention, and complying with
applicable laws and regulations. Our future growth and financial performance depend on our ability to hire, train and retain
qualified managers from a limited pool of qualified candidates. If we are unable to attract, retain and successfully train our
technicians and branch managers, this could have a materially adverse effect on our business, results of operations and financial
condition.
We may incur liabilities for the actions of our employees.
Our employees deliver services within buildings and at locations owned or operated by our customers. As a result, we
may be subject to claims in connection with damage to property, business interruptions, unauthorized use of the customer’s
property or willful misconduct or other tortuous acts by our employees or people who have gained unauthorized access to
premises through our business operations. Such claims may be substantial and may result in adverse publicity for our group.
Accordingly, these claims could have a material adverse effect on our business, results of operations and financial condition.
We may not be able to attract and retain key officers and directors.
Despite our decentralized business model, we also depend upon the services of a small number of key executive
officers and directors. There can be no assurance that these individuals will continue to make their services available to us in the
future. The loss of or diminution in the services of one or more of our key executive officers or directors, or our inability to attract,
retain and maintain new key executive officers or directors, could have a material adverse effect on our business, results of
operations or financial condition.
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Our use of the percentage of completion method of accounting could result in a reduction or reversal of previously recorded
revenues or profits.
Our net sales from installation and services projects in progress is recognized using the percentage of completion
method of accounting, which results in our recognizing project revenues and earnings ratably over the project term (without
regard to the timing of our receipt of cash payments), in the proportion that actual costs are incurred in relation to estimated total
project costs. The earnings or losses recognized on individual projects are based on estimates of project revenue, costs and degree
of completion. Project-related expenditures that have been incurred, but for which the goods or service are related to future stages
of the project, are not considered when determining the degree of completion. Changes to the scope of the project, claims and
incentive pay are included in project revenue to the extent that they have been agreed with the customer and can be reliably
measured. Unanticipated delays and unexpected costs may arise in the course of completing a project, including as a result of
shortage of skilled labor, the failure of subcontractors to perform as contracted and changes in project specifications. In particular,
this may be the case in larger, more complex installation projects and fixed price services agreements. We record the effect of
revisions to estimated costs, and consequently revenues, once the amounts are known or can be reasonably estimated. These
revisions can occur at any time and could be material. An inability by us to accurately estimate these costs may adversely affect
our net sales and may require us to adjust the amount of net sales previously recognized. Given the uncertainties associated with
these types of contracts, it is possible for actual costs to vary from estimated costs, which may result in the reduction or reversal of
previously recorded profits.
As a result of the requirements of the percentage of completion method of accounting, the possibility exists, for
example, that we could have estimated and reported a profit on a project over several periods and later determined, usually near
contract completion, that all or a portion of such previously estimated and reported profits were overstated. If this occurs, the full
aggregate amount of the overstatement will be reported for the period in which such determination is made, thereby reducing
profits from that project and resulting in an adjustment to earnings recorded for such period, which may lead to a loss being
reported. As a result of the uncertainties associated with our projects, actual costs may vary from estimates previously made,
which can result in reductions or reversals of previously recorded net sales and profits.
Our success depends on effective project and site management, which could be impaired by a certain number of factors.
For many of our projects, we provide a broad range of services with a high technical content. For example, in our
installation business, we install complex electrical infrastructure in hospitals and other commercial buildings and in our service
business area, we provide maintenance and periodic repair of these installations, for which a high level of technical skill is
required. In order to ensure that the projects we take on are effectively conducted and profitable, we need to have a high degree of
project and site management expertise, especially in evaluating the costs of providing our services to the relevant customer and in
maximizing efficiency in providing the contracted services throughout the term of the contract. Specific factors that can affect our
performance and profitability include our ability to accurately determine the costs of providing the contracted services in the
context of a particular project, our ability to measure the personnel and other resources that we need to deploy in order to fulfill
our contractual obligations on an ongoing basis, our ability to control services provided by subcontractors or to influence the
performance of such subcontractors or other service providers, and unforeseen technical difficulties that could cause project
delays or unscheduled project downtime.
If, due to ineffective contract planning or management, we are unable to efficiently and profitably render our services,
we could experience increased contract execution costs, difficulty in obtaining timely payment for our services or harm to our
reputation, which could materially adversely affect our business, financial condition and results of operations.
Damage to our reputation could have an adverse effect on our business, financial condition, results of operations or prospects.
Our reputation is important to our ability to market our services and secure new customers. Our historical success is
attributable, in large part, to our reputation as a leading and reliable provider of a broad range of services, particularly services
requiring a certain level of technical expertise, and this reputation has strengthened our business and helped to facilitate our
expansion. Although we closely monitor the quality of our services, we cannot guarantee that we will be able to protect our
business against damage to our reputation vis-à-vis our customers, potential customers and, more generally, in the geographic
regions and business sectors in which we operate. For example, we could be held responsible for an accident at, or a malfunction
of, a customer’s facilities due to poor performance of our services, or the erroneous perception that the accident or malfunction
occurred as a result of our performance of services. Any such event or perception could damage our reputation or brand, which
could have a material adverse effect on our business, results of operations, financial condition and prospects.
We are party to public sector contracts, which may be affected by political and administrative decisions, and we are subject to
risks inherent in public contracts.
Public sector customers account for a significant portion of our net sales. For the year ended December 31, 2012, we
generated 22% of our total net sales from our public sector customers and a majority of our net sales are attributable, directly or
indirectly, to public infrastructure projects. The success and profitability of our public sector business may be influenced by
political considerations. It may also be affected by political and administrative decisions concerning levels of public spending. In
certain cases, due to applicable regulations, such as European Union tender rules, certain terms of public sector contracts, such as
pricing terms, contract period, the use of subcontractors and the ability to transfer receivables under contract, provide us with less
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flexibility than comparable private sector contracts. Public sector contracts can, if entered into or prolonged in violation of
applicable tender rules, be declared invalid by a court of law, or if questioned by a third party competitor, risk being terminated by
the public sector customer. Certain of our public sector contracts may be subject to challenge on these grounds and could be
declared invalid if they are found to be in violation of applicable public procurement law.
Moreover, decisions to decrease public spending may result in the termination or downscaling of public sector
contracts, which could have a material adverse effect on our business, results of operations and financial condition. Historically,
our performance has been linked, in part, to the ability and willingness of local, regional and national governments to allocate
public funds to infrastructure and other publicly funded projects, as well as our ability to bid successfully for these contracts.
Public sector spending, in turn, generally has been dependent on general macroeconomic conditions. A decrease in public sector
spending as a result of a deterioration in Scandinavian, European or global economic conditions, changes in governmental policy
or other reasons could have an adverse effect on our financial condition and results of operations. We cannot assure you that a fall
in public sector spending in the countries in which we operate will not have an adverse effect on our business, financial condition
or results of operation.
Contracts in the public sector are also subject to review and monitoring by local authorities to ensure compliance with
laws and regulations prohibiting anti-competitive practices. Although we believe that we comply with these laws and regulations,
there can be no assurance that we will not be found in violation of any such laws or regulations, and we could be subject to fines,
penalties and other sanctions, including exclusion from participation in tenders for public contracts. Any such event would have a
material adverse impact on our reputation, business, results of operations and financial condition.
Changes in the laws and regulations governing public procurement could have a material impact on our business.
As a government contractor, we are subject to a number of procurement regulations, requirements and limitations
relating to the conduct of business relationships and the formation of purchasing contracts, including prohibitions on certain
business practices that could be construed as bribery, public corruption or unfair competitive practices. Although we maintain
policies regarding compliance with these regulations, there can be no assurance that our employees, subcontractors, agents and
partners, or the public sector entities with whom they contract, will not act in violation of such policies and/or applicable laws and
regulations. Furthermore, if a public sector entity were to violate applicable procurement laws or regulations in connection with
contracts entered into with us or our marketing activities, the relevant authorities could seek enforcement action against us. Any
such violation, even if prohibited by our policies, could result in civil or criminal penalties, the loss of business or harm to our
reputation and, accordingly, have a material adverse effect on our business, results of operations or financial condition.
In addition, awards under public procurement processes may be subject to challenge or rescission based on actual or
alleged procedural deficiencies in the tender process, even after we have made significant expenditures associated with winning
such an award. We (or a public sector customer) may face actions seeking to challenge prior awards and we may not be successful
in securing a contract in any re-tendering process, which could have a material adverse effect on our business, results of
A significant part of our net sales is attributable to contracts awarded through a competitive bidding process, which can result
in substantial costs and loss of revenue if we fail to compete effectively.
A significant part of our net sales is attributable to contracts that are awarded through a competitive bidding process, in
the private as well as public sectors. Competitive bidding results in substantial costs and presents a number of risks, including:
substantial investments in terms of cost and managerial time required to prepare bids and proposals for contracts that may or may
not be awarded to us; the need to estimate accurately the resources and costs that will be required to service any contracts we are
awarded, often in advance of the final determination of their full scope; the expense and delay that may arise if our competitors
protest or challenge awards made to us pursuant to a competitive bidding process, and the risk that such protest or challenge could
result in the requirement to resubmit bids or in the termination, reduction or modification of the contracts that have been awarded;
and the opportunity cost of not bidding on and winning other contracts we might otherwise pursued, all of which could have a
material adverse effect on our business, results of operations and financial condition.
Changes in government monetary or fiscal policies may negatively impact our results of operations.
The demand for our products and services is impacted by monetary and other government policies in each of the
countries in which we operate, including policies that have the effect of encouraging or discouraging construction, such as longterm interest rates, tax policies, policies encouraging or discouraging labor mobility and migration, the availability of financing or
subsidies, the allocation of government funding for public infrastructure programs and safety regulations that encourage or
discourage the use of certain materials and products. Interest rate changes, for example, affect demand for residential and nonresidential structures, which in turn affects sales of our services that serve these activities. Interest rate changes also affect our
customers’ ability to finance purchases and can impact the ability of our suppliers to finance the production of parts and
components necessary to deliver the services we sell. In addition to changing interest rates, central banks and other policy arms of
many countries take actions to vary the amount of liquidity and credit available to such country. Changes in liquidity and credit
policies, including the reduction or elimination of favorable tax or other stimulus programs, could adversely impact our customers,
markets and suppliers, any of which could have a material adverse effect on our business, results of operations and financial
condition.
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Fluctuating commodity prices may adversely impact our results of operations.
The prices of petroleum, copper, steel, aluminum and other commodities used in the products we install can be volatile.
We are not always able to quickly or effectively react to price increases by our suppliers or pass through increased costs to our
customers. A majority of our contracts allow us to pass through cost increases to our customers. However, short-term changes in
the costs of raw materials, some of which are subject to significant fluctuations, are not always passed on to our customers. Any
delay in our ability to pass on material price increases to our customers could adversely impact our business, results of operations,
financial condition and cash flows.
In addition, if prices decrease for commodities, we may have inventories purchased at prices higher than prevailing
market prices. Prices and the availability of petroleum products are subject to political, economic and market factors that are
outside our control. Political events in petroleum-producing regions as well as weather-related events may cause the price of fuel
to increase. Any significant increases in fuel or energy prices or increased costs relating to emissions control requirements that
have been or may be imposed in the future, particularly due to climate change-related legislation, could have an adverse effect on
our business, financial condition and results of operations. Significant fluctuations in the cost of the commodities used in products
we use as a part of the services that we deliver may adversely affect our results of operations and financial condition.
We currently do not enter into forward sales, commodity, derivatives or hedging arrangements with respect to our purchase of
raw materials and, as a result, we may be exposed to the impact of any significant increase in the price such materials.
Our businesses may be affected by changes in the market prices of certain raw materials such as petroleum, copper,
steel and aluminum. While we generally attempt to pass price increases of raw materials through to our customers, we do not
currently enter into forward sales, commodity, derivative or hedging arrangements to establish a price in advance for the purchase
of future raw materials. As a result, we may realize the benefit of any short-term decrease in raw material prices, but we are not
protected against increases in the price of raw materials. If the prices for certain raw materials increase significantly, our profits
may be materially adversely affected.
Any failure of our third-party subcontractors to satisfactorily perform their obligations may hurt our reputation, business and
results of operations.
We offer certain of our services to our customers through various third-party service providers engaged to perform
these services on our behalf. However, we retain responsibility for the work performed by these subcontractors. Accordingly, we
are exposed to risks relating to managing subcontractors and the risk that these subcontractors may fail to perform the agreedupon services satisfactorily and on a timely basis, which could affect our ability to perform our obligations or meet our customers’
expectations and comply with applicable regulatory requirements. In extreme cases, performance or other deficiencies on the part
of our subcontractors could result in a customer terminating our contract. A termination could expose us to financial liabilities,
damage our reputation and impair our ability to compete for future contracts. In addition, in the event a subcontractor provides
unsatisfactory services on our behalf, we could be required to make additional investments or provide additional services to ensure
the adequate performance and delivery of the contracted services. In addition, we are exposed to the operational controls of our
subcontractors, including with respect to the qualifications of their personnel and their compliance with labor and immigration
laws. Our subcontractors may maintain inadequate insurance coverage or inadequate financial resources to honor claims resulting
from damages or losses inflicted by such subcontractors on our customers.
We constantly manage and monitor the performance of our subcontractors. However, the failure of subcontractors to
meet their contractual obligations or comply with applicable laws or regulations could harm our reputation, as well as result in
customer losses and financial liabilities, any of which could have a material adverse effect on our business, results of operations
and financial condition.
We rely on third-party suppliers, and if we fail to identify and develop relationships with a sufficient number of qualified
suppliers, or if there is a significant interruption in our supply chains or significant fluctuation in the prices of our product
supply, our results of operations could be adversely affected.
Our ability to offer a wide variety of services to our customers is dependent upon our ability to obtain adequate product
supply from manufacturers or other suppliers at attractive prices. For the year ended December 31, 2012, we estimate that our top
ten suppliers accounted for 32% of our total supply costs. We may not be able to identify and develop relationships with qualified
suppliers that can satisfy our standards for quality and price and our need to access products and supplies in a timely and efficient
manner. We may be required to replace a supplier if its products do not meet our quality, price or safety standards. Our results of
operations and inventory levels could suffer if we are unable to promptly replace a supplier that is unwilling or unable to satisfy
our requirements with a supplier providing similar products. The loss of, or substantial decrease in the availability of, products
from our suppliers, or the loss of a key supplier, could adversely impact our business, results of operations, financial condition and
cash flows.
In addition, supply interruptions could arise from shortages of raw materials, labor disputes or weather conditions
affecting products or shipments, transportation disruptions or other factors beyond our control. Short-term and long-term
disruptions in our supply chain would result in a need to maintain higher inventory levels as we replace similar products, a higher
cost of goods and ultimately a decrease in our net sales and profitability. A disruption in the timely availability of our goods by
our key suppliers and the failure by our suppliers to continue to supply us with products on commercially reasonable terms, or at
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all, may result in a decline of our operating margins and have a material adverse effect on our business, results of operations,
financial condition and cash flow.
The cost of our services have historically been volatile and subject to fluctuations arising from changes in supply and
demand, economic conditions, labor costs, competition, market speculation, government regulation and trade policies, as well as
from periodic delays in the delivery of our products. We have a limited ability to control the timing and amount of changes to
prices that we will pay for our products. In addition, the supply of our products fluctuates based on available manufacturing
capacity. A shortage of capacity, or excess capacity, in the industry can result in significant increases or decreases in market prices
for those products, often within a short period of time. Even where we are able to increase our prices to our customers, we may be
unable to increase our prices in sufficient time to absorb price increases by our suppliers. Such price fluctuations can adversely
affect our business, results of operations, financial condition and cash flows.
We are dependent on our relationships with strategic partners in the building and services industry, including NCC, Skanska
and PEAB, the three largest construction companies in Scandinavia. The failure to maintain these relationships could result
in the loss of business and, as a result, materially adverse effects on our operating performance.
Our business, particularly with respect to installation in new construction projects, is dependent in large part on our
long-standing relationships with leading Scandinavian construction companies. Our opportunities to partner with these companies
could be adversely affected if: we are unable to achieve the objectives under our arrangements in a timely manner, or at all; our
partners become unable, unwilling or less willing to invest in new property development due to poor general market conditions,
their financial condition or other circumstances, many of which are beyond our control; we disagree with a key partner regarding
strategic direction, the economics of our relationship or other matters; we are unable to successfully manage multiple
simultaneous projects with such partners; our strategic partners breach or terminate their contract with us; our partners become
competitors of ours or enter into agreements with our competitors; applicable laws and regulations, domestic or foreign, impede
our ability to enter into strategic arrangements; or as we enter into additional or consolidation in the construction markets limits
the number of potential industry partners. In particular, we are a subcontractor to Skanska in connection with a turn-key electrical
and plumbing supply contract relating to the construction of Statoil’s new facilities in Bergen, Norway. Under the contract we,
along with all of the other subcontractors, have agreed to accept joint and several liability for the performance of Skanska’s
obligations under the supply contract. Pursuant to an agreement among the subcontractors, we bear responsibility for and potential
liability in respect of ventilation works and electrical installations. To the extent Skanska encounters financial difficulties or
otherwise becomes unable to perform its obligations under the construction contract, we may incur substantial liabilities, which
could have a material adverse impact on our business, results of operations and financial condition. If any of these events occur, or
if we fail to maintain our agreements with our strategic partners and collaborators, we may not be able to commercialize our
existing and future products, further develop our business or generate sufficient revenues to support our operations. Additionally,
our business could be negatively impacted if any of our industry partners undergo a change of control, assign the rights or
obligations under any of our agreements or cease to be a going concern.
We may be exposed to the credit risk of certain of our customers and, in addition, our liability to customers under guarantee
provisions may materially and adversely affect our earnings.
We sell installation and services solutions to our customers through contracts that are not secured by collateral or other
security and therefore bear the risk that our customers will be unable to pay amounts due to us. Our products are sold to customers
in industries that may experience fluctuations in demand based on economic conditions, energy prices, seasonality, consumer
demand and other factors beyond our control. These industries include the construction industry. We may not be able to limit our
potential loss of revenues if a significant number of customers are unable to pay amounts due to us on a timely basis, which could
have a material adverse effect on our business, results of operations and financial condition.
At the same time, we generally provide guarantees for completed projects as to the proper operation and conformance
to specifications of our installations and services. The failure of our installations to operate properly or to meet specifications may
increase our costs by requiring additional engineering resources and services, the replacement of parts and equipment or monetary
reimbursement to a customer. We have in the past received guarantee claims, are subject to guarantee claims and we expect to
continue to receive them in the future. To the extent that we incur substantial guarantee claims in any period, our reputation, our
ability to obtain future business and our earnings could be adversely affected.
In 2009, as part of our acquisition of Siemens’ installation business in Norway, we acceded to a contract with Kolo
Veidekke relating to installation and ongoing maintenance of electrical systems as part of the construction of a new highway.
Under the terms of the original contract, Siemens accepted liability for any errors or defects in the electrical system that may occur
during the 26 years following the execution of the contract. Contractual liability under the guarantee is limited to NOK57 million
(approximately €8 million). Negligence and tort claims are subject to a higher limitation of NOK250 million (approximately €33
million). To the extent claims are brought against us under the guarantee, we could incur substantial liability and harm to our
reputation, which could have a material adverse effect on our business, results of operations and financial condition.
Our competitive position could be adversely affected by changes in technology and industry standards.
Our business requires a high level of technical expertise for a wide variety of services. We need to constantly adapt our
expertise in response to technological innovations, as well as industry standards, product instructions and customer requirements.
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New technology or changes in industry and customer requirements may render some of our services obsolete, excessively costly
or otherwise unmarketable.
As a result, we must continuously enhance our expertise and the efficiency and reliability of our services in order to
remain at the forefront of industry standards and customer requirements. If we are unable to adapt to ever-changing technologies
and customer requirements in a timely and cost-effective manner, our competitive position will suffer and our prospects for
growth will be impaired, which would adversely affect our business and results of operations.
A change in supplier rebates due to the loss of our leading market position or other market conditions or a deterioration in our
commercial relationship with one or more key suppliers could adversely affect our income and gross margins.
The terms on which we purchase products from many of our suppliers enable us to receive a rebate based on the
volume of our purchases. These rebates effectively reduce our costs. Our ability to earn and negotiate rebates is critical to the
success of our business. If market conditions change or if we lose our leading market position, suppliers may respond by changing
the terms of some or all of these purchasing programs to our detriment. Any such changes could lower our gross margins or
revenues. Furthermore, a loss of market share could result in a decreased demand for our services, which could cause our volume
requirements for certain products to decline. If we are unable to meet specified volume thresholds for certain suppliers, we may
not receive favorable rebates, which could increase our costs and decrease our gross margins.
In addition, some of our suppliers are not obligated under long-term supply agreements to continue to sell to us. We
have relatively few sources of supply for some of the products that we purchase, particularly, with respect to lighting installations,
and in some cases we rely on a small group of suppliers for certain key products. In addition, the lead time involved in the
manufacturing of some of these components can be lengthy. If certain of our key suppliers become unwilling or unable to supply
us with components meeting our requirements, we may not be able to organize additional or replacement suppliers in a timely
manner, or at all. Moreover, we maintain low levels of inventory and our suppliers deliver directly to our work sites, which
prevents us from being able to provide replacement supplies on our own should one or more or our suppliers fail to meet our
supply requirements. The inability or unwillingness of our suppliers to provide timely delivery of products necessary for our
installations and services projects could cause our services to be disrupted and our results of operations to decline.
Our operations could be adversely affected if a significant number of our customers terminate their services contracts prior to
the end of the contractual term or select another provider following the expiration of their contracts.
We perform the majority of our work for customers under contracts with a stated term and, in some cases, with
termination clauses permitting the customer to cancel the contract at the customer’s discretion following the expiration of an
agreed notice period. There can be no assurance that our customers will not exercise their rights to terminate their contracts prior
to expiration or that we will be successful in negotiating new contracts with customers as such contracts expire. We generally
execute our business through numerous small contracts (including multiple contracts for the same customers) and, therefore, any
cancellation of a contract or a number of contracts would not ordinarily have an adverse effect on our results of operations.
However, contract cancellations or dissatisfaction with our services may damage our reputation and make it more difficult for us
to obtain similar contracts with other customers, in which case our business and results of operations would be adversely affected.
Amounts included in our estimated order backlog may not result in actual revenue or translate into profits, and our estimated
order backlog is subject to cancellation and unexpected adjustments and is therefore an uncertain indicator of future results of
operations.
As of December 31, 2012, our order backlog was SEK4,809 million, which represented 82% of our installation net
sales for the year ended December 31, 2012, and as of March 31, 2013, our order backlog was SEK4,914 million, which included
net sales likely to occur beyond 2013 and represented 85% of our installation net sales for the twelve months ended March 31,
2013. These order backlog amounts are based on our estimates and therefore may not result in an actual recognition of revenue
within the period initially anticipated, if at all. In addition, certain contracts included in our estimated order backlog may not be
profitable. We may experience variances in the realization of our estimated order backlog because of project delays or
cancellations resulting from weather conditions, project deferrals or delays, scope adjustments, external market factors and
economic factors beyond our control. If our estimated order backlog fails to materialize as we anticipated, our business, financial
condition or results of operations would be materially and adversely affected. Accordingly, our estimated order backlog as of any
particular date is an uncertain indicator of future revenue or earnings.
We may incur liabilities that are not covered by insurance.
We carry insurance of various types, including workers’ compensation, employment practices, pension-related and
general liability coverage. While we seek to maintain appropriate levels of insurance, not all claims are insurable and there can be
no assurance that we will not experience major incidents that are not covered by our insurance. Furthermore, the occurrence of
several events resulting in substantial claims for damages within a calendar year may have a material adverse effect on our
business. In addition, our insurance costs may increase over time in response to any negative development in our claims history or
due to material price increases in the insurance market in general. There can be no assurance that we will be able to maintain our
current insurance coverage or do so at a reasonable cost.
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We may not be able to successfully defend against claims made against us by customers or other third parties, or we may fail to
adequately recover on our claims against customers or third parties.
We may encounter difficulties in meeting contractual performance obligations, which may result in the incurrence of
penalties for non-performance or a delay in the performance of our contractual obligations. In addition, we rely on third-party
partners, equipment manufacturers and subcontractors to complete some of our contracts. As such, claims involving customers,
suppliers and subcontractors may be brought against us, and by us, in connection with our contracts or with customers’ internal
procedures. Claims brought against us could include back charges for alleged defective or incomplete work, breaches of warranty
and/or late completion of the project and claims for cancelled projects. The claims and back charges can involve actual damages,
as well as contractually agreed-upon liquidated sums. These claims, as well as claims we may make against customers or other
third parties, if not resolved through negotiation, could result in lengthy and expensive litigation or arbitration proceedings.
We occasionally bring claims against project owners for additional costs that exceed the contract price or for amounts
not included in the original contract price, including change orders. These types of claims occur due to matters such as ownercaused delays, increased unit prices or changes from the initial project scope that result, both directly and indirectly, in additional
costs. Often, these claims can be the subject of lengthy arbitration, litigation or third-party expert proceedings, and it can be
difficult to accurately predict when these claims will be fully resolved. When these types of events occur and unresolved claims
are pending, we may invest significant working capital in projects to cover cost overruns pending the resolution of the relevant
claims. Charges associated with claims, or our failure to recover sufficient damages and/or liquidated sums in connection with
claims we bring against third parties, could materially adversely affect our business, financial condition and results of operations.
If we fail to ensure safe work environments for our employees, we could be exposed to significant financial losses, as well as
civil and criminal liabilities.
Our operations are subject to extensive laws and regulations relating to the maintenance of safe conditions in the
workplace. The industry in which we operate involves a certain degree of operational risk, such as working with high voltages,
heat and at heights, which cannot be fully eliminated by procedures implemented to address them. These hazards can cause
personal injury or death, severe damage to or destruction of property and equipment and other consequential damages and could
lead to the suspension of operations and large damage claims and, in extreme cases, criminal liability.
In December 2011, for example, Bravida Danmark A/S received a notice from the Danish Working Environment
Service (Arbejdstilsynet), in connection with its visit to a construction site where we are conducting operations, informing us that
asbestos had been found on the site. In addition, in November 2011, the Danish Working Environment Service served another
notice to Bravida Danmark A/S with respect to a separate site warning of a risk of building collapse on the site. Although no
further action was taken by the Danish Working Environment Service in either of these instances, if we were to fail to implement
any safety or other procedures with respect to these or other sites, or if the procedures we implement were deemed to be
ineffective, our employees or others may suffer injury and we could incur significant financial losses. In addition, we could be
found liable for failing to comply with government regulation dealing with occupational health and safety. Occurrence of any of
these events could cause a materially adverse effect on our operations and profitability.
Our failure, or the failure of one of our subcontractors, to comply with applicable regulations or to maintain a safe work
environment could result in substantial fines, claims relating to violations of social and working environment legislation or the
revocation of licenses. There can be no assurance that we will not be subject to claims relating to employees’ working conditions.
Any such claims, or increased costs resulting from such claims or regulatory changes, could have a material adverse effect on our
New technology and the implementation of new work processes, services, tools and machinery may have unforeseen
effects on the working conditions of our employees. In addition, our employees may be exposed to materials that, although not
currently considered harmful, could in the future be deemed health hazards, as was the case with asbestos. Unsafe work sites also
have the potential to increase project costs for our customers and raise our operating costs. Any of the foregoing could result in
financial losses, which could have a material adverse impact on our business, financial condition and results of operations.
Compliance with existing laws and regulations or changes in any such laws and regulations could affect our business,
financial condition and results of operations.
We are subject to numerous international, EU, national and local laws, regulations and ordinances and must observe a
large number of different regulatory systems across a number of jurisdictions that change frequently, continuously evolve and
become more stringent. Such regulations include those relating to occupational health and safety and the services we deliver. For
example, our services must comply with the various building codes and regulations in the countries in which we operate and must
satisfy certain quality and safety requirements resulting from national and international standards, including EU directives, and
regulations and standards adopted by international organizations. We are also subject to laws and regulations, and must hold
permits, relating to the storage, handling and disposal of potentially hazardous wastes and materials, including asbestos,
refrigerants, adhesives, oil and other petroleum-based products, and electrical and electronic equipment waste and storage,
handling and disposal problems may occur. Moreover, under certain of our leases, we are responsible for remediation of any
environmental contamination, irrespective of whether we caused the contamination.
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Failure to adopt appropriate internal compliance policies or to ensure compliance with our policies and the law may
result in fines or enforcement actions against us. Compliance with existing and additional or more stringent laws, regulations,
ordinances or permit requirements, as well as more vigorous enforcement policies of regulatory agencies or stricter or different
interpretations, may require us to make additional expenditures or investments, which may be material, and could also otherwise
affect our business in a way that could have a material adverse effect on our business, financial condition and results of
operations.
Our operations and future growth may be affected by competition regulations.
We are subject to competition laws and regulations at the national and supranational level. In jurisdictions where we
have a leading market position, these laws and regulations may reduce our operational flexibility and limit our ability to make
additional acquisitions and implement our strategy.
In general, these laws are designed to preserve free and open competition in the marketplace in order to enhance
competitiveness and economic efficiency. From time to time in the past, we have been, and in the future we may become, subject
to investigations and proceedings by national and supranational competition and antitrust authorities, as well as claims from
private third parties, for alleged infringements of competition or antitrust laws. This may result in judgments, fines or other forms
of liability, which could have a material adverse effect on our reputation, business, financial condition and results of operations.
Although we have issued internal guidelines concerning compliance with competition laws and regulations, individual
local managers may act against our instructions and either inadvertently or deliberately violate applicable competition laws and
regulations by engaging in prohibited activities such as price fixing or colluding with competitors regarding markets or customers.
Such actions may harm our reputation and, if we are held responsible, the resulting fines and other sanctions could be substantial.
Therefore, the occurrence of any such incidents may have a material adverse effect on our business, results of operations and
financial condition.
Failure to comply with transfer pricing regulations may result in the payment of additional tax or penalties by us.
The markets in which we operate have transfer pricing regulations that require transactions involving associated
companies to be at arm’s length. Arrangements between members of our group, such as intra-group transactions involving
management services, royalties, information technology service fees, cash-pool arrangements, intra-group loans and consultancy
fees, are typically carried out on an arm’s-length basis. However, if the tax authorities in any relevant jurisdiction do not regard
such arrangements as being made on an arm’s-length basis and successfully challenge those arrangements, the amount of tax
payable by the relevant member or members of our group, in respect of both current and previous years, may increase materially
and penalties or interest may be payable. Furthermore, any failure to file transfer pricing documentation evidencing the outcome
of applied pricing principles, should they be requested by the relevant tax authorities, may result in penalties.
We are exposed to risks in connection with derivative instruments and hedging transactions.
We use derivative financial instruments (primarily currency and interest rate swaps and interest rate ceilings) to help
limit and control foreign exchange and interest rate risks. Such transactions involve risks, particularly, if the interest or exchange
rate development differs from expectations. The projections and assumptions made by our risk management team at the time when
such transactions were entered into could prove to be incorrect and the transactions could fail to limit the risks as intended or
increase our costs. This could have a material adverse effect on our business, results of operations and financial condition. As of
and for the year ended December 31, 2012, we did not recognize any accruals or contingent losses in our financial statements
relating to our derivative instruments.
In addition, we intend to hedge some or all of our interest rate and currency risk under the Notes. Such hedges are
senior obligations of the Issuer and rank pari passu in right of payment with the Notes and obligations under the Revolving Credit
Facility, and together with the Notes and the Revolving Credit Facility are secured by first-priority security interests over the
Collateral; provided, however, that, under the terms of the Intercreditor Agreement, the Notes will not receive the Collateral;
provided, however, that, under the terms of the Intercreditor Agreement, certain hedges are “super senior” in terms of the receipt
of the proceeds of enforcement of Collateral until such super senior hedges and obligations under the Revolving Credit Facility
have been repaid in full. See “Description of Certain Financing Arrangements—Intercreditor Agreement.” If we were to default
in making payments under the Notes, or if certain other credit events were to occur in relation to us and a credit-linked hedge of
interest rate or currency risk in respect of such Notes were to terminate or be closed out as a result, then, in relation to the mark-tomarket (“MTM”) value which would normally be payable by one party to the other on a termination or close-out of an equivalent
hedge that was not credit-linked, either (a) we will be limited, where such MTM value would otherwise be payable to us, in
claiming against our hedge counterparty in respect of such termination or close-out to an amount equal to the product of (i) such
MTM value and (ii) the credit recovery rate for holders of the Notes, such credit recovery rate being determined within a
reasonable period after such termination or close-out by reference to a market auction process or market quotations for such notes,
or (b) no MTM payment in respect of such termination or close-out will be due from either party, depending on the particular type
of credit-linked hedge into which we enter.
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We are exposed to translation risk of currency fluctuations.
Our business operations are characterized by a relatively low level of transactional currency risk since our purchases
and sales are made in the same local currency with minimal exposure to imported components. From an accounting perspective,
we are exposed to risks relating to translation into Swedish kronor of income statements and balance sheets of foreign subsidiaries
with local reporting denominated in Danish kroner and Norwegian kroner. In order to prepare our consolidated financial
statements, we must translate foreign currency assets, liabilities, net sales and expenses into Swedish kronor. For balance sheet
items, foreign currencies are translated into the functional currency at the exchange rates applicable on the transaction date. For
income statement items, foreign currencies are translated into the functional currency at the average exchange rate applicable to
the period. Consequently, increases and decreases in the value of the Swedish krona against other currencies affect the amount of
these items in our consolidated financial statements, even if their value has not changed in their original currency. A 10%
strengthening of the Norwegian krone as of December 31, 2012 would have had a positive translation effect on equity of SEK39
million and the same increase in value of the Danish krone would have had a positive translation effect on equity of SEK17
million. The translation differences from the translation of foreign operations for the years ended December 31, 2010, 2011 and
2012 had a negative impact of SEK54.0 million (€5.7 million), SEK5.0 million (€0.6 million) and SEK12.0 million (€1.4 million),
respectively, on our total earnings.
The trend toward greater outsourcing of services and maintenance by public institutions and private companies may slow or
reverse, which could adversely affect our business, including our financial condition, results of operations, cash flows and
prospects.
Growth in demand for technical services is also influenced by trends other than macroeconomic trends, including
outsourcing. Over the past several years, our business has benefited from increased levels of the outsourcing of installation and
services activities by public institutions and private companies. The development of outsourced services may be affected by
political decisions, public opinion, positive and negative experiences with outsourcing, and demand by public institutions and
private users. These factors may negatively impact growth, cause contracts to be discontinued or reduce our ability to achieve
satisfactory growth rates in the future, all of which may have a material adverse effect on our business, financial condition, cash
flows and results of operations.
The residential, non-residential and infrastructure construction markets are seasonal and our business operations may be
affected by adverse weather conditions.
We experience seasonal fluctuations in the demand for certain of our services, due primarily to weather and holiday
seasons. Although weather patterns affect our results of operations throughout the year, cold and wet weather during the winter
months has historically reduced construction activity primarily in the first quarter in our markets. In contrast, our highest volume
of net sales historically has occurred in September through November. Generally, during the winter months, new construction
activity declines due to inclement weather and to the holiday season. Public holidays and vacation, particularly in the months of
June and July, also have seasonality effects, because building projects or industrial production processes may slow or temporarily
cease. As a result, our results of operations may vary significantly from period to period. We anticipate that fluctuations from
period to period will continue in the future.
In addition, adverse weather conditions, particularly during the winter season, could affect the ability of our employees
to perform efficient work outdoors in certain regions of Sweden, Denmark and Norway. For example, cold weather is less
favorable for construction projects and delays installation work because it hinders site accessibility. We may experience reduced
cash flow if unseasonal weather conditions persist, which could have a material adverse effect on our business, results of
We have exposure to customers in the mining and energy industries.
For the year ended December 31, 2012, we derived approximately 1.1% of our net sales from our customers who
operate in the mining industry and 0.5% from our customers who operate in the oil and gas industry. These industries have in the
past, and may in the future, be negatively impacted by adverse macroeconomic conditions. If a significant downturn in the mining
or oil and gas industry were to occur, the cash flows of our customers in this industry would be adversely impacted, which could
have a material adverse effect on the demand for our services and consequently our results of operations.
Despite the beginning of an economic recovery in the countries in which we operate, certain regions, particularly Denmark,
continue to suffer from economic weakness, which may in turn place pressure on our customers, which may have a material
adverse effect on our results of operations, cash flows and financial condition.
The pace of recovery from the global economic downturn has been slow in some of the regions in which we operate,
and the economy of Denmark, in particular, which is one of our principal markets, continues to be affected by low consumer
confidence, low home values, prolonged foreclosure activity, a weak housing market, high levels of unemployment and reduced
access to consumer credit. In addition, repercussions from the ongoing European debt crisis could further damage the Danish
economy as well as the economy of other Scandinavian countries. While these factors are outside of our control, they directly
affect our business. The slow pace of recovery in Denmark, or a new cycle of economic downturn, could cause our current and
potential customers in Denmark to delay their purchases or affect their ability to pay, which could reduce our future net sales,
results of operations and cash flows.
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The eurozone debt crisis and related market perceptions concerning the instability of the euro, the potential re-introduction of
individual currencies within the eurozone, or the potential dissolution of the euro entirely, could adversely affect our business
and our financial performance.
Recent developments in the eurozone have exacerbated the ongoing global economic crisis. Financial markets and the
supply of credit may continue to be negatively impacted by ongoing fears surrounding the sovereign debts and/or fiscal deficits of
several countries in Europe (primarily Greece, Ireland, Italy, Portugal, Cyprus and Spain), the possibility of further downgrading,
or defaults on, sovereign debt, concerns about a slowdown in growth in certain economies and uncertainties regarding the overall
stability of the euro and the sustainability of the euro as a single currency given the diverse economic and political circumstances
in individual Member States. Governments and regulators have implemented austerity programs and other remedial measures to
respond to the eurozone debt crisis and stabilize the financial system, but the actual impact of such programs and measures are
difficult to predict.
If the eurozone debt crisis is not resolved, it is possible that one or more countries may default on their debt obligations
and/or cease using the euro and re-establish their own national currency, or that the eurozone may collapse. If such an event were
to occur, it is possible that there would be significant, extended and generalized market dislocation, which may have a material
adverse effect on our business, results of operations and financial condition, especially because our operations are primarily in
Europe. In addition, the departure of one or more countries from the eurozone may lead to the imposition of, among other things,
exchange rate control laws. Should the euro dissolve entirely, the legal and contractual consequences for holders of eurodenominated obligations and for parties subject to other contractual provisions referencing the euro would be determined by laws
in effect at such time. These potential developments, or market perceptions concerning these and related issues, could adversely
affect our trading environment and/or the value of the Notes, could have adverse consequences for us with respect to our
outstanding debt obligations that are euro-denominated and, because we have a substantial amount of debt denominated in euro,
our financial condition may be materially affected.
We are subject to risks associated with operations in multiple countries and our international business operations expose us to
a number of difficulties in dealing with multiple regulatory environments.
We have substantial operations, property, plant and equipment in multiple countries. As a result, we are subject to risks
associated with conducting our operations in multiple countries, including:
•
difficulties in coordinating projects across multiple regions, and staffing and managing foreign operations;
•
protectionist laws and business practices that favor local competitors;
•
the imposition of or increases in customs duties and other tariffs;
•
increased costs of providing customer support for our projects in multiple languages;
•
the imposition of or increases in investment or trade restrictions or trade sanctions;
•
the interruption of transportation flow for delivery of products to us and services by us to our end-market
consumers;
•
currency devaluations and fluctuations in currency exchange rates;
•
the inability to definitively determine or satisfy local, regional and national legal requirements, the inability to
effectively enforce contract or legal rights and the inability to obtain complete financial or other information
under local legal, judicial, regulatory, disclosure and other systems; and
•
the nationalization or expropriation of assets, and other risks which could result from a change in government or
government policy, or from other political, social or economic instability.
We cannot assure you that such risks will not have a material adverse effect on us or that we would be able to mitigate
such material adverse effects in the future. In addition to the factors noted above, our results of operations and financial condition
are affected by inflation, deflation and stagflation in each country in which we have facilities. We cannot assure you that future
increases in our costs will not exceed the rate of inflation or the amounts, if any, by which we may be able to increase prices for
our products.
Changes in tax laws or challenges to our tax position could adversely affect our results of operations and financial condition.
We are subject to complex tax laws in each of the jurisdictions in which we operate. Changes in tax laws could
adversely affect our tax position, including our effective tax rate or tax payments. In addition, Swedish, Danish, Norwegian and
European and other international tax laws and regulations are extremely complex and are subject to varying interpretations. We
often rely on generally available interpretations of tax laws and regulations in the jurisdictions in which we operate. We cannot be
certain that the relevant tax authorities are in agreement with our interpretation of these laws. If our tax positions are challenged
by relevant tax authorities, the imposition of additional taxes could require us to pay taxes that we currently do not collect or pay
34
or increase the costs of our services to track and collect such taxes, which could increase our costs of operations and have a
negative effect on our business, results of operations, financial position and cash flows.
We occupy most of our facilities under short- and medium-term leases. We may be unable to renew leases at the end of their
terms. If we close a facility, we remain obligated under the applicable lease.
Most of our facilities are located in leased premises. Most of our leases are non-cancellable and short- or medium-term.
We believe that leases we enter into in the future will likely be on similar terms as our current leases. We may be unable to renew
our leases at the end of their terms, or the terms of such renewal may be less favorable to us than those under the current leases. If
we close a facility, we generally remain committed to perform our obligations under the applicable lease, which includes the
payment of the base rent for the balance of the lease term. Over the course of the last few years, we closed a number of facilities
for which we remain liable on the lease obligations. Our obligation to continue making rent payments in respect of leases for
closed facilities could have a material adverse effect on our business and results of operations.
Our operating lease commitments could restrict our operations and make us more vulnerable to adverse economic conditions.
Our annual leasing costs for the year ended December 31, 2012 was approximately SEK191.3 million. In the event we
experience a significant decline in activity, our operating lease payment obligations may adversely affect operations and limit our
growth. Our level of operating lease payments may negatively impact our operations by increasing our vulnerability to general
adverse economic and industry conditions and impairing our ability to obtain additional financing in the future for working
capital, capital expenditures, acquisitions or other general corporate purposes. These restrictions could have a material adverse
effect on our business, financial position, results of operations and cash flows, and the ability to satisfy the obligations under the
Notes.
A failure to maintain and continuously improve our information technology and operational systems to support the anticipated
growth and improvements in our operations could have a material adverse effect on our business and operations.
In order to manage our growth and improve our performance, we must maintain and continuously upgrade and improve
our operational systems and processes. Our current information technology system is highly customized, and upgrades and
improvements may be costly and disruptive to our business. We may not be able to develop and implement, on a timely basis,
projects, systems, procedures and controls required to support the growth and development of our operations. If we are unable to
manage our growth and improve our performance, our business, results of operations and financial condition may be materially
adversely affected.
We rely on information technology systems that allow us to track and bill our services, communicate with our
customers, manage our employees and gather information upon which our management makes decisions regarding our business.
The administration of our business is increasingly dependent on the use of these systems. As a result, system failures or
disruptions resulting from disasters, computer viruses, hackers or other causes could have a material adverse effect on our
business. In addition, pursuant to contracts with third-party vendors, we outsource the operation and maintenance of certain of our
information technology systems to seek to ensure effective management of our information technology resources, as well as to
improve the cost efficiency of our information technology infrastructure, systems and applications. We rely on the ability of our
outsourcing partners to deliver agreed services. Their failure to perform satisfactorily could have a material adverse impact on our
We may be required to make further contributions to our pension schemes if the value of pension fund assets is not sufficient
to cover potential obligations.
Our white-collar employees in Sweden are covered by a defined benefit pension plan, which is accounted for in
accordance with IAS 19, under which we are required to provide agreed benefits to current and former employees. In Norway,
employees of Siemens Installation AS, which we acquired in 2009, were previously covered by a defined benefit pension plan. In
2010, these employees were transferred to the same defined contribution pension plan as our other employees in Norway.
However, the legacy defined benefit pension plan still applies to a small number of employees.
“Pensions risk” is the risk that the assets of our various defined benefit pension schemes, which are long-term in nature,
will not fully match the timing and amount of the schemes’ liabilities, as a result of which we would be required or choose to
make additional contributions to the schemes. Pension scheme liabilities vary with changes to long-term interest rates, inflation,
pensionable salaries and the longevity of scheme members. Changes to local legislation and regulations relating to defined benefit
plan funding requirements may also result in significant deviations in the timing and size of the expected cash contributions under
such plans. For the year ended December 31, 2012, we recorded a net benefit cost of SEK21.8 million to our income statement
and paid cash contributions of SEK5 million in respect of our defined benefit pension arrangements. As of December 31, 2012,
the value of our unfunded pension plan obligations was SEK25 million.
In addition, subject to European Union endorsement, for accounting periods beginning on or after January 1, 2013,
there will be a number of changes to IAS 19, the IFRS pensions accounting standard. These changes result in higher pension costs
which would have an adverse effect on our operating profit.
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Work stoppages or strikes could adversely affect our business.
The majority of our employees are members of unions, and most of our employees who work in our warehouses are
covered by collective bargaining agreements. We may encounter strikes or other disturbances, or threats of strikes or disturbances
occasioned by our unionized labor force and, upon the expiration of existing collective bargaining agreements, we may be unable
to reach new collective bargaining agreements on satisfactory terms or without work stoppages, strikes or similar industrial
actions. Our inability to negotiate satisfactory terms for new agreements would likely cause our labor costs to increase, which
would negatively affect our profit margins if we are unable to pass the additional costs on to our customers. When we acquire
companies and integrate them into our existing operations, we frequently enter into negotiations to restructure or reduce the
workforce at the acquired company. We may experience lengthier consultations or even strikes, work stoppages or other industrial
actions in the future, particularly when we are engaged in restructuring and reducing our workforce. Any industrial action or threat
thereof could disrupt our operations, possibly for a significant period of time, and result in increased wages and benefits or
otherwise have a material adverse effect on our business, results of operations and financial condition.
Risks Related to Our Structure
The Issuer and certain of the Guarantors are holding companies with no revenue-generating operations of their own and are
dependent upon cash flow from subsidiaries to meet their obligations on the Notes and the Note Guarantees, respectively.
The Issuer, Bravida Installation och Service AB, Scandinavian Installation Refi AB and Scandinavian Installation
Acquisition AB are each holding companies with no independent business operations or significant operating assets other than
investments in their subsidiaries. Each of these holding companies depends upon the receipt of sufficient funds from its
subsidiaries to meet its obligations, including the Notes. If our operating subsidiaries do not provide funds to the Issuer to make
scheduled payments on the Notes, we do not expect the Issuer to have any other source of funds that would allow it to make
payments to the holders of the Notes.
Various agreements governing our debt may restrict and, in some cases may actually prohibit, the ability of these
subsidiaries to move cash within their restricted group. Applicable tax laws may also subject such payments to further taxation.
Our subsidiaries may not be able to, or may not be permitted under applicable law to, make distributions or advance upstream
loans to the Issuer or the Guarantors.
The inability to transfer cash among entities within their respective consolidated groups may mean that even though the
entities, in aggregate, may have sufficient resources to meet their obligations, they may not be permitted to make the necessary
transfers from one entity in their restricted group to another entity in their restricted group in order to make payments to the entity
owing the obligations.
The Notes and each of the Note Guarantees will be structurally subordinated to present and future liabilities of our nonGuarantor subsidiaries.
Not all of our subsidiaries will guarantee the Notes. Generally, claims of creditors of a non-Guarantor subsidiary,
including trade creditors and claims of preference shareholders (if any) of the subsidiary, will have priority with respect to the
assets and earnings of the subsidiary over the claims of creditors of its parent entity, including claims by holders of the Notes
under the Notes or the Note Guarantees. Accordingly, in the event of any foreclosure, dissolution, winding-up, liquidation,
administration, reorganization or other insolvency or bankruptcy proceeding of any of our non-Guarantor subsidiaries, holders of
their indebtedness and their trade creditors will generally be entitled to payment of their claims from the assets of those
subsidiaries before any assets are made available for distribution to its parent entity. As such, the Notes and each Note Guarantee
will each be structurally subordinated to the creditors (including trade creditors) and preference shareholders (if any) of our, the
Issuer’s or the applicable Guarantor’s non-Guarantor subsidiaries.
For the twelve months ended March 31, 2013 on a Recalculation Basis, the Guarantors represented 93.0% of our
consolidated net sales and 90.7% of our consolidated EBITDA and as of March 31, 2013 represented 91.4% of our consolidated
total tangible assets. As of March 31, 2013, after giving effect to the Issue, the Issuer’s subsidiaries that are not guaranteeing the
Notes would have had no oustanding long-term financial indebtedness. Any of the debt that our non-Guarantor subsidiaries incur
in the future in accordance with the Indenture will rank structurally senior to the Notes and the Note Guarantees.
The Note Guarantees and security interests on the Collateral will be subject to certain limitations on enforcement and may be
limited by applicable laws or subject to certain defenses that may limit their validity and enforceability.
The Indenture provides that certain Note Guarantees will be limited to the maximum amount that can be guaranteed by
the relevant Guarantor without rendering the relevant Note Guarantee voidable or otherwise ineffective under applicable law and
enforcement of each Note Guarantee would be subject to certain generally available defenses. These laws and defenses include
those that relate to corporate benefit, fraudulent transfer or conveyance, voidable preference, financial assistance, corporate
purpose, capital maintenance or similar laws, regulations or defenses affecting the rights of creditors generally. Additionally, in
accordance with local laws, the Security Agent may not be able to represent the holders of the Notes in a court process without a
specific power of attorney.
36
Although laws differ among various jurisdictions, in general, under fraudulent conveyance and other laws, a court
could subordinate or void the Note Guarantees or the security interests in the Collateral granted by the relevant Security
Documents and, if payment had already been made under a Note Guarantee or upon enforcement of the Collateral, require that the
recipient return the payment to the relevant Guarantor, if the court found that:
•
the relevant Note Guarantee or security interest under the Security Documents was incurred with actual intent to
hinder, delay or defraud creditors or shareholders of the Guarantor or security provider or, in certain jurisdictions,
even when the recipient was simply aware that the Guarantor or security provider was insolvent when it granted
the relevant Note Guarantee or security;
•
the Guarantor or security provider did not receive fair consideration or reasonably equivalent value for the
relevant Note Guarantee or security interest under a Security Document and the Guarantor or security provider
was: (i) insolvent or rendered insolvent because of the relevant Note Guarantee or security interest;
(ii) undercapitalized or became undercapitalized because of the relevant Note Guarantee or security interest; or
(iii) intended to incur, or believed that it would incur, indebtedness beyond its ability to pay at maturity;
•
the relevant Note Guarantees or Security Documents were held to exceed the corporate objective of the Guarantor
or security provider or not to be in the best interests or for the corporate benefit of the Guarantor or security
provider; or
•
the amount paid or payable under the relevant Note Guarantee or the enforcement proceeds under the relevant
Security Documents was in excess of the maximum amount permitted under applicable law.
The measures of insolvency for purposes of fraudulent transfer laws vary depending upon applicable governing law.
Generally, an entity would be considered insolvent if, at the time it incurred indebtedness:
•
the sum of its debts, including contingent liabilities, is greater than the fair value of all its assets;
•
the present fair salable value of its assets is less than the amount required to pay the probable liability on its
existing debts and liabilities, including contingent liabilities, as they become due; or
•
it cannot pay its debts as they become due.
If a court were to find that the issuance of the Notes or a Note Guarantee was a fraudulent conveyance or held it
unenforceable for any other reason, the court could hold that the payment obligations under the Notes or such Guarantee are
ineffective, or require the holders of the Notes to repay any amounts received with respect to the Notes or such Note Guarantee. In
the event of a finding that a fraudulent conveyance occurred, you may cease to have any claim in respect of the relevant Guarantor
and would be a creditor solely of the Issuer and, if applicable, of the other Guarantors under any Note Guarantees that have not
been declared void.
Additionally, any future pledge of Collateral in favor of the Security Agent, including pursuant to Security Documents
delivered after the date of the Indenture, might be avoidable by the security provider (as debtor-in-possession) or by its trustee in
bankruptcy (or similar officer) if certain events or circumstances exist or occur, including, among others, if the security provider is
insolvent at the time of the pledge, the pledge permits the holders of the Notes to receive a greater recovery than if the pledge had
not been given and a bankruptcy proceeding in respect of the security provider is commenced within three months following the
pledge, or in certain circumstances, a longer period.
In order to receive the benefit of a security interest, the secured creditors must hold secured claims (i.e., the secured
party and the creditor have to be the same person).
In addition, under the terms of the Indenture, we will be permitted in the future to incur additional indebtedness and
other obligations that may share in the liens on the Collateral securing the Notes and the liens on the collateral securing our other
secured debt. The granting of new security interests may require the releasing and retaking of security or otherwise create new
hardening periods in certain jurisdictions. The applicable hardening period for these new security interests will run from the
moment each new security interest has been granted or perfected. At each time, if the security interest granted or recreated were to
be enforced before the end of the respective hardening period applicable in such jurisdiction, it may be declared void or
ineffective and it may not be possible to enforce it.
Enforcing your rights as a holder of Notes or under the Note Guarantees or security across multiple jurisdictions may prove
difficult.
The Issuer is incorporated under the laws of Sweden and the Guarantors are incorporated or organized under the laws
of Sweden, Norway and Denmark. The Collateral includes the shares of certain of our subsidiaries incorporated under the laws of
these jurisdictions. In the event of a bankruptcy, insolvency or similar event, proceedings could be initiated in Sweden, Norway
and Denmark. Such multijurisdictional proceedings are likely to be complex and costly for creditors and otherwise may result in
greater uncertainty and delay regarding the enforcement of your rights. Your rights under the Notes, the Note Guarantees and the
Collateral will be subject to the insolvency and administrative laws of several jurisdictions and there can be no assurance that you
37
will be able to effectively enforce your rights in such complex, multiple bankruptcy, insolvency or similar proceedings. The
multijurisdictional nature of enforcement over the Collateral may limit the realizable value of the Collateral.
Moreover, in certain jurisdictions, it is unclear whether all security interests in the Collateral give the Security Agent a
right to prevent other creditors from foreclosing on and realizing the Collateral or whether certain security interests only give the
Security Agent priority in the distribution of any proceeds of such realization. Accordingly, the Security Agent and holders of the
Notes may not be able to avoid foreclosure by other creditors (including unsecured creditors) on the Collateral.
Risks Related to Our Financial Profile
Our substantial leverage and debt service obligations may make it difficult for us to fulfill our obligations under the Notes and
operate our business.
Upon the consummation of the Issue, we had a substantial amount of outstanding indebtedness with significant debt
service requirements. On a Recalculation Basis after giving effect to the Issue, our total indebtedness (including the Notes) would
have been SEK2,628 million (€314 million) as of March 31, 2013.
Our significant leverage could have important consequences for holders of the Notes, including, but not limited to:
•
making it more difficult for us to satisfy our obligations with respect to the Notes and our other debt and
liabilities;
•
requiring us to dedicate a substantial portion of our cash flow to payments on our debt instead of operations, thus
reducing the availability of our cash flow to fund internal growth through working capital, capital expenditures,
acquisitions, joint ventures, product research and development, and other general corporate purposes;
•
increasing our vulnerability to, and reducing our flexibility to respond to, a downturn in our business, or generally
adverse economic or industry conditions;
•
placing us at a competitive disadvantage compared to our competitors that are not as highly leveraged as us;
•
limiting our flexibility in planning for, or reacting to, changes in our business and the competitive environment
and industry;
•
restricting us from pursuing strategic acquisitions or exploiting certain business opportunities;
•
limiting, among other things, our and our subsidiaries’ ability to borrow additional funds or raise equity capital in
the future and increasing the costs of such additional financings;
•
exposing us to risks that are inherent in interest rate fluctuations because certain of our indebtedness (including
the Senior Secured Floating Rate Notes) bears variable rates of interest; and
•
subjecting us to restrictive covenants, including, in the case of our Revolving Credit Facility, financial covenants,
the non-compliance with which could result in an event of default under, or acceleration of, our indebtedness.
We primarily expect to use cash flow from operations and borrowings under our new Revolving Credit Facility to
finance our operations, service our indebtedness and fund capital expenditures. Our ability to make these payments depends on
our future performance, which will be affected by financial, business, economic, regulatory and other factors, many of which we
cannot control. Our business may not generate sufficient cash flow from operations in the future, which could result in us being
unable to service or repay indebtedness or fund other liquidity needs. If we cannot service our indebtedness and meet our other
obligations and commitments, we might be required to refinance our debt or dispose of assets to obtain funds for such purpose.
We cannot assure you that such refinancings or asset disposals could be effected on a timely basis or on satisfactory terms, if at
all, or would be permitted by the terms of our debt instruments.
Despite our high level of indebtedness and restrictive covenants, we and our subsidiaries are still able to incur significant
additional amounts of debt or make certain restricted payments, which could further exacerbate the risks associated with our
substantial leverage.
We and our subsidiaries may be able to incur substantial additional indebtedness, including additional secured
indebtedness, in the future. Although the Indenture and the agreement governing our new Revolving Credit Facility contain
restrictions on the incurrence of additional debt, these restrictions are subject to a number of significant qualifications and
exceptions and, under certain circumstances, the amount of indebtedness (including secured indebtedness) that could be incurred
in compliance with these restrictions could be substantial. Following the Issue, we have SEK550 million immediately available
for borrowing under our new Revolving Credit Facility. Under the Indenture, in addition to specified permitted debt, we are able
to incur additional indebtedness so long as on a pro forma basis our fixed charge coverage ratio (as defined in the Indenture) is at
least 2.0 to 1.0 and additional indebtedness sharing in the Collateral securing the Notes so long as on a pro forma basis our
consolidated senior secured leverage ratio (as defined in the Indenture) is no greater than 5.0 to 1.0. In addition, neither the
Indenture nor the agreement governing our new Revolving Credit Facility prevents us from incurring obligations that do not
38
constitute indebtedness under those agreements. Moreover, some of the debt we may incur in the future could be effectively and
structurally senior to the Notes and may be secured by collateral that does not secure the Notes. The incurrence of additional debt
would increase the leverage-related risks described in this Prospectus. If we are able to designate some of our restricted
subsidiaries under the Indenture as unrestricted subsidiaries, those unrestricted subsidiaries would be permitted to borrow beyond
the limitations specified in the Indenture and engage in other activities in which restricted subsidiaries may not engage. We are
also permitted to invest in joint ventures and acquisitions, which may increase our indebtedness. Moreover, although the Indenture
and the agreement governing our new Revolving Credit Facility contain restrictions on our ability to make restricted payments,
including the declaration and payment of dividends, we are able to make substantial restricted payments under certain
circumstances. Under the Indenture, for example, we are able to make dividends, distributions, loans or other payments to any
Parent (as defined therein) within 18 months of the Issue Date in an aggregate amount not to exceed SEK500 million so long as on
a pro forma basis our consolidated senior secured leverage ratio does not exceed 4.5 to 1.0 on a net basis. Adding new debt to our
and our subsidiaries’ existing debt levels or making restricted payments could exacerbate the risks associated with our substantial
leverage described above, including our possible inability to service our debt.
We may not be able to generate sufficient cash to service our indebtedness, including due to factors outside our control, and we
may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.
Our ability to service our indebtedness will depend on our future performance, which will be affected by prevailing
economic conditions and financial, business, regulatory and other factors. Some of these factors are beyond our control. In
addition, our ability to borrow funds in the future to make payments on our debt will depend on the satisfaction of the covenants in
our debt agreements, including the Indenture, and other agreements we may enter into in the future. We cannot assure you that our
business will generate sufficient cash flows from operations or that future borrowings will be available to us in an amount
sufficient to enable us to make interest and principal payments on our debt, including the Notes, or to fund our other liquidity
needs.
If our cash flows from operations and capital resources are insufficient to fund our debt obligations, we may be forced
to reduce or delay capital expenditures, sell assets, seek additional capital, forego opportunities, or seek to restructure or refinance
our indebtedness, including the Notes. These alternative measures may not be successful and may not be sufficient to enable us to
meet our scheduled debt obligations. In the absence of such cash flows and resources, we could face substantial liquidity problems
and could be required to sell material assets to attempt to meet our debt service and other obligations. We may not be able to
consummate those asset sales to raise capital or sell assets at prices and on terms that we believe are fair, and any proceeds that we
receive may not be adequate to meet any debt obligations then due. If we cannot meet our debt obligations, the holders of our debt
may accelerate our debt and, to the extent such debt is secured, foreclose on our assets securing such debt. In such an event, we
may not have sufficient assets to repay all of our debt.
In addition, any failure to make payments of interest or principal on our outstanding indebtedness on a timely basis
would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. For a
discussion of our cash flows and liquidity, see “Management’s Discussion and Analysis of Financial Condition and Results of
Operations—Results of Operations—Liquidity and Capital Resources”.
We are subject to restrictive debt covenants limit our flexibility in operating our business and our ability to raise additional
funds.
The Indenture and the agreement governing our new Revolving Credit Facility contain covenants that significantly
restrict our ability to:
•
incur or guarantee additional indebtedness and issue certain preferred stock;
•
incur or permit to exist certain liens;
•
make certain payments, including dividends or other distributions, with respect to capital stock;
•
prepay or redeem subordinated debt or capital stock;
•
make certain loans or other investments;
•
create encumbrances or restrictions on the payment of dividends or other distributions, loans or advances to, and
on the transfer of assets to the Issuer or any of its restricted subsidiaries;
•
sell, lease or transfer certain assets, including capital stock of restricted subsidiaries;
•
engage in certain transactions with affiliates;
•
issue or sell the share capital of certain subsidiaries;
•
consummate a change of control;
•
consolidate or merge with other entities or sell substantially all of our assets; and
39
•
impair the security interests for the benefit of the holders of the Notes.
Each of the covenants is subject to a number of important exceptions and qualifications. See “Description of Certain
Financing Arrangements—Revolving Credit Facility” and “Description of the Senior Secured Notes—Certain Covenants.”
Despite these exceptions and qualifications, the covenants contained in the Indenture and the agreement governing our new
Revolving Credit Facility could materially affect our ability to operate our business and may limit our ability to react to market
conditions, raise additional debt or equity financing to operate during general economic or business downturns, take advantage of
potential business opportunities as they arise or grow in accordance with our strategy. For example, such restrictions could
adversely affect our ability to finance our operations, make strategic acquisitions, investments or alliances, restructure our
organization or finance our capital needs.
Additionally, our Revolving Credit Facility Agreement requires us to maintain a super senior leverage ratio, which
must not exceed 2.5 to 1.0, tested quarterly, and our ability to meet that financial ratio can be affected by events beyond our
control, including prevailing economic, financial and industry conditions. A breach of any of those covenants or restrictions could
result in an event of default under the agreement governing the Revolving Credit Facility, and the relevant lenders, subject to
applicable cure periods and other limitations on acceleration or enforcement, could cancel the availability of the Revolving Credit
Facility and elect to declare all amounts outstanding thereunder, together with accrued interest, immediately due and payable. In
addition, a default under the agreement governing the Revolving Credit Facility could lead to an event of default and acceleration
under other debt instruments that contain cross-default or cross-acceleration provisions, including the Indenture. If our creditors,
including the lenders under the Revolving Credit Facility, accelerate the payment of those amounts, we cannot assure you that our
assets and the assets of our subsidiaries would be sufficient to repay in full those amounts, and to satisfy all other liabilities of our
subsidiaries which would be due and payable and to make payments to enable us to repay the Notes, in full or in part. In addition,
if we are unable to repay those amounts, our creditors could proceed against any collateral granted to them to secure repayment of
those amounts.
The Senior Secured Floating Rate Notes and revolving commitments under the Revolving Credit Facility bear interest at a
floating rate that could rise significantly, increasing our interest cost and debt and reducing our cash flow.
The Senior Secured Floating Rate Notes and Revolving Credit Facility bear interest at a floating rate. These interest
rates could rise significantly in the future, increasing our interest expense. Although we may enter into and maintain certain
hedging arrangements designed to fix a portion of these rates, we are not required to do so and there can be no assurance that
hedging will continue to be available on commercially reasonable terms. Hedging itself carries certain risks, including that we
may need to pay a significant amount (including costs) to terminate any hedging arrangements. To the extent interest rates were to
rise significantly our interest expense associated with the Senior Secured Floating Rate Notes and any drawings under the
Revolving Credit Facility would correspondingly increase, thus reducing cash flow.
Risks Related to the Notes
Creditors under the Revolving Credit Facility, any credit facility that refinances or replaces the Revolving Credit Facility and
certain hedging obligations are entitled to be repaid with the proceeds of the Collateral sold in any enforcement sale in priority
to the Notes. Holders of the Notes will not control decisions regarding the Collateral in certain circumstances.
The Notes and the Note Guarantees are secured initially on a first-ranking basis by the same Collateral securing the
obligations under the Revolving Credit Facility and certain hedging liabilities. In addition, under the terms of the Indenture, we
are permitted to incur significant additional indebtedness and other obligations that may be secured by the same Collateral on a
pari passu or on a super-priority basis, including other future credit facilities and certain hedging liabilities.
Pursuant to the Intercreditor Agreement, creditors under the Revolving Credit Facility, certain future credit facilities
(subject to the incurrence of additional indebtedness permitted by the Indenture) and certain hedging liabilities are entitled to be
repaid with the proceeds of the Collateral sold in any enforcement sale in priority to the Notes. As such, in the event of a
foreclosure on the Collateral, you may not be able to recover amounts owed to you if the then outstanding claims under the
Revolving Credit Facility, certain future credit facilities and such hedging obligations are greater than the proceeds realized. Any
proceeds from an enforcement sale of the Collateral by any creditor will, after all obligations under the Revolving Credit Facility,
future credit facilities benefitting from such ranking and such hedging obligations have been discharged from such recoveries, be
applied pro rata in repayment of the Notes and any other obligations secured by the Collateral which are permitted to rank
pari passu with the Notes.
The lenders under the Revolving Credit Facility, certain future credit facilities and creditors in respect of certain
hedging obligations may have interests that are different from the interests of holders of the Notes and they may, subject to the
terms of the Intercreditor Agreement, elect to pursue their remedies under the Security Documents at a time when it would be
disadvantageous for the holders of the Notes to do so.
In addition, if the Security Agent sells Collateral comprising the shares of any of our subsidiaries as a result of an
enforcement action in accordance with the Intercreditor Agreement, claims under the Note Guarantees and the liens over any
assets of such entities securing the Notes and the Note Guarantees may be released. See “Description of Certain Financing
Arrangements—Intercreditor Agreement” and “Description of the Senior Secured Notes—Security—Release of Liens.”
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The rights of holders of the Notes to enforce remedies with respect to the Collateral are subject to collateral sharing
arrangements.
The security interest in our assets serving as Collateral for the Notes and the Note Guarantees thereof are also granted
as collateral in favor of the lenders under the Revolving Credit Facility and certain hedging counterparties. The Intercreditor
Agreement and the Indenture also permit a security interest in such Collateral to be granted to lenders of additional debt and to
hedging counterparties under certain of our hedging obligations. The Intercreditor Agreement provides that a common Security
Agent, who will also serve as the Security Agent for the lenders under the Revolving Credit Facility, certain hedge counterparties
and any additional secured debt, acts only as provided for in the Intercreditor Agreement. In general, the lenders and the agent
under the Revolving Credit Facility and the representatives of our hedging counterparties and any agent with respect to any future
secured debt will have, subject to prior notification of and consultation with the Trustee, the right to instruct the Security Agent to
enforce the shared collateral. In addition, holders of the Notes will not be able to force a sale of the Collateral or otherwise
independently pursue the remedies of a secured creditor under the Security Documents without consulting the lenders under the
Revolving Credit Facility, certain hedge counterparties and any such other secured debt for so long as any amounts under the
Revolving Credit Facility, certain hedging obligations or such other secured debt remain outstanding or as specified in the
Intercreditor Agreement. The Intercreditor Agreement provides that the enforcement sale of any Collateral will be subject to, as a
condition to the release of any claims of any other debt secured by such Collateral under the Intercreditor Agreement, certain
protections intended to maximize the secured creditors’ recovery from an enforcement sale. Prior to enforcement of the Collateral
by another class of creditors, the Trustee will be provided with notice and the right to consult. Neither the Trustee, the Issuer nor
the holders of the Notes will have the ability to prevent or delay enforcement after the relevant consultation periods have expired.
The Intercreditor Agreement further provides that in the event that the classes of creditors entitled to provide
enforcement instructions to the Security Agent provide conflicting instructions, such creditors must, subject to certain exceptions,
consult with each other for a period of not less than 30 days following the earlier of (i) the date of such conflicting instructions and
(ii) the date falling ten business days after the first enforcement instructions were delivered in accordance with the provisions of
the Intercreditor Agreement, before any enforcement action may be taken. Although enforcement instructions given by the holders
of the Notes will prevail after such consultation period (other than in the case that an insolvency event has occurred), if the
liabilities under the Revolving Credit Facility and certain hedging obligations have not been fully discharged within six months of
the date the first such enforcement instruction was issued or if no steps have been taken in relation to the commencement of
enforcement of the Collateral from the date that is three months after the date of such enforcement instruction (including any
instruction not to take enforcement steps) then enforcement instructions by the lenders under the Revolving Credit Facility and
creditors under certain hedging liabilities will prevail. These arrangements could be disadvantageous to the holders of the Notes in
a number of respects and may permit the lenders under the Revolving Credit Facility and creditors under certain hedging liabilities
to control enforcement in circumstances in which their interests are different from those of the holders of the Notes. See
“Description of Certain Financing Arrangements—Intercreditor Agreement.” The lenders under the Revolving Credit Facility,
certain hedge counterparties or any other future class of debt secured by the Collateral may have interests that are different from
the interests of holders of the Notes and they may elect to pursue their remedies under the Security Documents at a time when it
would not be advantageous for the holders of the Notes to do so.
The rights of the holders of the Notes to take enforcement action, including with respect to the liens securing the Notes, are
limited.
The Intercreditor Agreement provides that a common security agent, who will also serve as the security agent for the
lenders under the Revolving Credit Facility, our hedging obligations and any additional debt secured by the Collateral permitted to
be incurred by the Indenture, will act only as provided for in the Intercreditor Agreement. The Intercreditor Agreement regulates
the ability of the trustee or holders of the Notes to instruct the security agent to take enforcement action. The security agent will
not be required to take enforcement action unless instructed to do so by an instructing group that comprises (i) creditors holding
more than 66 2/3% of the indebtedness and commitments under any “super priority” credit facility, including the Revolving Credit
Facility and the priority hedging obligations when entered into (the “Majority Super Senior Creditors”) or (ii) the holders of the
required principal amount of the then outstanding Notes as set out in the Indenture (or if the required amount is not specified, the
holders holding at least the majority of the principal amount of the then outstanding Notes), the non-priority hedging obligations
when entered into and the holders of the required principal amount of the then outstanding indebtedness ranking pari passu with
the Notes as set out in the relevant documents governing such debt ranking pari passu with the Notes (or if the required amount is
not specified, the holders holding at least the majority of the principal amount of the then outstanding amount of such
indebtedness) whose principal amount outstanding under the Notes and such indebtedness ranking pari passu with the Notes (the
“Senior Secured Credit Participations”) at that time aggregate more than 50% of the total Senior Secured Credit Participations at
that time (the “Majority Senior Secured Creditors”) (in each case acting through their respective creditor representative). If,
however, before the super-senior discharge date, the security agent has received conflicting enforcement instructions from the
creditor representatives then, to the extent the instructions from the Majority Senior Secured Creditors comply with the initial
consultation requirements and the security enforcement principles, the security agent will comply with the instructions from the
Majority Senior Secured Creditors, provided that if the super-senior liabilities have not been fully discharged within six months of
the date on which the first such enforcement instructions were issued, or no enforcement has occurred within three months of the
date on which the first such enforcement instructions were first issued, then the instructions of the Majority Super Senior Creditors
will prevail. If, prior to the later of the super senior discharge date and the senior secured discharge date the Senior Secured
Instructing Group has instructed the security agent not to enforce or to cease enforcing the Transaction Security or the Senior
Secured Instructing Group has not issued instructions, and the Senior Secured Instructing Group has not required any Debtor to
41
make a Distressed Disposal, the Security Agent shall give effect to any instructions to enforce the Transaction Security which the
Second Lien Notes Trustee or the Additional Second Lien Debt Representative (acting on the instructions of the Second Lien
Notes/Additional Second Lien Required Holders) are then entitled to give to the Security Agent under the terms of the
Intercreditor Agreement. To the extent we incur additional indebtedness that is secured on a pari passu basis with the Notes, your
voting interest in an instructing group comprised of Senior Secured Creditors will be diluted commensurate with the amount of
indebtedness we incur.
Our failure to comply with the covenants under the Revolving Credit Facility Agreement or the Indenture, including as a
result of events beyond our control, could result in an event of default which could materially and adversely affect our
financial condition and results of operations.
Our Revolving Credit Facility Agreement and the Indenture require us to comply with various covenants, including
financial covenants in the Revolving Credit Facility requiring us to maintain specified financial ratios and satisfy specified
financial tests.
The Revolving Credit Facility Agreement requires us to maintain a leverage ratios and a minimum cash balance. See
“Description of Certain Financing Arrangements—Revolving Credit Facility.” Our ability to meet these financial ratios and tests
could be affected by a deterioration in our results of operations, as well as by events beyond our control, including decreases in
tariffs and unfavorable economic conditions, and we cannot assure you that we will be able to meet those ratios and tests.
Moreover, the Revolving Credit Facility Agreement includes certain events of default (such as breach of representations and
warranties and cross-payment defaults) that are in addition to the events of default set forth in the Indenture. If an event of default
occurs under the Revolving Credit Facility Agreement or any other of our debt instruments and is not cured or waived, the holders
of the defaulted debt could terminate their commitments and declare all amounts borrowed, together with accrued and unpaid
interest and other fees, to be immediately due and payable. Borrowings under other debt instruments, including the Notes, that
contain cross-acceleration or cross-default provisions also may be accelerated or become payable on demand. In these
circumstances, our assets and cash flows may not be sufficient to repay in full that indebtedness and our other indebtedness,
including the Notes then outstanding, which could force us into bankruptcy or liquidation, and we might not be able to repay our
obligations under the Notes in such an event.
The value of the Collateral securing the Notes and the Note Guarantees may not be sufficient to satisfy our obligations under
the Notes, and there may be limitations on your ability to foreclose on the Collateral.
The Notes and the Note Guarantees are secured by security interests in the Collateral described in this Prospectus,
which Collateral also secures the obligations under any “super priority” credit facility, including the Revolving Credit Facility and
certain hedging obligations. The Revolving Credit Facility contains a mechanism under which commitments under the Revolving
Credit Facility may be increased from SEK550 million to up to SEK910 million and any such increase will also benefit from firstranking security interests in the Collateral. Upon a refinancing of the Revolving Credit Facility, or if the lenders under the
Revolving Credit Facility consent to an increase under the Revolving Credit Facility, the amount that will benefit from firstranking security interest in the Collateral may be increased up to the amount provided under the Indenture. The Collateral may
also secure additional debt ranking pari passu with the Notes to the extent permitted by the terms of the Indenture and the
Intercreditor Agreement. Your rights to the Collateral may therefore be diluted by any increase in the first-priority debt secured by
the Collateral.
The Collateral securing the Notes are subject to any and all exceptions, defects, imperfections, encumbrances and other
liens permitted under the Indenture. The existence of any such exceptions, defects, imperfections, encumbrances and other liens
could adversely affect the value of the Collateral securing the Notes as well as the ability of the Security Agent to realize or
foreclose on that Collateral. Furthermore, the first-priority ranking of security interests can be affected by a variety of factors,
including, among others, the timely satisfaction of perfection requirements, statutory liens or recharacterization under the laws of
certain jurisdictions. The security interests of the security agent will be subject to practical problems generally associated with the
realization of security interests in Collateral. For example, the Security Agent may need to obtain the consent of a third party to
enforce a security interest. We cannot assure you that the Security Agent will be able to obtain any such consents. We also cannot
assure you that the consents of any third parties will be given when required to facilitate a foreclosure on such assets.
Accordingly, the Security Agent may not have the ability to foreclose upon those assets and the value of the Collateral may
significantly decrease.
The value of the Collateral and the amount to be received upon a sale of such Collateral will depend upon many factors,
including, among others, the ability to sell the Collateral in an orderly sale, the condition of the economies in which operations are
located and the availability of buyers. The book value of the Collateral should not be relied on as a measure of realizable value for
such assets. All or a portion of the Collateral may be illiquid and may have no readily ascertainable market value. Likewise, we
cannot assure you that there will be a market for the sale of the Collateral, or, if such a market exists, that there will not be a
substantial delay in its liquidation. In addition, the share pledges of an entity may be of no value if that entity is subject to an
insolvency or bankruptcy proceeding. Consequently, liquidating the Collateral may not result in proceeds in an amount sufficient
to pay any amounts due under the Notes after satisfying the obligations to pay any creditors with prior liens. If the proceeds of the
sale of the Collateral are not sufficient to repay all amounts due on the Notes, holders of the Notes (to the extent not repaid from
the proceeds of the sale of the Collateral) would have only an unsecured, unsubordinated claim against the Issuer’s and the
Guarantors’ remaining assets, which may not be sufficient to repay our obligations under the Notes.
42
Your rights in the Collateral may be adversely affected by the failure to perfect security interests in the Collateral.
Under applicable law, a security interest in certain tangible and intangible assets can be properly perfected, and its
priority retained, only through certain actions undertaken by the secured party and/or the grantor of the security. The liens in the
Collateral securing the Notes may not be perfected with respect to the claims of the Notes if we fail or are unable to take the
actions we are required to take to perfect or maintain the perfection of any of these liens. In addition, applicable law requires that
certain property and rights acquired after the grant of a general security interest, such as real property, equipment subject to a
certificate and certain proceeds, can only be perfected at or promptly following the time such property and rights are acquired and
identified.
The Trustee and the Security Agent for the Notes are under no obligation to monitor, and we may not comply with our
obligations to inform the Trustee or Security Agent of, any future acquisition of property and rights by us, and the necessary
action may not be taken to properly perfect the security interest in such after-acquired property or rights. Such failure may result
in the invalidity of the security interest in the Collateral or adversely affect the priority of the security interest in favor of the Notes
against third parties. Neither the Trustee nor the Security Agent for the Notes has any obligation to monitor the acquisition of
additional property or rights by us or the perfection of any security interest.
It is uncertain under Danish law whether obligations owing to beneficial owners of the Notes that are not identified as
registered holders of security rights in shares issued by the Danish subsidiaries of the Issuer will be validly secured. If any
challenge to the validity of those security interests were successful, the holders of the Notes may not be able to recover any
amounts under the share pledges granted over subsidiaries incorporated in Denmark.
The security over the Collateral will not be granted directly to the holders of the Notes, and the holders of the Notes will have
limited rights to enforce remedies under the Security Documents.
The security interests in the Collateral that secure our obligations under the Notes and the obligations of the Guarantors
under the Note Guarantees are not granted directly to the holders of the Notes, but will be granted only in favor of the Security
Agent. The Trustee has entered into the Intercreditor Agreement with, among others, the Security Agent and representatives of the
other indebtedness secured by the Collateral, including our new Revolving Credit Facility. Other creditors may become parties to
the Intercreditor Agreement in the future. Among other things, the Intercreditor Agreement governs the enforcement of the
Security Documents, the sharing in any recoveries from such enforcement and the release of the Collateral by the Security Agent.
As a consequence, holders of the Notes will not have direct security interests and will not be entitled to take enforcement action in
respect of the Collateral securing the Notes, except through the Security Agent, who will follow instructions as set forth under
“Description of Certain Financing Arrangements—Intercreditor Agreement.”
While Danish courts will recognize a duly appointed agent’s right to enforce security interests in court on behalf of
named secured creditors, there is a risk that the Security Agent’s right to enforce security interests in its own name on behalf of
secured creditors from time to time may be successfully contested.
The Issuer and the Guarantors have control over the Collateral securing the Notes, and the operation of the business or sale of
particular assets could reduce the pool of assets securing the Notes.
The Security Documents allow the Issuer and the Guarantors to remain in possession of, retain exclusive control over,
freely operate, and collect, invest and dispose of any income from the Collateral securing the Notes. So long as no default or event
of default under the Indenture would result therefrom, the Issuer and the Guarantors may, among other things, subject to certain
limitations with respect to Security Documents governed by Swedish law, Norwegian law or Danish law, without any release or
consent by the Security Agent, conduct ordinary course activities with respect to the Collateral, such as selling, factoring,
abandoning or otherwise disposing of Collateral and making ordinary course cash payments, including repayments of
indebtedness. Any of these activities could reduce the value of the Collateral, which could reduce the amounts payable to you
from the proceeds of any sale of the Collateral in the case of an enforcement of the liens on the Notes. To the extent that additional
indebtedness and obligations are secured by the Collateral, our control over the Collateral may be diminished. To the extent these
activities are allowed with regard to certain security interests, under Swedish law and Danish law, such security interests could be
considered not validly perfected.
The granting of the security interests in connection with the issuance of the Notes, or the incurrence of permitted debt in the
future, may create or restart hardening periods, i.e., the periods of time following the granting of security interests during
which such security interests may be challenged in accordance with the laws applicable in certain jurisdictions.
The granting of security interests to secure the Notes and the Note Guarantees may create hardening periods for such
security interests in certain jurisdictions. The granting of shared security interests to secure future indebtedness permitted to be
secured on the Collateral may restart or reopen such hardening periods in particular, because the Indenture permits the release and
retaking of security granted in favor of the Notes in certain circumstances, including in connection with the incurrence of future
indebtedness. The applicable hardening period for these new security interests can run from the moment each new security interest
has been granted or perfected. At each time, if the security interest granted or recreated were to be enforced before the end of the
respective hardening period applicable in such jurisdiction, it may be declared void or ineffective and/or it may not be possible to
enforce it.
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The same considerations also apply following the issuance of the Notes in connection with the accession of further
subsidiaries as additional Guarantors and the granting of security interest over their relevant assets and equity interests for the
benefit of holders of the Notes.
There are circumstances other than repayment or discharge of the Notes under which the Collateral securing the Notes and
the Note Guarantees will be released automatically and under which the Note Guarantees will be released automatically,
without your consent or the consent of the relevant Trustee.
Under various circumstances, the Collateral securing the Notes and the Note Guarantees will be released automatically,
including:
•
upon payment in full of principal, interest and all other obligations on the Notes;
•
upon release of the Note Guarantee (with respect to the liens securing such Note Guarantee granted by such
Guarantor);
•
in connection with a disposition of Collateral to any person other than the Issuer or any of its restricted
subsidiaries if the sale or other disposition does not violate the requirements of the provisions set forth under
“Description of the Senior Secured Notes—Certain Covenants—Limitation on Sales of Assets and Subsidiary
Stock” or is otherwise permitted in accordance with the Indenture;
•
if the Issuer designates any Guarantor to be an unrestricted subsidiary in accordance with the applicable
provisions of the Indenture, the release of the property and assets, and capital stock, of such unrestricted
subsidiary;
•
in connection with certain enforcement actions taken by the creditors pursuant to the Intercreditor Agreement;
and
•
in accordance with the provisions of the Indenture.
Even though holders of the Notes share in the Collateral securing the Notes ratably with the lenders under the
Revolving Credit Facility, under certain circumstances, the lenders under the Revolving Credit Facility Agreement and certain of
our hedging arrangements will control enforcement actions with respect to the Collateral through the Security Agent, whether or
not holders of the Notes agree or disagree with those actions. See “Description of the Senior Secured Notes—Security—
Enforcement of Security Interest.”
Under various circumstances, the Note Guarantees will be released automatically, including:
•
upon a sale or other disposition of all or substantially all of the assets of that Guarantor (including by way of
merger or consolidation) or the share capital of that Guarantor to a person that is not (either before or after giving
effect to such transaction) the Issuer or a restricted subsidiary of the Issuer, if the sale or other disposition is
otherwise permitted by the provisions set forth under “Description of the Senior Secured Notes—Certain
Covenants— Limitation on Sales of Assets and Subsidiary Stock”;
•
if the Issuer designates any restricted subsidiary that is a Guarantor to be an unrestricted subsidiary in accordance
with the applicable provisions of the Indenture;
•
upon the defeasance or satisfaction and discharge of the Indenture as provided under “Description of the Senior
Secured Notes—Defeasance” or “Description of the Senior Secured Notes—Satisfaction and Discharge,” as
applicable;
•
pursuant to a transaction permitted by the covenant described under “Description of the Senior Secured Notes—
Certain Covenants—Merger and Consolidation”;
•
with respect to a Guarantor that is an Immaterial Subsidiary (as defined under “Description of the Senior Secured
Notes—Certain Definitions”), so long as no event of default has occurred and is continuing under the Indenture,
to the extent that such Guarantor is unconditionally released and discharged from all liabilities as a guarantor, if
any, with respect to the Revolving Credit Facility and any other indebtedness; and
•
in accordance with the other provisions of the Indenture.
In addition, the Note Guarantees and security interests will be subject to release as contemplated under the Intercreditor
Agreement. Unless consented to, the Intercreditor Agreement provides that the Security Agent shall not, in an enforcement
scenario, exercise its rights to release the Note Guarantees or security interests in the Collateral securing the Notes unless the
relevant sale or disposal is made:
•
for consideration, all or substantially all of which is in the form of cash;
44
•
concurrently with the unconditional discharge or release of the indebtedness of the disposed entities to certain
other creditors, including the creditors under the Revolving Credit Facility; and
•
pursuant to a competitive process, or (if not by way of public auction) following the issuance of a fairness
opinion with respect to the amount received in connection with such sale from an independent investment bank or
internationally recognized accounting firm selected by the Security Agent.
See “Description of Certain Financing Arrangements—Intercreditor Agreement.”
The Collateral is subject to casualty risks.
We intend to maintain insurance or otherwise insure against hazards in a manner appropriate and customary for our
business. There are, however, certain losses that may be either uninsurable or not economically insurable, in whole or in part.
Insurance proceeds may not compensate us fully for our losses. If there is a complete or partial loss of any of the Collateral, the
insurance proceeds may not be sufficient to satisfy all of the secured obligations, including the Notes and the Note Guarantees.
In the event of a total or partial loss to any of our facilities, certain items of equipment and inventory may not be easily
replaced, if at all. Accordingly, even though there may be insurance coverage, the extended period needed to manufacture
replacement units or inventory could cause significant delays and any such delay could further decrease the value of the other
Collateral.
We may not have the ability to raise the funds necessary to finance an offer to repurchase the Notes upon the occurrence of
certain events constituting a change of control as required by the Indenture.
Upon the occurrence of certain events constituting a “change of control” as defined in the Indenture, the Issuer is
required to offer to repurchase all outstanding Notes at a purchase price in cash equal to 101% of the principal amount thereof on
the date of purchase plus accrued and unpaid interest to the date of purchase. If a change of control were to occur, our ability to
make such purchase may be limited by our then existing financial resources and we cannot assure you that we would have
sufficient funds available at such time to pay the purchase price of the outstanding Notes or that the restrictions in the Revolving
Credit Facility, the Indenture, the Intercreditor Agreement or our other then existing contractual obligations would allow us to
make such required repurchases. A change of control may result in an event of default under, or acceleration of, the Revolving
Credit Facility and other indebtedness. The repurchase of the Notes pursuant to such an offer could cause a default under such
indebtedness, even if the change of control itself does not. The ability of the Issuer to receive cash from its subsidiaries to allow
them to pay cash to the holders of the Notes following the occurrence of a change of control may be limited by our then existing
financial resources. In addition, under the terms of the agreement governing the Revolving Credit Facility, under certain
circumstances, if we repay more than 60% of the aggregate principal amount of the Notes offered hereby, we are required to repay
and cancel commitments under the Revolving Credit Facility in the same proportion until the total commitments under the
Revolving Credit Facility are reduced to SEK250 million (or its equivalent in other currencies). Sufficient funds may not be
available when necessary to make any required repurchases. If an event constituting a change of control occurs at a time when we
are prohibited from providing funds to any of the Issuer for the purpose of repurchasing the Notes, we may seek the consent of the
lenders under such indebtedness to the purchase of the Notes or may attempt to refinance the borrowings that contain such
prohibition. If such a consent to repay such borrowings is not obtained, the Issuer will remain prohibited from repurchasing any
Notes. In addition, we expect that we would require third-party financing to make an offer to repurchase the Notes upon a change
of control. We cannot assure you that we would be able to obtain such financing. Any failure by the Issuer to offer to purchase the
Notes would constitute a default under the Indenture, which would, in turn, constitute a default under the agreement governing the
Revolving Credit Facility and certain other indebtedness. See “Description of the Senior Secured Notes—Change of Control.”
The change of control provision contained in the Indenture may not necessarily afford you protection in the event of
certain important corporate events, including a reorganization, restructuring, merger or other similar transaction involving us that
may adversely affect you, because such corporate events may not involve a shift in voting power or beneficial ownership or, even
if they do, may not constitute a “change of control” as defined in the Indenture. Except as described under “Description of the
Senior Secured Notes—Change of Control,” the Indenture will not contain provisions that would require the Issuer to offer to
repurchase or redeem the Notes in the event of a reorganization, restructuring, merger, recapitalization or similar transaction.
The definition of “change of control” contained in the Indenture will include (with certain exceptions) a disposition of
all or substantially all the assets of the Issuer and its restricted subsidiaries, taken as a whole, to any person. Although there is a
limited body of case law interpreting the phrase “all or substantially all,” there is no precisely established definition of the phrase
under applicable law. Accordingly, in certain circumstances, there may be a degree of uncertainty as to whether a particular
transaction would involve a disposition of “all or substantially all” of the Issuer’s assets and its restricted subsidiaries taken as a
whole. As a result, it may be unclear as to whether a change of control has occurred and whether the Issuer is required to make an
offer to repurchase the Notes.
Furthermore, the occurrence of certain events that might otherwise constitute a change of control under the Indenture
will not be deemed to be a change of control if at the time our consolidated leverage ratio is less than certain specified levels. See
“Description of the Senior Secured Notes—Certain Definitions—Specified Change of Control Event.”
45
Certain covenants may fall away upon the occurrence of a change in our ratings.
The Indenture provides that, if at any time following the date of the Indenture, the Notes receive a rating of Baa3 or
better by Moody’s Investors Service, Inc. and a rating of BBB– or better from Standard & Poor’s Investors Ratings Services and
no default or event of default has occurred and is continuing, then beginning that day and continuing until such time as the Notes
cease to have investment-grade ratings from both Moody’s Investors Service, Inc. or Standard & Poor’s Investors Ratings
Services, certain covenants will cease to be applicable to the Notes. See “Description of the Senior Secured Notes—Certain
Covenants—Suspension of Covenants on Achievement of Investment Grade Status.”
If these covenants were to be suspended, we would be able to incur additional indebtedness or make payments,
including dividends or investments, which may conflict with the interests of holders of the Notes. There can be no assurance that
the Notes will ever achieve an investment-grade rating or that any such rating will be maintained.
There is no established trading market for the Notes. If a market for the Notes does not develop, your ability to sell the Notes
may be limited.
The Notes are new issues of securities for which there is currently no established trading market. Accordingly, we
cannot assure you as to:
•
the liquidity of any market in the Notes;
•
your ability to sell your Notes; or
•
the prices at which you would be able to sell your Notes.
Although the Issuer intends to use commercially reasonable efforts to list the SEK Senior Secured Floating Rate Notes
on NASDAQ OMX Stockholm, there can be no assurance that such application will be accepted for listing or that the SEK Senior
Secured Floating Rate Notes will be so admitted. The Initial Purchasers of the Notes have advised us that they intend to make a
market in the Notes as permitted by applicable law. The Initial Purchasers are not obligated, however, to make a market in the
Notes, and any market-making activity may be discontinued at any time at the sole discretion of the Initial Purchasers without
notice.
The liquidity of the trading market in the Notes and the market price quoted for the Notes may be adversely affected by
many factors, including, among other things, changes in the overall market for similar securities, interest rates, our financial
performance or prospects or in the prospects for companies in our industry generally. Historically, the market for non-investmentgrade debt has been subject to substantial volatility, which could adversely affect the price at which you may sell your Notes. In
addition, subsequent to their initial issue, the Notes may trade at a discount from their initial offering price, depending upon
prevailing interest rates, the market for similar notes, our operating performance and other factors. As a result, an active trading
market for the Notes may not develop or, if developed, may not continue, and you may be unable to sell your Notes.
Furthermore, it is possible that the market for the Notes will be subject to disruptions. Any such disruption may have a
negative effect on you, as a holder of the Notes, regardless of our prospects and financial performance. As a result, there is no
assurance that there will be an active trading market for the Notes. If no active trading market develops, you may not be able to
resell your holding of the Notes at a fair value, if at all. In addition, the Indenture will allow the Issuer to issue additional Notes in
the future which could adversely impact the liquidity of the Notes offered hereby.
The Notes are initially held in book-entry form, and therefore you must rely on the procedures of the relevant clearing systems
to exercise any rights and remedies.
The Notes are initially only issued in global form and held by, or on behalf of, a common depositary for the accounts of
Euroclear and Clearstream.
Interests in the global notes trade in book-entry form only, and the Notes in definitive registered form (“definitive
registered notes”), will be issued in exchange for book-entry interests only in very limited circumstances. Owners of book-entry
interests are not considered owners of the Notes. The common depositary, or its nominee, for Euroclear and Clearstream is the
sole registered holder of the global notes representing the Notes. Payments of principal, interest and other amounts owing on or in
respect of the global notes representing the Notes are made to Deutsche Bank AG, London Branch, as principal Paying Agent,
which makes payments to Euroclear and Clearstream. Thereafter, these payments are credited to participants’ accounts that hold
book-entry interests in the global notes representing the Notes and credited by such participants to indirect participants. After
payment to the common depositary for Euroclear and Clearstream, we have no responsibility or liability for the payment of
interest, principal or other amounts to the owners of book-entry interests. Accordingly, if you own a book-entry interest, you must
rely on the procedures of Euroclear and Clearstream, and if you are not a participant in Euroclear or Clearstream, on the
procedures of the participant through which you own your interest, to exercise any rights and obligations of a holder of the Notes
under the Indenture.
Unlike the registered holders of the Notes themselves, owners of book-entry interests do not have the direct right to act
upon our solicitations for consents, requests for waivers or other actions from holders of the Notes. Instead, if you own a bookentry interest, you are permitted to act only to the extent you have received appropriate proxies to do so from Euroclear or
46
Clearstream. The procedures implemented for the granting of such proxies may not be sufficient to enable you to vote on a timely
basis.
Similarly, upon the occurrence of an event of default under the Indenture, unless and until definitive registered Notes
are issued in respect of all book-entry interests, if you own a book-entry interest, you are restricted to acting through Euroclear
and Clearstream. The procedures to be implemented through Euroclear and Clearstream may not be adequate to ensure the timely
exercise of rights under the Notes. See “Book-Entry, Delivery and Form.”
The transfer of the Notes is restricted, which may affect the value of the Notes.
The Notes and the Note Guarantees have not been registered under the U.S. Securities Act or the securities laws of any
jurisdiction and, unless so registered, may not be offered or sold except pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the U.S. Securities Act and any other applicable laws. We have not undertaken any
registration rights in respect of the Notes. It is your obligation to ensure that your offers and sales of Notes comply with applicable
law.
Credit ratings may not reflect all risks, are not recommendations to buy or hold securities and may be subject to revision,
suspension or withdrawal at any time.
One or more independent credit rating agencies may assign credit ratings to the Notes. The ratings may not reflect the
potential impact of all risks related to the structure, market, additional risk factors discussed above and other factors that may
affect the value of the Notes. A credit rating is not a recommendation to buy, sell or hold securities and may be subject to revision,
suspension or withdrawal by the rating agency at any time. No assurance can be given that a credit rating will remain constant for
any given period of time or that a credit rating will not be lowered or withdrawn entirely by the credit rating agency if, in its
judgment, circumstances in the future so warrant. A suspension, reduction or withdrawal at any time of the credit rating assigned
to the Notes by one or more of the credit rating agencies may adversely affect the cost and terms and conditions of our financings
and could adversely affect the value and trading of the Notes.
Risks Related to Our Ownership
The interests of our principal shareholders may conflict with your interests as a holder of the Notes.
The interests of our controlling shareholders may conflict with yours as a holder of the Notes, particularly if we
encounter financial difficulties or are unable to pay our debts when due. The controlling shareholders have (directly or indirectly)
the power to, among other things, affect our legal and capital structure and our day-to-day operations and may have an incentive
to increase the value of their investments or cause us to distribute funds at the expense of our financial condition, which could
impact our ability to make payments on the Notes. In addition, the controlling shareholders have the power to elect a majority of
our board of directors and appoint new officers and management and, therefore, effectively control many other major decisions
regarding our operations. We cannot assure you that the interests of the controlling shareholders will not conflict with your
interests as a holder of the Notes. See “Principal Shareholder” and “Certain Relationships and Related Party Transactions.”
47
PRESENTATION OF INFORMATION
IFRS Financial Information
The Issuer, Bravida Holding AB (publ), was incorporated on April 10, 2012 in connection with the Acquisition
Transactions (as defined herein). No financial statements of the Issuer are available prior to the date of its incorporation.
Accordingly, as of and for the years ended December 31, 2010, 2011 and 2012 and the three months ended March 31, 2012, this
Prospectus presents the historical financial information for Bravida AB, the Issuer’s predecessor, and its consolidated subsidiaries.
This Prospectus presents the historical financial information of the Issuer and its consolidated subsidiaries as of and for the three
months ended March 31, 2013. In addition thereto, the Issuer’s audited financial statements as of and for the period April 25, 2012
– December 31, 2012, prepared in accordance with generally accepted accounting principles in Sweden as in effect from time to
time (“Swedish GAAP”) and the Issuer’s unaudited condensed consolidated interim financial statements as of and for the nine
months ended 30 September 2013 prepared in accordance with International Accounting Standards 34, Interim Financial
Reporting (“IAS 34”) are incorporated into this Prospectus through reference, due to requirements stipulated by the SFSA
pursuant to the Trading Act but are not presented below in conjunction with “Selected Historical Consolidated Financial and
Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” or elsewhere in
this Prospectus.
We refer to the periods for which financial information is presented for Bravida AB and its consolidated subsidiaries in
this Prospectus as the “Predecessor periods” and the periods for which historical financial information is presented for the Issuer
and its consolidated subsidiaries as the “Successor periods.” Due to the accounting impact of the Acquisition Transactions and
other factors, such as increased interest expense resulting from the Acquisition Transactions, financial information in respect of
the Successor periods is not directly comparable to that in respect of the Predecessor periods. See “—Impact of the Acquisition
Transactions on Our Historical Financial Information.”
In order to provide a meaningful comparison of our results for the Successor periods to those for the Predecessor
periods, we also present in this Prospectus unaudited recalculated condensed consolidated financial information for the three
months ended March 31, 2012 and for the year ended December 31, 2012. The unaudited recalculated condensed consolidated
financial information represents the historical audited financial information for the Predecessor, as adjusted to give recalculation
effect to historical income and expenses recorded by Bravida AB’s intermediate holding companies (Bravida Installation och
Service AB (formerly Bravissima Acquisition AB), Scandinavian Installation Refi AB and Scandinavian Installation Acquisition
AB (collectively, the “Intermediate Holding Companies”)), and by Bravissima AS and the Issuer, as well as the Acquisition
Transactions, as if such transactions had occurred on January 1, 2012. The recalculation adjustments are based on available
information and certain assumptions that we believe are reasonable. The unaudited recalculated condensed consolidated financial
information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and the historical financial statements which are incorporated through reference into this Prospectus. The unaudited
recalculated condensed consolidated financial information is presented for information purposes only and is not intended to
represent or be indicative of the results of operations or financial condition that we would have reported had the Acquisition
Transactions actually occurred on January 1, 2012, and they do not purport to project our results of operations or financial
condition for any future period. In addition, the unaudited recalculated condensed consolidated financial information presented in
this Prospectus has not been prepared in accordance with International Financial Reporting Standards as adopted by the European
Union (“IFRS”), and neither the recalculation adjustments to the historical financial information nor the resulting unaudited
recalculated condensed consolidated financial information has been audited or reviewed in accordance with applicable auditing
standards. Due to the accounting impact of the Acquisition Transactions, particularly the adjustments related to acquisition
accounting, and other factors, such as the increased interest expense resulting from the Acquisition Transactions, the unaudited
recalculated condensed consolidated financial information is not directly comparable to the Predecessor’s historical financial
information presented in this Prospectus. Although we present a comparison of the Successor’s unaudited condensed consolidated
interim financial statements for the three months ended March 31, 2013 to the Successor’s unaudited recalculated condensed
consolidated financial information for the three months ended March 31, 2012, these results are not directly comparable. See
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
The following financial statements and financial information are included in this Prospectus, either directly or
incorporated through reference:
•
audited consolidated financial statements of Bravida AB and its consolidated subsidiaries as of and for the years
ended December 31, 2010, 2011 and 2012, prepared in accordance with IFRS;
•
unaudited condensed consolidated interim financial statements of Bravida AB and its consolidated subsidiaries as
of and for the three months ended March 31, 2012, prepared in accordance with IAS 34);
•
audited financial statements of the Issuer as of and for the period April 25, 2012 – December 31, 2012, prepared
in accordance with Swedish GAAP;
•
unaudited condensed consolidated interim financial statements of the Issuer and its consolidated subsidiaries as of
and for the three months ended March 31, 2013, prepared in accordance with IAS 34;
48
•
unaudited recalculated condensed consolidated financial information for the three months ended March 31, 2012
and for the year ended December 31, 2012;
•
unaudited recalculated condensed consolidated financial information for the twelve months ended March 31,
2013; and
•
and for the nine months ended 30 September 2013, prepared in accordance with IAS 34.
The historical audited financial information included in this Prospectus, including the audited financial information
discussed in “Summary—Summary Consolidated Historical and Recalculated Financial and Other Information,” “Selected
Historical Consolidated Financial and Other Information” and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations,” for each of the fiscal years ended December 31, 2010, 2011 and 2012 has been derived or extracted
from Bravida AB’s audited consolidated financial statements which have been audited by Bravida AB’s independent auditors,
KPMG AB. The historical unaudited condensed consolidated financial statements included in this Prospectus for the three months
ended March 31, 2012 have been derived or extracted from Bravida AB’s unaudited interim condensed consolidated financial
statements. The historical unaudited condensed consolidated financial statements included in this Prospectus for the three months
ended March 31, 2013 have been derived or extracted from the Issuer’s unaudited interim condensed consolidated financial
statements. These financial statements are incorporated through reference into this Prospectus.
Various numbers and percentages set forth in this Prospectus have been rounded and accordingly may not present exact
totals.
In “Summary—Summary Consolidated Historical and Recalculated Financial and Other Information” we also present
other recalculated information adjusted to give effect to the issuance of the Notes and the application of the proceeds therefrom as
set forth under “Use of Proceeds.”
Unless otherwise indicated in this Prospectus, we have, solely for your convenience, translated Swedish krona amounts
into euro (i) in respect of income statement data for the year ended December 31, 2012 and the twelve months ended March 31,
2013, at a rate of exchange of SEK8.7064 to €1.00 and SEK8.6185 to €1.00, respectively, representing the average rate of
exchange for the respective periods as published by Bloomberg (London Composite Rate) and (ii) in respect of balance sheet data
as of December 31, 2012 and March 31, 2013, at a rate of exchange of SEK8.5828 to €1.00 and SEK8.3679 to €1.00, respectively,
representing the rate of exchange as of the respective dates as published by Bloomberg (London Composite Rate). For all other
convenience translations we have used the average rate of exchange applicable for the date or period, as the case may be,
presented in this Prospectus under the heading “Exchange Rate Information.” The translation of income statement and balance
sheet transactions expressed in Swedish krona using such rates may result in the presentation of euro amounts that differ from the
euro amounts that would have been obtained by translating Swedish krona into euro at the exchange rate prevailing when such
transactions were recorded.
Impact of the Acquisition Transactions on Our Historical Financial Information
We accounted for the Acquisition Transactions using the acquisition method of accounting, which involves measuring
the cost of the acquisition and allocating it to identifiable assets acquired and identifiable liabilities assumed, measured at their fair
values as of the date of completion of the Acquisition Transactions. The revenues and expenses directly attributable to the
operations of the Predecessor were included in the Issuer’s financial statements from the same date. The excess of the purchase
price over these allocations has been assigned to goodwill, which is not amortized for accounting purposes but is subject to testing
for impairment at least annually. In addition, we will incur a substantial amount of indebtedness as a result of the Refinancing (as
defined herein), and our interest expense will increase in future periods.
In addition to changes to our financial statements resulting from the application of the acquisition method of
accounting, due to the effects of the increased borrowings to finance the Acquisition Transactions, our interest expense has
increased significantly following the Acquisition Transactions. As a result, the financial information for periods beginning on or
after December 31, 2012 for the Successor may not be comparable to the financial information of the Predecessor for periods prior
to this date.
The Issuer will be our continuing reporting entity going forward but the impact of the Acquisition Transactions and the
Refinancing on our financial statements will affect the comparability of our future financial information with the historical
financial information of our Predecessor. Acquisition Transactions-related costs were recognized for the Issuer in profit or loss as
incurred.
Non-IFRS Financial and Operating Information
Certain financial measures and ratios related thereto in this Prospectus, including EBITDA and Adjusted EBITDA
(collectively, the “EBITDA Metrics”), are not specifically defined under IFRS or any other generally accepted accounting
principles. These measures are presented in this Prospectus because we believe that they are among the measures used by
management to evaluate the cash available to us to fund ongoing, long-term obligations and they are frequently used by securities
analysts, high yield investors and other interested parties for valuation purposes or as a common measure of the ability of issuers
to incur and meet debt service obligations. These measures may not be comparable to other similarly titled measures of other
49
companies and are not measurements under IFRS or other generally accepted accounting principles, and you should not consider
such items as alternatives to net income (loss), operating income or any other performance measures derived in accordance with
IFRS, and they may be different from similarly titled measures used by other companies. Our management believes this
information, along with comparable IFRS measures, is useful to investors because it provides a basis for measuring the operating
performance in the periods presented. These measures are used in the internal management of our business, along with the most
directly comparable IFRS financial measures, in evaluating the operating performance.
The EBITDA Metrics have limitations as analytical tools, and you should not consider them in isolation or as a
substitute for analysis of our results or any performance measures under IFRS as set forth in our financial statements. Some of
these limitations are:
•
they do not reflect our cash expenditures or future requirements for capital expenditures;
•
they do not reflect changes in, or cash requirements for, our working capital needs;
•
they do not reflect the interest expense or cash requirements necessary to service interest or principal payments
on our debt;
•
they do not reflect any cash income taxes that we may be required to pay;
•
they are not adjusted for all non-cash income or expense items that are reflected in our consolidated income
statement;
•
they do not reflect the impact of earnings or charges resulting from certain matters we consider not to be
indicative of our ongoing operations;
•
assets are depreciated or amortized over differing estimated useful lives and often have to be replaced in the
future, and these measures do not reflect any cash requirements for such replacements; and
•
other companies in our industry may calculate these measures differently than we do, limiting their usefulness as
comparative measures.
Because of these limitations the EBITDA Metrics should not be considered as measures of discretionary cash available
to us to invest in the growth of our business or as measures of cash that will be available to us to meet our obligations. You should
compensate for these limitations by relying primarily on our IFRS results and using these non-IFRS measures only supplementally
to evaluate our performance. You are encouraged to evaluate each of the adjustments reflected in our presentation of the EBITDA
Metrics and whether you consider each to be appropriate. See “Summary—Summary Consolidated Historical and Recalculated
Financial and Other Information,” “Selected Historical Consolidated Financial and Other Information,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the
related notes which are incorporated through reference into this Prospectus.
For a description of how our EBITDA Metrics are calculated from our consolidated result from operations and a
reconciliation of Adjusted EBITDA to our results for the period presented in this Prospectus and a calculation of our other
EBITDA Metrics, see “Summary—Summary Consolidated Historical and Recalculated Financial and Other Information.”
Free cash flow is a supplemental measure of our liquidity and cash flow that is not required by or presented in
accordance with IFRS or other generally accepted accounting principles. We present free cash flow in this Prospectus because we
believe that free cash flow provides useful information to investors about our business and our liquidity and cash flow. Free cash
flow is not a measurement of our liquidity or results of operations under IFRS or other generally accepted accounting principles
and has limitations as an analytical tool. This measure may not be comparable to other similarly titled measures of other
companies and is not a measurement under IFRS or other generally accepted accounting principles, and you should not consider
such items as alternatives to cash flow from operating activities, profit/(loss) for the period or any other performance measures
derived in accordance with IFRS. You should compensate for these limitations by relying primarily on our IFRS results and using
this non-IFRS measure only supplementally to evaluate our performance. You are encouraged to evaluate the methodology used
to calculate free cash flow and whether you consider it to be appropriate.
Financial Information for the Twelve Months Ended March 31, 2013
The unaudited recalculated condensed consolidated financial information for the twelve months ended March 31, 2013
set forth in this Prospectus was derived by adding the unaudited recalculated condensed consolidated financial information of
Bravida AB for the fiscal year ended December 31, 2012 to the unaudited condensed consolidated financial information of the
Issuer for the three months ended March 31, 2013 and subtracting the unaudited recalculated condensed consolidated financial
data of Bravida AB for the three months ended March 31, 2012. The summary unaudited consolidated financial data for the
twelve months ended March 31, 2013 is not required by or presented in accordance with IFRS or generally accepted accounting
principles, and has been prepared for illustrative purposes only and is not necessarily representative of our results of operations for
any future period or our financial condition at any future date.
50
Presentation of Segment Information
Segment information presented in this Prospectus representing net sales from our installation and services businesses
are based on our classification of our profit centers. Each of our local branches is divided into one or more profit centers that
predominantly engage in either our installation business or our services business. For purposes of our segment reporting, we
classify net sales generated from profit centers that predominantly provide installation solutions as net sales from our installation
business and the net sales generated from profit centers that predominantly provide service solutions as net sales from our services
business. To the extent that a profit center operates in both of our business areas and provides installation as well as service
solutions, for purposes of our segment reporting, we allocate all of the net sales generated by such profit center to either one of our
business area segments, based on the operations predominantly conducted by that profit center. For example, if a profit center
predominantly conducts our installation business, we record the total net sales generated by that profit center as net sales from
installation. The presentation of segment information by business area in this Prospectus is therefore based on our own
classification. We review the classification of our profit centers on a regular basis and they may be reclassified from time to time.
Market and Industry Information
In this Prospectus, we rely on and refer to information regarding our business and the markets in which we operate and
compete. Certain market data and economic and industry data and forecasts used in this Prospectus were obtained from publicly
available information, independent industry publications and reports prepared by industry consultants. Where available, we have
presented market and industry information derived from third-party sources such as industry publications and research, as well as
data reports, surveys and studies prepared by professional third-party organizations. In particular, we present in this Prospectus
certain information prepared by Eurostat and Euroconstruct. In considering the industry and market data included in this
Prospectus, prospective investors should note that this information may be subject to significant uncertainty due to differing
definitions of the relevant markets and market segments described. In many cases, there is no readily available external
information (whether from trade associations, government bodies or other organizations) to validate market-related analyses and
estimates, thus requiring us to rely on internally developed data. Consequently, we have made our estimates largely based on
internal surveys and studies.
In addition to the foregoing, certain information regarding markets, market size, market share, market position, growth
rates and other industry data pertaining to our business contained in this Prospectus was estimated or derived from assumptions
we deem reasonable and from our own research, surveys, studies and experience. In light of the absence of publicly available
information on a significant proportion of participants in the industry, the data on market sizes and projected growth rates should
be viewed with caution. Our internal estimates have not been verified by any independent sources and neither we nor the Initial
Purchasers can assure you as to their accuracy or the accuracy of the underlying assumptions used to estimate such data.
All estimates involve risks and uncertainties and are subject to change based on various factors. The projections and
forward-looking statements in this section are not guarantees of future performance, and actual events and circumstances could
differ materially from current expectations. Numerous factors could cause or contribute to such differences. See “Risk Factors,”
“Industry” and “Business” for further discussion.
The tables below set forth, for the periods and dates indicated, the period end, average, high and low exchange rates
published by Bloomberg (London Composite Rate). The below rates may differ from the actual rates used in the preparation of
our consolidated financial statements and the other financial information appearing in this Prospectus. Our inclusion of these
exchange rates is not meant to suggest that the Swedish krona amounts actually represent such euro amounts, or that such amounts
would have converted at a particular rate, if at all.
51
EXCHANGE RATE INFORMATION
On June 3, 2013, the exchange rate of the Swedish krona compared to the euro was SEK8.5556 per euro.
Swedish krona per euro
Year
Period
End
2008 .............................................................................................................
2009 .............................................................................................................
2010 .............................................................................................................
2011 .............................................................................................................
2012 .............................................................................................................
10.9625
10.2561
8.9891
8.9192
8.5828
Average
High
Low
9.6315
10.6220
9.5411
9.0312
8.7064
11.2311
11.6565
10.2662
9.3222
9.1538
9.2777
10.0538
8.9658
8.7074
8.1850
Swedish krona per euro
Period
End
Month
November 2012............................................................................................
December 2012 ............................................................................................
January 2013 ................................................................................................
February 2013 ..............................................................................................
March 2013 ..................................................................................................
April 2013 ....................................................................................................
May 2013 .....................................................................................................
52
8.6611
8.5828
8.6307
8.4469
8.3679
8.5325
8.6066
Average
8.6073
8.6513
8.6243
8.5061
8.3487
8.4514
8.5697
High
Low
8.6746
8.7720
8.7021
8.6163
8.4380
8.6388
8.6239
8.5239
8.5828
8.5241
8.4238
8.2821
8.3178
8.5177
USE OF PROCEEDS
The following table illustrates the estimated sources and uses of proceeds of the Issue. Actual amounts will vary from
estimated amounts depending on several factors, including the actual amount of borrowings and changes in our actual amount of
expenses related to the Issue.
Sources of Funds
Uses of Funds
(SEK
millions)
Notes issued through the Issue..
Total sources............................
3,225
3,225
(euro
millions)(1)
(SEK
millions)
377 Refinance of the Existing Credit
Facilities(2) .............................
Estimated fees and expenses of the
Refinancing(3) ........................
Cash retained on balance sheet(4)
377 Total uses..................................
(euro
millions)(1)
2,788
326
95
342
11
40
3,225
377
(1)
The Swedish krona-denominated Notes have been converted into euro using the rate of SEK8.5556 = €1.00, which was the average Bloomberg (London Composite
Rate) as of June 3, 2013.
(2)
The Existing Credit Facilities have been repaid with the net proceeds from the issuance of the Notes. As of March 31, 2013, SEK2,788 million in aggregate principal
amount was outstanding under the Existing Credit Facilities. In addition, we have paid approximately SEK19.5 million of accrued and unpaid interest and SEK0.3
million of break costs in respect of our Existing Credit Facilities on the Issue Date. The Existing Credit Facilities are denominated in Swedish krona and euro, in
aggregate principal amounts of SEK1,418 million and €164 million, respectively.
(3)
Estimated fees and expenses of the Refinancing reflects underwriting fees and commissions and other transaction costs and professional fees associated with the Issue
and the entry into the Revolving Credit Facility.
(4)
We expect to use the SEK342 million of proceeds retained as cash on balance sheet for general corporate purposes, which may include the financing of acquisitions
from time to time. If we are unable to identify suitable acquisition opportunities, we may use all or part of the proceeds from the Issue retained as cash on balance sheet,
together with other cash reserves, to fund distributions to our shareholders.
53
CAPITALIZATION
The following table describes our cash and cash equivalents and our consolidated capitalization as of March 31, 2013
on a historical basis and on an as adjusted basis after giving effect to the Issue. You should read this table in conjunction with
“Use of Proceeds,” “Selected Historical Consolidated Financial and Other Information,” “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes
which are incorporated through reference into this Prospectus.
As of March 31, 2013
Historical
Adjustments
(SEK
million)
(SEK million)
Cash and cash equivalents(2) ..................................................................
255
Long-term debt:
Existing Credit Facilities(3) ...........................................................
Revolving Credit Facility(4) ..........................................................
Notes issued through the Issue(5) ..................................................
2,788
—
—
Total long-term debt ...........................................................................
Total equity ...........................................................................................
Total capitalization .............................................................................
(6)
As Adjusted for the Issue
342
(euro
million)(1)
597
71
—
—
3,225
—
—
385
2,788
3,432
3,225
3,432
385
410
6,220
6,657
795
(2,788)
3,225
(1)
Amounts denominated in Swedish kronor have been converted from Swedish kronor to euro using a rate of SEK8.3679=€1.00, which was the average Bloomberg
(London Composite Rate) as of March 31, 2013.
(2)
The adjustments to cash and cash equivalents reflects the actual cash overfunding from the Refinancing, after payment of fees and expenses and, in the case of the
portion of the Notes denominated in euros, converted into Swedish kronor using the March 31, 2013 conversion rate noted above.
(3)
The Existing Credit Facilities are denominated in Swedish krona and euro, in aggregate principal amounts of SEK1,418 million and €164 million, respectively.
(4)
The Revolving Credit Facility provides for borrowings of up to SEK550 million. See “Description of Certain Financing Arrangements—Revolving Credit Facility.”
The Revolving Credit Facility was undrawn on the Issue Date, with the exception of certain outstanding guarantees that were rolled-over under the Revolving Credit
Facility. The amount of such guarantees as of March 31, 2013 was SEK51 million.
(5)
The Notes include euro-denominated floating rate notes and Swedish kronor-denominated floating rate notes.
(6)
Total long-term debt does not reflect the mark-to-market of derivatives, which amounted to SEK(60.4) million as of March 31, 2013. Such derivatives were rolled-over
in connection with the Issue. The accrued and unpaid interests as well as break costs for repayment of the Existing Credit Facilities are estimated to be SEK19.8
million.
54
UNAUDITED RECALCULATED CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The following recalculated financial information contains unaudited recalculated condensed consolidated income
statements of the Issuer for the year ended December 31, 2012 and the three months ended March 31, 2012. The unaudited
recalculated consolidated income statements of the Issuer for the year ended December 31, 2012 and the three months ended
March 31, 2012 represent the historical unaudited financial information for Bravida AB, as adjusted to give effect to historical
income and expenses recorded by Bravida AB’s intermediate holding companies (Bravida Installation och Service AB (formerly
Bravissima Acquisition AB), Scandinavian Installation Refi AB and Scandinavian Installation Acquisition AB (collectively, the
“Intermediate Holding Companies”)) and by Bravissima AS and the Issuer (formerly Bravissima AB) during the relevant periods
and as further adjusted to give recalculation effect to the Acquisition Transactions as if such transactions had occurred on
January 1, 2012. The unaudited recalculation adjustments give effect to:
•
the acquisition on July 31, 2012 of all the issued and outstanding capital stock of Scandinavian Installation Refi
AB and its subsidiaries by investment funds advised by Bain Capital. The Acquisition Transactions were
accounted for under IFRS 3 (2008 Revised), Business Combinations (“IFRS 3”), using the acquisition method of
accounting. The Successor recognized SEK4,471 million of goodwill as a result of the Acquisition Transactions;
and
•
the incurrence of indebtedness under the Existing Credit Facilities Agreement, which was used to finance a
portion of the purchase price for the Acquisition Transactions.
The unaudited recalculation adjustments do not reflect any other transactions since January 1, 2012, including the Issue.
The unaudited recalculated consolidated financial information is presented for informational purposes only. The
unaudited recalculation adjustments are based on currently available information and certain assumptions that we believe are
reasonable under circumstances and supportable. The unaudited recalculated consolidated financial information does not purport
to represent what our results of operations would have been had the Acquisition Transactions actually occurred on January 1,
2012, and they do not purport to project our results of operations or financial condition for any future period. The unaudited
recalculated consolidated income statements should be read in conjunction with the information contained in “Management’s
Discussion and Analysis of Results of Operations and Financial Condition” and the consolidated financial statements and related
notes thereto which are incorporated through reference into this Prospectus.
The Acquisition Transactions
We have accounted for the Acquisition Transactions as a business combination in accordance with accounting guidance
for business combinations under IFRS 3, and, accordingly, have recognized, assets acquired and liabilities assumed at fair value as
of the acquisition date. The Successor recognized goodwill as a result of the Acquisition Transactions, which completed on
July 31, 2012. Our unaudited recalculated consolidated income statements reflect adjustments related to pension liabilities
pursuant to IAS 19. The effects of the financing incurred in conjunction with the Acquisition Transactions have been reflected in
the recalculated income statements as an adjustment to finance costs. The aforementioned adjustments have been offset by the
related tax effects, as applicable.
Unaudited Recalculated Income Statement for the Year Ended December 31, 2012
Predecessor
(SEK millions)
Historical
(1)
Net sales.................................................................................
Costs of production ................................................................
11,400.2
(9,164.5)
Gross profit/(loss).................................................................
Other operating income..........................................................
Administrative and selling expenses......................................
Other operating expenses .......................................................
2,235.6
—
(1,632.6)
(32.7)
Operating profit/(loss) .........................................................
Financial income....................................................................
Financial expenses .................................................................
570.3
9.0
(40.1)
Net financial income/(expense) ...........................................
(31.2)
Earnings before tax..............................................................
Tax on profit for the period....................................................
539.2
(145.3)
Profit/(loss) for the period ...................................................
393.9
55
Issuer,
Bravissima
AS and
Intermediate
Holding
Companies
Historical
(2)
Issuer
Adjustments
(3)
Recalculated
11,400.2
(9,164.5)
—
—
(60.0)(4)
8.9(8)
190.3(5)
(627.2)(6)
(193.2)(9)
121.5(10)
2,235.6
—
(1,683.7)
(32.7)
519.3
6.1
(545.9)
(539.8)
116.1(7)
2.4(11)
(20.5)
(26.8)
(47.3)
(1)
The historical financial information of Bravida AB for the fiscal year ended December 31, 2012 has been derived from its audited consolidated income statement which
are incorporated through reference into this Prospectus.
(2)
The historical financial information of the Issuer, Bravissima AS and each of the Intermediate Holding Companies for the period from January 1, 2012 to December 31,
2012. The historical financial information of each of the Issuer, Bravissima AS and each of the Intermediate Holding Companies included in this column has been
derived from their respective audited income statements.
(3)
Adjustments for the Acquisition Transactions and intercompany eliminations.
(4)
Administrative and selling expenses for the Issuer, Bravissima AS and the Intermediate Holding Companies correspond mainly to bonuses paid in connection with the
Acquisition Transactions (SEK36 million), consulting costs associated with the review of our business following the Acquisition Transactions (SEK13 million) and
personnel costs (SEK4 million).
(5)
Represents intercompany interest.
(6)
Financial expenses for the Issuer, Bravissima AS and the Intermediate Holding Companies correspond mainly to interest expense on the financing of pre-Acquisition
Transactions (for the period from January 1, 2012 until July 31, 2012) and the Existing Credit Facilities Agreement for the period from August 1, 2012 until
December 31, 2012, certain one-off fees payable in connection with the entering into the Existing Credit Facilities Agreement, interest on intercompany loans and other
miscellaneous fees and expenses.
(7)
Represents deferred tax income in capitalized tax value in tax loss carry-forward during the year.
(8)
Adjustment for pension liabilities following the Acquisition Transactions recorded in the income statement pursuant to IAS 19.
(9)
Represents intercompany eliminations.
(10) Reflects incremental finance costs for the period from January 1, 2012 to July 31, 2012, corresponding to the difference between finance costs payable on preAcquisition Transactions debt and finance costs that would have been payable on the Existing Credit Facilities Agreement, as well as intercompany eliminations.
(11) Represents deferred tax related to adjustments.
Unaudited Recalculated Income Statement for the Three Months Ended March 31, 2012
(SEK millions)
Net sales...............................................................................
Costs of production ..............................................................
Predecessor
Issuer,
Bravissima AS
and
Intermediate
Holding
Companies
Historical(1)
Consolidation
Adjustments(2)
Issuer
Adjustments(3)
2,915.9
2,357.9
Gross profit/(loss)...............................................................
Other operating income........................................................
Administrative and selling expenses....................................
Other operating expenses .....................................................
558.0
—
(410.4)
—
Operating profit/(loss) .......................................................
Financial income..................................................................
Financial expenses ...............................................................
147.6
3.5
(7.5)
Net financial income/(expense) .........................................
(4.1)
Earnings before tax............................................................
Tax on profit for the period..................................................
143.5
(38.2)
Profit/(loss) for the period .................................................
105.3
Recalculated
2,915.9
(2,357.9)
—
—
(47.4)(7)
0.1(4)
(27.2)(5)
(0.2)(8)
(309.6)(9)
558.0
—
(457.9)
—
100.1
3.4
(344.3)
(340.9)
7.1(6)
78.6(10)
(240.9)
47.6
(193.3)
(1)
The historical financial information of Bravida AB for the three months ended March 31, 2012 has been derived from its unaudited consolidated income statement
which are incorporated through reference into this Prospectus.
(2)
The historical financial information of the Issuer, Bravissima AS and each of the Intermediate Holding Companies for the period from January 1, 2012 to March 31,
2012. The historical financial information of each of the Issuer, Bravissima AS and the Intermediate Holding Companies included in this column has been derived from
their respective unaudited income statement.
(3)
Adjustment for the Acquisition Transactions and intercompany eliminations.
(4)
Represents intercompany interest.
(5)
Financial expenses for the Issuer, Bravissima AS and the Intermediate Holding Companies correspond mainly to interest expense on the financing of the preAcquisition Transactions.
(6)
Represents deferred tax income in capitalized tax value in tax loss carry-forward during the period.
(7)
Corresponds mainly to transaction costs incurred in connection with the Acquisition Transactions, and severance payment in connection with the termination of our
previous CEO.
(8)
Represents intercompany eliminations.
(9)
Reflects incremental finance costs for the period from January 1, 2012 to March 31, 2012, corresponding to the difference between finance costs payable on preAcquisition Transactions debt and finance costs that would have been payable on the Existing Credit Facilities Agreement, certain one-off fees payable in connection
with entering into the Existing Credit Facilities Agreement and other miscellaneous fees and expenses.
(10) Represents deferred tax related to adjustments.
56
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OTHER INFORMATION
The following table presents our consolidated historical financial information as of and for the dates indicated. The
historical financial information of the Predecessor as of and for the years ended December 31, 2010, 2011 and 2012 presented
below has been extracted from the Predecessor’s audited consolidated financial statements as of and for the years ended
December 31, 2010, 2011 and 2012, which are incorporated through reference into this Prospectus.
The historical unaudited condensed consolidated financial information as of and for the three months ended March 31,
2012 has been extracted from the Predecessor’s unaudited interim condensed consolidated financial statements as of and for the
three months ended March 31, 2012, which are incorporated through reference into this Prospectus. The historical unaudited
condensed consolidated financial information as of and for the three months ended March 31, 2013 has been extracted from the
Issuer’s unaudited interim condensed consolidated financial statements as of and for the three months ended March 31, 2013,
which are incorporated through reference into this Prospectus. Results of operations for the three-month periods are not
necessarily indicative of results for a full fiscal year, or any other periods.
Prospective investors should read the summary data presented below in conjunction with “Use of Proceeds,”
“Capitalization,” “Unaudited Recalculated Condensed Consolidated Financial Information,” “Selected Historical Consolidated
Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations”
and our consolidated financial statements and the related notes which are incorporated through reference into this Prospectus.
Consolidated Income Statement
Predecessor
For the year ended
December 31,
2010
2011
(SEK millions)
2012
(audited)
Successor
For the three
months ended
March 31,
For the three
months ended
March 31,
2012
2013
(unaudited)
(unaudited)
Net sales.............................................................................
Costs of production ............................................................
10,345
(8,205)
10,768
(8,573)
11,400
(9,165)
2,916
(2,358)
2,729
(2,181)
Gross profit/(loss).............................................................
Other operating income......................................................
Administrative and selling expenses..................................
Other operating expenses ...................................................
2,139
—
(1,519)
—
2,195
—
(1,531)
—
2,236
—
(1,633)
(33)
558
—
(410)
—
548
—
(400)
—
Operating profit/(loss) .....................................................
Financial income................................................................
Financial expenses .............................................................
621
12
(60)
663
10
(57)
570
9
(40)
148
3
(7)
148
1
(65)
Net financial income/(expense) .......................................
(48)
(48)
(31)
(4)
(64)
Earnings before tax..........................................................
Tax on profit for the period................................................
573
(161)
616
(106)
539
(145)
143
(38)
84
(19)
Profit/(loss) for the period ...............................................
412
510
394
105
65
Consolidated Balance Sheet
Predecessor
As of
December 31,
(SEK millions)
2010
2011
Successor
For the three
months ended
March 31,
2012
(audited)
As of
March 31,
2012
2013
(unaudited)
(unaudited)
ASSETS
Intangible assets .........................................................................
Property, plant and equipment ...................................................
Interests in associates.................................................................
Pension assets ............................................................................
Other securities held as non-current assets ................................
Long-term receivables ...............................................................
Deferred tax asset.......................................................................
2,134
34
0
168
47
23
171
2,203
34
1
156
51
16
151
2,276
36
4
139
48
14
117
2,209
35
2
156
51
16
144
6,728
36
7
8
49
14
169
Total non-current assets ..........................................................
Inventories .................................................................................
Tax assets...................................................................................
2,578
65
3
2,613
70
8
2,634
66
21
2,613
69
10
7,011
66
58
57
Predecessor
For the three
months ended
March 31,
As of
December 31,
(SEK millions)
2010
2011
Successor
2012
(audited)
As of
March 31,
2012
2013
(unaudited)
(unaudited)
Trade receivables .......................................................................
Receivables from the parent company .......................................
Receivables from group companies ...........................................
Accrued but not invoiced income ..............................................
Prepayments and accrued income ..............................................
Other receivables .......................................................................
Short-term investments and restricted funds..............................
Cash and cash equivalents .........................................................
1,652
—
—
544
154
41
8
35
1,845
418
—
685
161
41
2
76
1,901
—
1,826
763
153
27
3
50
1,689
446
—
784
157
33
2
77
1,684
—
—
865
135
35
1
255
Total current assets..................................................................
2,501
3,306
4,811
3,267
3,099
Total assets................................................................................
5,079
5,919
7,445
5,880
10,110
EQUITY
Share capital...............................................................................
Reserves .....................................................................................
Retained earnings including profit/(loss) for the period ............
10
(5)
1,350
10
(10)
2,120
10
(21)
1,663
10
(7)
2,221
4
29
3,396
Equity attributable to equity holders of the parent ..............
NON-CONTROLLING INTERESTS .......................................
LIABILITIES
Pension provisions .....................................................................
Other provisions.........................................................................
Deferred tax liabilities................................................................
Long term liabilities...................................................................
1,355
—
2,120
1
1,652
2
2,224
1
3,429
3
97
36
77
91
36
94
83
38
86
91
36
94
235
35
25
2,788
Total non-current liabilities ....................................................
Current interest-bearing liabilities .............................................
Overdraft facilities .....................................................................
Trade payables ...........................................................................
Tax liabilities .............................................................................
Invoiced but not accrued income ...............................................
Liabilities to parent company.....................................................
Liabilities to group companies...................................................
Other liabilities ..........................................................................
Accrued expenses and deferred income.....................................
Provisions ..................................................................................
210
200
269
852
51
797
29
—
276
870
171
221
200
2
1,111
18
982
—
—
287
883
93
207
—
—
985
19
1,085
18
2,105
319
931
123
221
—
—
1,001
40
1,005
—
—
418
882
88
3,083
—
—
1,051
21
1,049
—
—
359
1,001
114
Total current liabilities ............................................................
3,515
3,576
5,584
3,434
3,595
Total liabilities..........................................................................
3,725
3,797
5,791
3,655
6,678
Total equity and liabilities.......................................................
5,079
5,919
7,445
5,880
10,110
Consolidated Cash Flow Statement
Predecessor
For the year ended
December 31,
(SEK millions)
2010
2011
2012
(audited)
OPERATING ACTIVITIES
Earnings before tax ...................................................................
Adjustments for non-cash items................................................
Income taxes paid .....................................................................
Cash flow from operating activities before changes in
working capital...................................................................
CASH FLOW FROM CHANGES IN WORKING CAPITAL
Increase(-)/Decrease(+) in inventories......................................
Increase(-)/Decrease(+) in operating assets ..............................
58
Successor
For the three
months ended
March 31,
For the three
months ended
March 31,
2012
2013
(unaudited)
(unaudited)
573
(106)
(8)
616
(75)
(77)
539
76
(19)
143
(3)
(1)
84
(5)
(24)
459
463
596
139
55
(3)
(17)
(3)
(286)
6
(140)
3
68
(1)
52
Predecessor
For the three
months ended
March 31,
For the year ended
December 31,
(SEK millions)
2010
2011
Successor
2012
(audited)
For the three
months ended
March 31,
2012
2013
(unaudited)
(unaudited)
Increase(-)/Decrease(+) in operating liabilities.........................
(42)
384
(38)
30
148
Cash flow from operating activities.......................................
INVESTING ACTIVITIES
Acquisition of subsidiaries........................................................
Sale of subsidiaries ...................................................................
Acquisition of assets and liabilities...........................................
Sale of assets and liabilities ......................................................
Acquisition of property, plant & equipment .............................
Sale/reduction of financial assets..............................................
398
559
424
240
254
(2)
10
(3)
6
(4)
12
(52)
—
(7)
—
(7)
—
(16)
—
(15)
4
(11)
—
—
—
(7)
3
(3)
—
(34)
—
(1)
—
(4)
—
Cash flow from investing activities........................................
FINANCING ACTIVITIES
Shareholder contributions received...........................................
Repayment of loans ..................................................................
Net charge in long-term liabilities ............................................
Change in utilization of overdraft and credit facilities..............
Dividend paid............................................................................
Loan granted to parent company...............................................
Group contributions paid ..........................................................
19
(66)
(37)
(7)
(39)
—
(600)
—
269
(700)
(3)
(210)
—
—
—
(267)
(150)
(4)
(32)
412
(200)
—
(2)
(624)
6
0
—
—
(200)
(2)
—
(27)
—
—
—
—
(50)
—
—
—
Cash flow from financing activities .......................................
Cash flow for the period ...........................................................
Cash and cash equivalents at beginning of period ....................
Foreign exchange difference in cash and cash equivalents .......
(1,244)
(827)
905
(42)
(453)
41
35
—
(408)
(21)
76
(5)
(229)
4
76
(2)
(50)
165
97
(6)
76
50
77
255
Cash and cash equivalents at end of period..........................
35
59
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis is based on, and should be read in conjunction with, the audited consolidated
financial statements of Bravida AB and its subsidiaries as of and for the years ended December 31, 2010, 2011 and 2012,
prepared in accordance with IFRS; the unaudited recalculated condensed consolidated financial data of Bravida AB and its
subsidiaries for the three months ended March 31, 2012; and the unaudited condensed consolidated interim financial statements
of the Issuer and its subsidiaries as of and for the three months ended March 31, 2013, prepared in accordance with IAS 34.
Certain information in the discussion and analysis set forth below and elsewhere in this Prospectus includes forward
looking statements that involve risks and uncertainties. See “Forward-Looking Statements” and “Risk Factors” for a discussion
of important factors that could cause actual results to differ materially from the results described in the forward looking
statements contained in this Prospectus.
This discussion and analysis should be read in conjunction with the financial statements described above and
incorporated through reference into this Prospectus, including the notes thereto, “Summary—Summary Consolidated Historical
and Recalculated Financial and Other Information,” “Unaudited Recalculated Condensed Consolidated Financial Information”
and “Selected Historical Consolidated Financial and Other Information.”
Overview
were the leading provider of installation and services solutions in Sweden and the number two and number three provider of such
plumbing; and HVAC.
•
•
•
60
Our Segments
We classify our profit centers based on whether they are predominately engaged in either our installation business or
our services business. For purposes of our segment reporting, we classify revenues generated from profit centers that
predominantly provide installation solutions as net sales from our installation business and the revenues generated from profit
centers that predominantly provide service solutions as net sales from our services business. To the extent that a profit center
operates in both of our business areas and provides installation as well as service solutions, for purposes of our segment reporting,
we allocate all of the revenues generated by such profit center to either one of our business areas, based on the operations
predominantly conducted by that profit center.
Our results of operations are controlled and reviewed on a geographic basis and we organize our operations into
divisions, which correspond to the geographic markets where we operate. Our geographic divisions comprise (i) the Stockholm
division; (ii) the Sweden–North division; (iii) the Sweden–South division; (iv) the Norway division; and (v) the Denmark division.
Key Factors Affecting Our Results of Operations
General Economic Conditions
Macroeconomic factors in the geographic markets in which we operate affect customer demand and, in turn, our results
of operations. These factors include GDP fluctuations in Sweden, Norway and Denmark, the three main countries in which we
operate. During periods of strong GDP growth, our activity is fueled by industrial investments, public sector infrastructure
projects and commercial construction. During recessionary periods, our installation business typically experiences a decline in net
sales which correlates to reduced levels of capital investments by our customers. This includes reduced spending by national and
local authorities, as well as industrial and utility companies, although public sector expenditure tends to decrease less relative to
private sector spending. We observed certain industries reducing their activity levels beginning in 2009. Accordingly, we
experienced decreases in demand in our installation business in 2010 and continuing in 2011, particularly in Denmark, which is
our market that was most affected by the economic downturn and the monetary crisis in the European Union. In particular, we
experienced reduced demand from manufacturing companies and building developers. However, during recessionary periods,
when customers significantly reduce their capital expenditures, demand in our services business, which is mainly driven by
renovation and maintenance expenditures, has been generally resilient to macroeconomic changes and tends to be countercyclical,
providing a more stable source of income. When macroeconomic conditions improve, we generally experience increases in
revenues in both our installation business and our services business.
Flexible Cost Structure
We have a flexible cost structure, which helps to preserve margins during economic downturns. Variable and semivariable costs (including subcontracting costs, temporary and fixed-term employees and installation materials and consumables
used) constitute the majority of our operating expenses. We maintain low levels of inventory and our suppliers deliver directly to
our work sites, which helps reduce our fixed costs and allows us to adjust our cost structure in response to market demand. We
also have flexibility to improve our cost structure through personnel relocations and reductions. For example, in March 2013, we
relocated a team of installers from our Sweden–South division to Norway, where we were experiencing higher demand for our
services but had limited numbers of skilled personnel available to address the requirements of our customers. Approximately 25%
of our labor costs are attributable to sub-contractors, allowing us to quickly adjust personnel levels and costs by increasing or
decreasing sub-contracted personnel as needed. Additionally, as a result of the employment laws in the countries where we
operate, we believe that we have the ability to actively manage the size of our workforce by implementing personnel reductions,
typically within three and twelve months.
Seasonality
Our revenues and costs are subject to seasonal variation, limiting the overall comparability of interim financial periods.
We account for revenue in accordance with the degree of completion of the project. Therefore, when a public holiday falls in a
given interim period, there are fewer working days and as a result we recognize less revenue from our ongoing projects. For
example, for the three months ended March 31, 2013, our net sales and costs of production decreased as a result of the Easter
holiday falling in March.
Our working capital needs are seasonal, although they are generally negative due to our customer contracts and focus
on invoice collection. We invoice our customers monthly, in the case of ongoing and completed installation projects, and daily, in
the case of completed service projects. The month immediately following the end of a quarter generally has our strongest cash
flow, and December is also typically high in connection with year-end payments. Cash flow tends to be generally the strongest in
the fourth quarter, with public and private sector customers seeking to meet their maintenance and operating expenses budgets.
Cash flow in August and September tends to be weak because of lower business activity in the month of July, which is the main
annual holiday period in our markets.
61
Foreign Currency Exchange Rates
Our reported results of operations and financial condition are affected by exchange rate fluctuations due to both
transactional and translation risk.
Transactional risk: Transactional risk arises when our subsidiaries execute transactions in a currency other than their
functional currency. We operate primarily in Sweden, Norway and Denmark. As a result, we generate a portion of our sales and
generate a portion of our costs in currencies other than Swedish kronor. Where we are unable to match sales received in foreign
currencies with costs paid in the same currency, our results of operations are impacted by currency exchange rate fluctuations. We
generally benefit from a natural hedge against currency fluctuations in the three countries in which we operate because we incur
costs and receive revenues in the applicable local currency. However, we purchase equipment from suppliers who generally
operate in euro, and these suppliers may change their Swedish kronor prices to reflect fluctuations in the Swedish kronor to euro
exchange rate.
Translation risk: We present our consolidated financial statements in Swedish kronor. Accordingly, we are exposed to
translation risk when we translate assets, liabilities, income and expenses of our Norwegian and Danish operations into Swedish
kronor at then-applicable exchange rates when preparing our consolidated financial statements. For our income statement items,
this translation is made using the average year to date exchange rates over the relevant period. For balance sheet items, we make
this translation using exchange rates as of the balance sheet date. The translation differences from the translation of foreign
operations for the years ended December 31, 2010, 2011 and 2012 had a negative impact of SEK54.0 million (€5.7 million),
SEK5.0 million (€0.6 million) and SEK12.0 million (€1.4 million), respectively, on our total earnings.
Although we have relatively low exposure to the transaction risk, fluctuations in currency rates against Swedish kronor
have a translation impact on the Swedish kronor value of our income, costs and other financial results. We did not experience
significant gains or losses as a result of fluctuations of Norwegian kroner and Danish kroner against Swedish kronor during the
periods under review.
Equipment and Materials Used
We purchase equipment (machinery, technical equipment and installation equipment) and installation materials in the
ordinary course of our business. Our expenses for this equipment and these materials are subject to fluctuations based on our
activity levels and the prices of the equipment and materials we purchase. During periods of strong economic growth, our
expenditures on equipment and other materials are higher, due to the fact that our installation business, which requires more
purchases of materials, makes up a larger share of our total sales than is the case during recessionary periods. When our demand
for equipment and materials increases, we seek to consolidate our purchases to achieve volume-based discounts from our
suppliers. During economic downturns, when our services business makes up a larger share of our total sales than our installation
business, our expenditures on equipment and other materials are lower, due to the fact that maintenance services require the use of
less equipment and materials. The prices of the equipment we purchase are subject to variation based on the fluctuations in the
prices of raw materials (primarily aluminum, copper and steel) used to produce that equipment.
Acquisitions and Dispositions
In recent years, external growth has contributed to the overall growth of our business, and we intend to continue to
pursue acquisitions in order to increase our market presence, our service offering and our service capacity. In 2010, we made three
small “bolt-on” acquisitions in Sweden, Norway and Denmark. In 2011, we made ten small “bolt-on” acquisitions in Sweden and
Norway, and as a result, our net sales increased by SEK142.8 million. In 2012, we completed seven small “bolt-on” acquisitions
in Sweden, Norway and Denmark, as a result of which our net sales increased by SEK179.2 million. We did not complete any
acquisitions in the first quarter of 2013.
Active Portfolio Management
We generally seek to maintain balanced and sustained revenue flows by prioritizing smaller, shorter-term, high-margin
contracts and maintaining a balance between installation and services contracts with a diverse range of customers operating in
various end-markets. When one of our end-markets, such as industrial manufacturing, is experiencing lower expenditure, we can
benefit from increased spending in another sector, such as mining. We also actively reallocate resources from less profitable
regions to more profitable regions in response to demand in those regions. We also actively manage our installation business order
book, which we track with two metrics we call order intake and order backlog. Order intake represents the value of installation
projects we commit to during any relevant period, plus changes to existing projects made during that period. Order backlog
represents the value of remaining (not yet accrued) project revenues from orders on hand at the end of any relevant period. These
two metrics provide us with visibility on near-term revenues. In 2011, 2012 and the first quarter of 2013, our order intake
increased for larger projects that only few providers, like us, have the size and scale to complete.
The Acquisition Transactions
We completed the Acquisition Transactions on July 31, 2012. The Acquisition Transactions and the payment of related
transaction expenses were financed with borrowings under our Existing Credit Facilities Agreement and equity contributions from
our shareholders. As of July 31, 2012, we had total debt of SEK2,804 million and cash and cash equivalents of SEK220 million.
62
Substantially all of such cash and cash equivalents were used shortly thereafter to pay costs associated with the Acquisition
Transactions, and had been earmarked for this purpose.
The Acquisition Transactions had a significant effect on our results of operations, in particular:
•
we incurred significant indebtedness and thereby increased our total liabilities. As of March 31, 2013, we had
SEK2,788 million of financial indebtedness, all of which was outstanding under our Existing Credit Facilities
Agreement. The proceeds from the Issue were used to repay in full all amounts outstanding under our Existing
Credit Facilities Agreement on the Issue Date and to pay fees and expenses in connection with the Issue (see
“Use of Proceeds”);
•
our results of operations, and particularly our financial expense, have been, and will remain, significantly affected
by our increased indebtedness. The increase in our financial expense had, and will continue to have, a significant
negative impact on our cash; and
•
the Acquisition Transactions were accounted for using the acquisition method of accounting. As a result, we
allocated the aggregate acquisition consideration to the intangible assets acquired and liabilities assumed based
on their respective fair values estimated as of the completion date of the Acquisition Transactions, which resulted
in an increase in our intangible assets, particularly goodwill.
Description of Key Line Items
Income Statement Data
Set forth below is a brief description of our key income statement line items.
Net sales consists of the total revenues from our installation and services businesses over the relevant periods. In our
installation business, net sales are recognized in accordance with the percentage of completion method, which calculates net sales
in proportion to the degree of completion of our installation projects. In our services business, net sales are also recognized in
accordance with the percentage of completion method. For a description of our revenue recognition policy, please see “—Critical
Accounting Policies and Estimates—Critical Accounting Policies—Revenue.”
Costs of production primarily consist of (i) personnel expenses, including wages, bonuses and social security costs,
(ii) the purchase and consumption of equipment and materials, (iii) subcontracting costs and (iv) other miscellaneous costs
(including vehicle costs). Personnel expenses represent approximately 44% of our costs of production and equipment and
materials expenses each represent approximately 46% of our costs of production.
Administrative and selling expenses primarily consists of personnel expenses in connection with the general
management of our business, including wages, bonuses, and social security costs, rental costs for premises, vehicle costs and
overhead costs.
Other operating expenses primarily consists of restructuring costs, acquisition costs and other non-recurring items.
Net financial expense primarily consists of cash and non-cash interest expenses on debt, including expenses relating to
the Acquisition Transactions, the Existing Credit Facilities Agreement, as well as other financial items, net of interest on deposits.
Tax on profit consists of corporate tax in each country in which we operate, as well as deferred taxes.
Results of Operations
The table below sets forth certain line items from our audited historical income statement for the years ended
December 31, 2010, 2011 and 2012, our unaudited recalculated income statement for the three months ended March 31, 2012 and
our unaudited interim income statement for the three months ended March 31, 2013.
Predecessor
Successor
Historical
Recalculated
Historical
For the year ended
December 31,
For the
three
months
ended
March 31,
For the three months
ended March 31,
2010
2011
2012
(audited)
(SEK millions)
Net sales.......................................................................
Services ..............................................................
Installation .........................................................
Costs of production ......................................................
10,345
4,952
5,393
(8,205)
63
10,768
5,489
5,279
(8,573)
2012
2013
(unaudited)
(SEK millions)
11,400
5,514
5,886
(9,165)
2,916
1,444
1,472
(2,358)
2,729
1,337
1,392
(2,181)
Predecessor
Successor
Historical
Recalculated
Historical
For the year ended
December 31,
For the
three
months
ended
March 31,
For the three months
ended March 31,
2012
2013
2010
2011
2012
(audited)
(SEK millions)
(unaudited)
(SEK millions)
Gross profit/loss .........................................................
Administrative and selling expenses............................
Other operating expenses .............................................
2,139
(1,519)
—
2,195
(1,531)
—
2,236
(1,633)
(33)
558
(458)
—
548
(400)
—
Operating profit/loss..................................................
Financial income..........................................................
Financial expenses .......................................................
621
12
(60)
663
10
(57)
570
9
(40)
100
3
(344)
148
1
(65)
Net financial income/expense ....................................
(48)
(48)
(31)
(341)
(64)
Earnings before tax....................................................
Tax on profit for the period..........................................
573
(161)
616
(106)
539
(145)
(241)
48
84
(19)
Profit/loss for the period............................................
412
510
394
(193)
65
Three Months Ended March 31, 2013 Compared with Recalculated Three Months Ended March 31, 2012
In this section, we compare our unaudited interim income statement for the three months ended March 31, 2013 with
our unaudited recalculated income statement for three months ended March 31, 2012. Our unaudited recalculated income
statement for the three months ended March 31, 2012 gives recalculation effect to the Acquisition Transactions as if they had
occurred on January 1, 2012. Due to the effects of the increased borrowings to finance the Acquisition Transactions, our interest
expense has increased significantly in periods following the Acquisition Transactions. Our selling and administrative expenses
have also increased due to the annual management and consulting fees incurred in connection with the Acquisition Transaction
and related transactions. As a result, the Issuer’s results of operations on a Recalculation Basis for the three months ended
March 31, 2013 are not directly comparable to the results of operations of the Predecessor for the corresponding period in 2012.
The unaudited recalculated consolidated financial and other data for the three months ended March 31, 2012 has been prepared
to give effect to the Acquisition Transactions in the manner described under “Unaudited Recalculated Condensed Consolidated
Financial Information” and the notes thereto as if they had occurred on January 1, 2012. The recalculation adjustments are
based upon available information and certain assumptions that we believe are reasonable. The summary unaudited recalculated
consolidated financial information and other data are for informational purposes only and do not purport to represent what our
results of operations or other financial information actually would have been if the Acquisition Transactions had occurred at any
date, and such data do not purport to project the results of operations for any future period.
Net sales
Net sales decreased by SEK187 million, or 6.4%, from SEK2,916 million for the Recalculation Basis Three Months
Ended March 31, 2012 to SEK2,729 million for the three months ended March 31, 2013. This decrease was primarily due to a
decrease in net sales in both our installation and services businesses, primarily due to a lower number of working days in the first
quarter of 2013 because the Easter holiday occurred in March, particularly affecting our services business in Norway.
Net sales by business areas
Net sales in our services business decreased by SEK107 million, or 7.4%, from SEK1,444 million for the Recalculation
Basis Three Months Ended March 31, 2012 to SEK1,337 million for the three months ended March 31, 2013.
Net sales in our installation business decreased by SEK80 million, or 5.4%, from SEK1,472 million for the
Recalculation Basis Three Months Ended March 31, 2012 to SEK1,392 million for the three months ended March 31, 2013.
Net sales by geographic divisions
Net sales in our Sweden–North division were stable at SEK501 million for both the Recalculation Basis Three Months
Ended March 31, 2012 and the three months ended March 31, 2013.
Net sales in our Stockholm division increased by SEK24 million, or 4.4%, from SEK541 million for the Recalculation
Basis Three Months Ended March 31, 2012 to SEK565 million for the three months ended March 31, 2013. This increase was
primarily due to a bolt-on acquisition made in December 31, 2012, and was partly offset by the impact of the Easter holiday.
64
Net sales in our Sweden–South division decreased by SEK82 million, or 9.5%, from SEK863 million for the
Recalculation Basis Three Months Ended March 31, 2012 to SEK781 million for the three months ended March 31, 2013. This
decrease was primarily due to weaker demand from the manufacturing industry in the region.
Net sales in our Norway division decreased by SEK70 million, or 10.6%, from SEK663 million for the Recalculation
Basis Three Months Ended March 31, 2012 to SEK593 million for the three months ended March 31, 2013. This decrease was
largely due to the Easter holiday, which is longer in Norway than in our other markets.
Net sales in our Denmark division decreased by SEK60 million, or 16.0%, from SEK375 million for the Recalculation
Basis Three Months Ended March 31, 2012 to SEK315 million for the three months ended March 31, 2013. This decrease was
primarily due to reduced demand resulting from the ongoing slowdown of the Danish economy.
Costs of production
Costs of production decreased by SEK177 million, or 7.5%, from SEK2,358 million for the Recalculation Basis Three
Months Ended March 31, 2012 to SEK2,181 million for the three months ended March 31, 2013. This decrease was primarily due
to a decrease in activity, with net sales decreasing by 6.4% over the period, as well as to an increase in efficiency.
Administrative and selling expenses
Administrative and selling expenses decreased by SEK58 million, or 12.7%, from SEK458 million for the
Recalculation Basis Three Months Ended March 31, 2012 to SEK400 million for the three months ended March 31, 2013. This
decrease was primarily due to one-off recalculation adjustments relating to the Acquisition Transactions and to the
implementation of cost saving initiatives throughout our business.
Operating profit
Operating profit increased by SEK48 million, or 48.0%, from SEK100 million for the Recalculation Basis Three
Months Ended March 31, 2012 to SEK148 million for the three months ended March 31, 2013. This increase was primarily due to
our focus on contracts with higher margins, our avoidance of high risk contracts, and our focus on controlling our costs of
production and reducing our administrative and selling expenses, which resulted in improved margins.
Net financial expense
Net financial expense decreased by SEK277 million, or 81.2%, from SEK341 million for the Recalculation Basis Three
Months Ended March 31, 2012 to SEK64 million for the three months ended March 31, 2013. This decrease was primarily due to
the one-off impact of costs relating to the Acquisition Transactions.
Tax on profit for the period
Tax on profit for the three months ended March 31, 2013 decreased by SEK67 million from a tax benefit recognised of
SEK48 million for the Recalculation Basis Three Months Ended March 31, 2012 to a tax expense of SEK19 million for the three
months ended March 31, 2013. The tax income of SEK48 million was primarily due to higher financial expenses, which were
generally deductible for corporate income tax purposes, as well as a reduction in the corporation income tax rate in Sweden, from
26.3% to 22.0%. The effective tax rate for the three months ended March 31, 2013 was 22.6%.
Profit/loss for the period
Profit/loss for the period increased by SEK258 million, from a loss of SEK193 million for the Recalculation Basis
Three Months Ended March 31, 2012 to a profit of SEK65 million for the three months ended March 31, 2013. This increase was
primarily due to the one-off impact of the Acquisition Transactions.
Year Ended December 31, 2012 Compared with the Year Ended December 31, 2011
In this section, we compare the income statement of Bravida AB for the year ended December 31, 2012 with the income
statement of Bravida AB for the year ended December 31, 2011. Due to the effects of increased borrowings to finance the
Acquisition Transactions, our interest expense increased significantly in periods following the Acquisition Transactions. Our
selling and administrative expenses also increased due to the annual management and consulting fees incurred in connection with
the Acquisition Transactions and related transactions. As a result, the Issuer’s results of operations for the year ended
December 31, 2012 differ from the results of operation of Bravida AB. For a presentation of the Issuer’s recalculated income
statement for the year ended December 31, 2012, see “Unaudited Recalculated Condensed Consolidated Financial Information.”
Net sales
Net sales increased by SEK632 million, or 5.9%, from SEK10,768 million for the year ended December 31, 2011 to
SEK11,400 million for the year ended December 31, 2012. This increase was primarily due to increased net sales in our
installation business resulting from a larger order intake at the beginning of 2012 and the end of 2011, which resulted in increased
net sales in early 2012.
65
Net sales in our services business was generally stable at SEK5,514 million for the year ended December 31, 2012,
compared to SEK5,489 million for the year ended December 31, 2011.
Net sales in our installation business increased by SEK607 million, or 11.5%, from SEK5,279 million for the year
ended December 31, 2011 to SEK5,886 million for the year ended December 31, 2012. This increase was primarily due to
stronger demand in our Norway, Stockholm, and Sweden–North divisions, driven by public-sector investment in schools, sports
facilities, hospitals and infrastructure. Demand for large project orders increased, while demand for renovation projects remained
stable.
Net sales in our Sweden–North division increased by SEK19 million, or 1.0%, from SEK1,970 million for the year
ended December 31, 2011 to SEK1,989 million for the year ended December 31, 2012. This slight increase was primarily due to
strong continuing demand in northern Norrland, particularly in the mining industry.
Net sales in our Stockholm division increased by SEK272 million, or 14.5%, from SEK1,880 million for the year ended
December 31, 2011 to SEK2,152 million for the year ended December 31, 2012. This increase was primarily due to strong
demand (particularly from the public sector) in the Stockholm region, where activity remained higher than in other more industryintensive regions of Sweden. A large portion of this increase was due to revenue from our contract with Facebook, pursuant to
which we participated in the construction of Facebook’s largest server hall outside of the United States.
Net sales in our Sweden–South division increased by SEK129 million, or 4.1%, from SEK3,138 million for the year
ended December 31, 2011 to SEK3,267 million for the year ended December 31, 2012. This increase was primarily due to certain
major projects, such as the Clarion Hotel Post in Gothenburg and the Emporia shopping mall near Malmö, despite a weaker
demand in certain industrial regions.
Net sales in our Norway division increased by SEK368 million, or 15.8%, from SEK2,328 million for the year ended
December 31, 2011 to SEK2,696 million for the year ended December 31, 2012. This increase was primarily due to stronger
demand, both in installation and services, partly offset by some price pressure. Demand was positively impacted by the growing
oil and gas industry, as well as general growth of the Norwegian economy, which was impacted less by the global economic
downturn than was the European Union. Expressed in local currency, our net sales increased by 15% from period to period.
Net sales in our Denmark division decreased by SEK116 million, or 7.6%, from SEK1,522 million for the year ended
December 31, 2011 to SEK1,406 million for the year ended December 31, 2012. This decrease was primarily due to weaker
demand, particularly in the second half of 2012, which was impacted by the downturn affecting Denmark. Prices were also
negatively impacted by that downturn. Expressed in local currency, our net sales declined by 4% from period to period.
Costs of production
Costs of production increased by SEK592 million, or 6.9%, from SEK8,573 million for the year ended December 31,
2011 to SEK9,165 million for the year ended December 31, 2012. This increase was primarily due to increased activity, as well as
the lag between cost increases and the time when we were able to pass through costs to our customers.
Administrative and selling expenses increased by SEK102 million, or 6.7%, from SEK1,531 million for the year ended
December 31, 2011 to SEK1,633 million for the year ended December 31, 2012. This increase was primarily due to an increased
number of employees during the year.
Other operating expenses
Other operating expenses were SEK33 million for the year ended December 31, 2012 compared to nil for the year
ended December 31, 2011, as a result of the recognition of a non-cash loss on the sale of Aug Larsen AS, one of our Norwegian
subsidiaries.
Net financial expense decreased by SEK17 million, or 35.4%, from SEK48 million for the year ended December 31,
2011 to SEK31 million for the year ended December 31, 2012 as a result of lower interest payments.
Tax on profit for the year
Tax on profit for the year increased by SEK39 million, or 36.8%, from SEK106 million for the year ended
December 31, 2011 to a tax credit of SEK145 million for the year ended December 31, 2012. This increase was primarily due to
higher taxable income.
66
Profit/loss for the year
Profit for the year decreased by SEK116 million, or 22.7%, from SEK510 million for the year ended December 31,
2011 to SEK394 million for the year ended December 31, 2012.
Year Ended December 31, 2011 Compared with the Year Ended December 31, 2010
Net sales
Net sales increased by SEK423 million, or 4.1%, from SEK10,345 million for the year ended December 31, 2010 to
SEK10,768 million for the year ended December 31, 2011. This increase was primarily due to a 10.9% increase in net sales from
our services business, partly offset by a 2.1% decrease in net sales from our installation business. For the first time in our history,
our net sales from our services business exceeded our net sales from our installation business.
Net sales in our services business increased by SEK537 million, or 10.8%, from SEK4,952 million for the year ended
December 31, 2010 to SEK5,489 million for the year ended December 31, 2011. We believe this increase resulted from our focus
on our services business, which we intended to grow to a level equal to or greater than our installation business and ultimately
achieved this level.
Net sales in our installation business decreased by SEK114 million, or 2.1%, from SEK5,393 million for the year ended
December 31, 2010 to SEK5,279 million for the year ended December 31, 2011. This decrease was primarily due to a general
slowdown in the markets in which we operate, particularly in Denmark.
Net sales in our Sweden–North division increased by SEK140 million, or 7.7%, from SEK1,830 million for the year
ended December 31, 2010 to SEK1,970 million for the year ended December 31, 2011. This increase was primarily due to
stronger demand from our manufacturing industry customers in the northern Norrland, and public sector investments and housing
projects in southern Norrland.
Net sales in our Stockholm division increased by SEK40 million, or 2.2%, from SEK1,840 million for the year ended
December 31, 2010 to SEK1,880 million for the year ended December 31, 2011. This increase was primarily due to strong
demand from housing projects and public sector investments, particularly in the first half of 2011.
Net sales in our Sweden–South division increased by SEK207 million, or 7.1%, from SEK2,931 million for the year
ended December 31, 2010 to SEK3,138 million for the year ended December 31, 2011. This increase was primarily due to higher
demand, driven by infrastructure and housing projects and, to a lesser extent, offices and retail projects, partly offset by lower
performance in the Jönköping region.
Net sales in our Norway division increased by SEK37 million, or 1.6%, from SEK2,291 million for the year ended
December 31, 2010 to SEK2,328 million for the year ended December 31, 2011. This increase was primarily due to increased
demand from manufacturing and housing projects. Expressed in local currency, net sales increased by 4% from period to period.
Net sales in our Denmark division was generally stable at SEK1,522 million for the year ended December 31, 2011,
compared to SEK1,519 million for the year ended December 31, 2010. Net sales were negatively impacted by the weakening of
the Danish kroner against the Swedish kronor, but offset by improved performance as the Danish market began to recover from
the recession. Expressed in local currency, net sales increased by 6% from period to period.
Costs of production
Costs of production increased by SEK368 million, or 4.5%, from SEK8,205 million for the year ended December 31,
2010 to SEK8,573 million for the year ended December 31, 2011. This increase was primarily due to increased activity in both
our installation and services businesses. Costs of production increased slightly more than net sales over the year, primarily due to
the lag between the occurrence of costs increases and the time when we are able to pass through such costs to our customers.
Administrative and selling expenses increased by SEK12 million, or 0.8%, from SEK1,519 million for the year ended
December 31, 2010 to SEK1,531 million for the year ended December 31, 2011. This increase was primarily due to increased
activity in both our installation and services businesses. Our “Good Process” cost saving initiative helped to limit the increase of
administrative and selling expenses to a significantly lower percentage than the increase in net sales over the same period.
Net financial expense remained stable at SEK48 million for both the year ended December 31, 2010 and the year ended
December 31, 2011.
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Tax on profit for the year
Tax on profit for the year decreased by SEK55 million, or 34.2%, from SEK161 million for the year ended
December 31, 2010 to SEK106 million for the year ended December 31, 2011. This decrease was primarily due to the use of tax
losses carried-forward in our Norwegian division.
Profit for the year
Profit for the year increased by SEK98 million, or 23.8%, from SEK412 million for the year ended December 31, 2010
to SEK510 million for the year ended December 31, 2011.
Order Intake and Order Backlog for Installation Projects
We monitor our installation business through two metrics we refer to as order intake and order backlog. These
measures provide visibility on our upcoming projects and operations, as well as an indication of our expected near-term
performance.
Order intake increased by SEK249 million, or 2.2%, from SEK11,315 million for the year ended December 31, 2011 to
SEK11,564 million for the year ended December 31, 2012, primarily due to major installation contracts and strong performance in
Norway. As of December 31, 2012, order backlog amounted to SEK4,809 million, compared to SEK4,590 million as of
December 31, 2011.
Order intake increased by SEK714 million, or 6.7%, from SEK10,601 million for the year ended December 31, 2010 to
SEK11,315 million for the year ended December 31, 2011, primarily due to strong performance in Sweden and Norway, partly
offset by weaker performance in Denmark. As of December 31, 2011, order backlog amounted to SEK4,590 million, compared to
SEK3,840 million as of December 31, 2010, primarily due to a number of large contracts attributed to us in 2011, for example our
installation contract with Facebook.
Liquidity and Capital Resources
“Liquidity” describes the ability of a company to generate sufficient cash flow to meet the cash requirements of its
business operations, including but not limited to working capital needs, capital expenditures, debt service obligations, contractual
obligations and acquisitions. Our primary sources of liquidity are provided by cash generated from our operating activities and our
third-party financings. Our primary uses of liquidity are to meet our debt service obligations, to fund acquisitions and to fund
capital expenditures.
Following the Issue and the application of the proceeds therefrom, our debt service obligations consist primarily of
interest payments on the Notes and principal and interest payments on amounts drawn under the Revolving Credit Facility. We
expect to fund acquisitions in the future primarily through drawings under the Revolving Credit Facility and with cash generated
by our operations. We expect to fund capital expenditures primarily with cash generated by our operations. Although we believe
that our expected cash flow from operating activities, together with available borrowings under the Revolving Credit Facility, will
be adequate to meet our expected liquidity needs, including our debt service obligations, we cannot assure you that our business
will generate sufficient cash flow from operations to meet these needs or that future debt or equity financing will be available to us
in an amount sufficient to meet our liquidity needs, including making payments on the Notes or on our other debt when due. If our
cash flow from operating activities is lower than expected, we may be required to seek additional financing, which may not be
available on commercially reasonable terms, if at all. Our ability to arrange financing generally and our cost of capital depend on
numerous factors, including general economic conditions, the availability of credit from banks, other financial institutions and
capital markets, restrictions in the instruments governing our debt and our general financial performance. See “Risk Factors—
Risks Related to Our Financial Profile—Our substantial leverage and debt service obligations may make it difficult for us to fulfill
our obligations under the Notes and operate our business” and “Risk Factors—Risks Related to Our Financial Profile—We may
not be able to generate sufficient cash to service our indebtedness, including due to factors outside our control, and we may be
forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.”
Cash Flow
The table below sets forth our consolidated cash flow statement for the years ended December 31, 2010, 2011 and
2012, as well as the three months ended March 31, 2012 and 2013.
68
Predecessor
Successor
Historical
Historical
For the
three
months
ended
March 31,
For the year ended
December 31,
2010
2011
2012
(audited)
(SEK millions)
Cash flow from operating activities ............................................
Cash flow from investing activities ............................................
Cash flow from financing activities ............................................
398
19
(1,244)
Cash flow for the year...............................................................
Cash and cash equivalents at beginning of year..........................
Foreign exchange difference in cash and cash equivalents .........
Cash and cash equivalents at end of year ...............................
For the three
months ended
March 31,
2012
2013
(unaudited)
(unaudited)
(SEK millions)
559
(66)
(453)
424
(37)
(408)
240
(7)
(229)
254
(39)
(50)
(827)
905
(42)
41
35
—
(21)
76
(5)
4
76
(2)
165
97
(6)
35
76
50
77
255
Cash Flow from Operating Activities
Cash inflow from operating activities for the three months ended March 31, 2013 increased by SEK14 million, or 5.8%,
from SEK240 million for the three months ended March 31, 2012 to SEK254 million for the three months ended March 31, 2013,
primarily as a result of a decrease in operating liabilities, partly offset by lower earnings before tax. Financial expenses were
higher in the three months ended March 31, 2013 than in the three months ended March 31, 2012.
Cash inflow from operating activities for the year ended December 31, 2012 decreased by SEK135 million, or 24.2%,
from an inflow of SEK559 million for the year ended December 31, 2011 to an inflow of SEK424 million for the year ended
December 31, 2012, primarily as a result of lower earnings before tax and a SEK140 million increase in operating assets resulting
from increased invoices at the end of 2012 that were not paid until 2013 and decreased trade payables, which were paid when due.
Cash inflow from operating activities for the year ended December 31, 2011 increased by SEK161 million, or 40.5%,
from an inflow of SEK398 million for the year ended December 31, 2010 to an inflow of SEK559 million for the year ended
December 31, 2011, primarily as a result of accelerated invoicing as well as strong invoice payment by our customers.
Cash Flow from Investing Activities
Cash inflow from investing activities for the three months ended March 31, 2013 decreased by SEK32 million, from an
outflow of SEK7 million for the three months ended March 31, 2012 to an outflow of SEK39 million for the three months ended
March 31, 2013, primarily as a result of the acquisition of a subsidiary on December 31, 2012, for which the purchase price of
SEK34 million was paid in January 2013.
Cash outflow from investing activities for the year ended December 31, 2012 decreased by SEK29 million, from an
outflow of SEK66 million for the year ended December 31, 2011 to an outflow of SEK37 million for the year ended
December 31, 2012, primarily due to a lower amount of cash spent on acquisitions.
Cash outflow from investing activities for the year ended December 31, 2011 increased by SEK85 million, from an
inflow of SEK19 million for the year ended December 31, 2010 to an outflow of SEK66 million for the year ended December 31,
2011, primarily due to the acquisition of seven companies and businesses in the year ended December 31, 2011, the cash impact
of which was SEK52 million, compared to SEK2 million for the previous year.
Cash Flow from Financing Activities
Cash outflow from financing activities for the three months ended March 31, 2013 was SEK50 million, primarily due to
the repayment of an overdraft facility.
Cash outflow from financing activities for the year ended December 31, 2012 was SEK408 million, primarily due to
SEK624 million in dividends paid to our shareholders and SEK200 million repaid under our Existing Credit Facilities, partly
offset by a SEK412 million contribution from our shareholders.
Cash outflow from financing activities for the year ended December 31, 2011 was SEK453 million, primarily due to a
SEK267 million repayment under credit facilities and a SEK150 million dividend paid to our shareholders.
Cash outflow from financing activities for the year ended December 31, 2010 was SEK1,244 million for the year ended
December 31, 2010, primarily due to a SEK700 million dividend paid to our shareholders, the repayment of SEK600 million
under a previous credit facility and a SEK213 million contribution to our Parent pursuant to our tax sharing agreement, partly
offset by a SEK269 million increase of use of overdrafts under our Existing Credit Facilities.
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Free Cash Flow
The following table presents a reconciliation of free cash flow to earnings before tax for the years ended December 31,
2010, 2011 and 2012, as well as the three months ended March 31, 2012 and 2013.
Predecessor
Predecessor
Successor
For the year ended
December 31
For the three
months ended
March 31,
For the three
months ended
March 31,
2012
2013
2010
2011
2012
(audited)
(SEK millions)
(unaudited )
(SEK millions)
Earnings before tax...................................................................
Plus non-cash items(1) ..................................................................
Plus interest expense...................................................................
Plus cash flow from changes in working capital.........................
Minus acquisition of intangible assets.........................................
Minus maintenance capital expenditures ....................................
Plus sale of property, plant & equipment....................................
573
(106)
26
(61)
—
(4)
—
616
(75)
32
96
—
(7)
539
76
37
(172)
—
(11)
143
(3)
7
100
—
(3)
—
84
(5)
60
199
—
(4)
—
Free cash flow(2) .........................................................................
428
661
470
244
334
Notes:
(1)
(2)
Adjustments for non-cash items includes depreciation/amortization and impairment of assets, capital gain/loss or sale of operations/subsidiaries, pension provisions,
change in provisions, profit/loss in merged subsidiaries and accounting of pensions.
Free cash flow represents earnings before tax adjusted for non-cash items, add back of interest expense and cash flow from change in working capital, less acquisition
of intangible assets, less maintenance capital expenditures, plus sale of maintenance capital expenditure.
Capital Expenditures
Capital expenditures for the year ended December 31, 2012 amounted to SEK11 million, compared to SEK7 million for
the year ended December 31, 2011 and SEK4 million for the year ended December 31, 2010. Our business is characterized by low
capital expenditures, which represented less than 0.1% of net sales for each of the years ended December 31, 2010, 2011 and
2012. We expect to make capital expenditures of approximately SEK10 million for the year ended December 31, 2013. We plan
to fund our future capital expenditures with cash from operating activities.
Working Capital Requirements
We do not currently have significant short-term or long-term working capital requirements, because we typically
receive payments under our installation and service contracts prior to paying costs related thereto. These prepayment
arrangements, along with personnel-related costs (primarily vacation salary), result in our negative working capital position.
Working capital requirements as a percentage of net sales was (3.7)%, (4.3)% and (3.5)% for the years ended
December 31, 2010, 2011 and 2012, respectively.
Contractual Obligations and Commercial Commitments
The table below sets forth our contractual obligations and commitments as of December 31, 2012, as adjusted for the
Issue and the application of the proceeds thereof.
Less than 1 year
1–5 years
More than 5 years
Total
SEK in millions
Senior Secured Notes issued through the Issue.......................
Rent for premises(1) ..................................................................
Other operating leases(1) ..........................................................
—
99
144
—
209
237
3,225
24
1
3,225
332
382
Total contractual obligations ...............................................
243
446
3,250
3,939
(1)
Contractual obligations for the rental of our premises and our other operating leases reflect our annual commitments under non-cancellable agreements.
Off-Balance Sheet Arrangements
In connection with our operations, we are required to provide a certain number of commitments in terms of
performance guarantees for completion of work, guarantees of customer advances and parent company guarantees. As of
December 31, 2012, these guarantees amounted to SEK20.3 million, compared to SEK19.9 million as of December 31, 2011, and
SEK19.7 million as of December 31, 2010.
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Hedging Obligations
The Issuer is (or will be) party to certain interest rate and cross currency hedging arrangements on or around the Issue
Date to mitigate against its interest rate exposure under its Senior Secured Floating Rate Notes and cross currency exposures
under its EUR Senior Secured Floating Rate Notes.
The Issuer currently intends to hedge at least 66% of the notional amount of its Senior Secured Floating Rate Notes for
interest rate exposure and 75% of the notional amount of its EUR Senior Secured Floating Rate Notes for cross-currency
exposure, in each case, for a period of at least three years from the Issue Date.
Risk Management
We are exposed to various types of risks, both operational and financial. Operational risks are associated with day-today operations relating to economic activity, tendering, capacity utilization, price risks and revenue recognition. Financial risks
arise from the amount of capital tied up and our capital requirements. We believe we are exposed to greater operational risks than
financial risks.
Financial Risk Management
In our installation business risks are asymmetric. In any given project, the chances of exceeding the expected outcome
during the term of the project are limited while there is a risk of incurring significant losses in relation to the size of the project.
The management of operational risks is a continuous process covering a large number of ongoing projects and service
assignments. We have designed standardized methods to ensure that operational risks remain under control. We believe our
systematic work on quality and environmental issues as well as occupational health and safety issues are key building blocks that
underpin our management system. Our financial risks are managed centrally for the purpose of minimizing and controlling our
risk exposure while credit risks are managed locally at each of our profit centers.
Operational Risks
Economic Activity
Fluctuations in the economy affect the building services sector, which is sensitive to market fluctuations and political
decisions that can have an impact on demand for residential and commercial new builds and investments in industry and the
public sector. Demand for service and maintenance work is less sensitive to fluctuations in the economy.
Tendering
A building services company is exposed to commercial and production-related risks, which need to be identified and
managed during the tendering process. To ensure that this is done, we have implemented process descriptions and checklists that
are aimed at identifying and pricing the risks in our cost estimates and tenders.
Capacity Utilization
Capacity utilization is heavily dependent on demand in our geographic markets. An unforeseen decline in capacity
utilization generally results in a loss of revenue, which in the short term cannot be offset by a corresponding cost reduction. We
seek to mitigate these risks through continuous resource planning and by employing subcontractors during periods of peak
production.
Price Risks
Unforeseen variations in input prices and prices charged by subcontractors constitute a risk. We seek to offset the risk
of rising prices through the use of contract forms that are appropriate for the project, indexation for fixed-price agreements and
efficient purchasing procedures.
Insurance
We believe we have adequate insurance coverage for our operations, comprising liability, contract and property
insurance.
Internal Controls
Our Board of Directors acts as the ultimate source of internal controls. Our Board of Directors has delegated to senior
management the establishment and implementation of a system of internal controls appropriate to our business. These controls
include the safeguarding of assets; the maintenance of proper accounting records; the reliability of financial information; and
compliance with appropriate legislation, regulation and best practice.
Our operations are decentralized. Management and administration are performed at the branch level by our branch-level
managers at over 200 of our local branch offices in 150 locations throughout Scandinavia. Our branch-level managers report to
each of our five geographic divisions comprising multiple regions. Each of our branches consists of, and is responsible for, one or
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more profit centers. We characterize our profit centers as either installation profit centers or services profit centers, based on the
predominant operations conducted by the applicable profit center. Branch managers report to our marketing managers at each of
the five divisions and seek to maintain working relationships with local branches of construction companies, municipal authorities
and local industries. Contracts with a value exceeding SEK50 million require approval of our chief executive officer. For a
description of our corporate governance model, see “Business—Our Governance Model.”
Critical Accounting Policies and Estimates
Critical Accounting Policies
Revenue
Revenue is recognized in the income statement when it is possible to reliably measure the revenue and it is probable
that the economic benefits will accrue to the Group. Our revenue consists of revenues partly from installation contracts and partly
from service contracts. Revenue is recognized in accordance with the percentage of completion method. This method is described
below under “—Installation contracts.” Interest income is recognized over the term of the loan by applying the effective interest
method. Dividend income is recognized when the right to receive payment has been established.
Installation Contracts
We apply the percentage of completion method to our installation contracts. Under this method, earnings are
recognized in accordance with the degree of completion of the project.
Determining the earnings accrued at any given time requires information about the following components:
•
Project revenue—the value of all revenues attributable to the contract.
•
Project cost—all costs corresponding to the project revenues that are attributable to the project.
•
Degree of completion—recognized costs in relation to estimated total project costs.
Expenditure that has been incurred during the year but that relates to future work is not included in project costs paid at
the time of determining the degree of completion.
These are reported as materials and inventories, advances or other assets depending on their character. Changes to the
scope of the project, claims and incentive pay are included in project revenue to the extent that they have been agreed upon with
the customer and can be reliably measured. A fundamental condition for application of the percentage of completion method is
that project revenues and project costs can be reliably measured and that the degree of completion is determined in a way that is
relevant with respect to the reliability requirement.
For projects for which revenues and costs cannot be reliably measured at the closing date the zero profit method is
applied. This means that revenue equal to the incurred costs is recognized for the project, i.e. the profit is zero until such time as it
is possible to determine the earnings. As soon as this is possible the percentage of completion method is applied. Provisions are
made for expected losses, i.e. when the project costs are expected to exceed the total project revenues, and these amounts are
charged to earnings for the year.
We recognize assets receivables (balance sheet item “Accrued but not invoiced income”) from buyers of installation
projects for which the project costs and recognized profits (after deducting recognized losses) exceed the invoiced amount.
Partially invoiced amounts that have not yet been paid by the customer and amounts withheld by the buyer are included in the
item Trade receivables. We recognize as liabilities (balance sheet item “Invoiced but not accrued income”) any liabilities to
buyers of installation contracts for projects in progress for which the invoiced amount exceeds the project costs and recognized
profits (after deducting recognized losses).
Inventories
Inventories are measured at the lower of cost and net realizable value. This also takes into account the risk of
obsolescence. Cost is determined using the first-in/first-out method (FIFO) method. Net realizable value is the estimated selling
price in our operating activities less any applicable variable selling expenses. The cost of our semi-finished and finished goods
consists of direct costs of production plus a reasonable portion of indirect costs of production. Normal capacity utilization is also
taken into account in the valuation.
Warranty Provision
A provision is recognized when the underlying product or service has been sold. Upon completion of the installation
work a warranty period of 24 months normally applies. The warranty provision is calculated on the basis of previous years’
warranty expenditure and an assessment of future warranty risks.
72
Translation of Foreign Currencies
Functional Currency and Reporting Currency
Items included in the financial statements for our various units are valued in the currency used in the economic
environment in which each company primarily operates (functional currency). The Swedish krona, the functional and reporting
currency of our Parent, is used in the consolidated financial statements.
Transactions and Balance Sheet Items
Transactions in foreign currencies are translated into the functional currency at the exchange rates applying at the
transaction date. Foreign exchange gains and losses arising from such transactions and upon translation of monetary assets and
liabilities in foreign currencies at closing rates are recognized in the income statement. Foreign exchange differences on
borrowing are recognized under financial items while other foreign exchange differences are included in operating profit/loss.
Financial Statements of Foreign Operations
Results and financial position for all foreign operations included in the consolidated financial statements that have a
different functional currency than our reporting currency are translated into our reporting currency as follows: assets and liabilities
for each of the balance sheets are translated at the closing rate income and expenses for each of the income statements are
translated at the average rate all resulting foreign exchange differences are recognized through other comprehensive income as a
separate part of equity (translation reserve).
Upon consolidation, foreign exchange differences arising from the translation of net investments in foreign operations
are transferred to equity through other comprehensive income. Upon divestment, wholly or partially, of a foreign operation the
foreign exchange differences recognized in equity through other comprehensive income are transferred to profit/loss for the year.
Goodwill and fair value adjustments arising from the acquisition of a foreign operation are treated as assets and liabilities in this
operation and translated at the closing rate.
Employee Benefits
Post-Employment Benefits
In Denmark all employees are covered by defined contribution plans. In Sweden most employees are covered by a
defined contribution plan, but a significant number are covered by a defined benefit plan. In Norway virtually all employees are
covered by a defined contribution pension plan.
In a defined contribution plan, we make fixed contributions to a separate legal entity and have no obligation to make
any further contributions. Costs are charged to the consolidated income statement when the benefits are earned.
Net liability relating to defined benefit plans is calculated separately for each plan by estimating the future
compensation earned by the employees through their employment in the current and previous periods. We bear the risk for
ensuring that the plan provides the promised compensation.
The defined benefit pension plans are both funded and unfunded. In a funded plan the assets have been segregated,
mainly in pension funds. These plan assets can only be used to make payments in accordance with the terms of the pension
agreements.
The estimated present value of the obligations less fair value of the plan assets is recognized in the balance sheet as a
provision or a non-current financial asset, as appropriate.
The pension cost and the retirement benefit obligation for defined benefit pension plans are calculated annually by
independent actuaries. The obligation is defined as the present value of expected future payments to beneficiaries. The discount
rate used is the yield on high-quality mortgage bonds with maturities equivalent to the average maturity of the obligations and the
currency.
Actuarial gains and losses may arise when defining the present value of the retirement benefit obligation and the fair
value of the plan assets. These arise either because fair value differs from the previous assumption or because the assumptions
have changed. That part of the accumulated actuarial gains and losses at the end of the previous year that exceeds 10% of the
higher of the present value of the obligations and fair value of the plan assets is recognized in the income statement over the
estimated remaining period of service for employees covered by the plan.
The accounting policy described above is applied for the consolidated financial statements. Our Parent and subsidiaries
report defined benefit pension plans in accordance with local rules and regulations in the country concerned.
A provision (or receivable) is recognized for special payroll tax when the pension cost defined in accordance with IAS
19 is higher (or lower) than the pension cost defined in the legal entity. The provision (or receivable) is based on the difference
between these amounts. The provision (or receivable) is not discounted to present value.
73
Termination Benefits
A provision is recognized in connection with the termination of staff only when we are demonstrably obliged to
terminate the employment before the normal date or when compensation is paid as the result of an offer made to encourage
voluntary redundancy. In the event of involuntary retirement we will draw up a detailed plan specifying, as a minimum, the
workplace, positions and approximate number of individuals affected as well as the benefits for each category of employee or
position and the date on which the plan will be implemented.
Critical Accounting Estimates
The following is a description of certain significant accounting estimates and assessments that have been made in
applying our accounting policies.
Percentage of Completion Accounting
Reported earnings for installation projects in progress is accounted for in accordance with the percentage of completion
method based on the degree of completion of the project. Use of this method requires that project income and project expenses can
be reliably measured, which in turn requires a well-functioning system for cost estimates, forecasting procedures and project
review. Forecasts relating to the final outcome for the project is a critical assessment that is material to the reporting of earnings
during the course of the project. There is a risk that the final earnings for the project may differ from earnings as reported in
accordance with the percentage of completion method.
Impairment Tests of Goodwill
In estimating recoverable amounts for cash-generating units for the purpose of testing for impairment of goodwill,
several assumptions about future circumstances and estimates of parameters have been made. Changes in 2012 in the bases for
these assumptions and estimates could have a significant impact on the value of goodwill.
Pension assumptions
Management has assumed that the return on plan assets will exceed the discount rate by one percentage point, because
this is the average return achieved over the last three years. To the extent that the actual return in 2012 deviates significantly from
the expected long-term return, actuarial gains or losses could have a significant impact on the reported liability for defined benefit
pensions. Similarly, deviations and changes to assumptions in respect of the calculation of the pension liability could have
significant effects on the reported value of the net liability.
Leasing
We lease a significant number of vehicles, mainly commercial vehicles. These have been accounted for in accordance
with the rules for operating leases. Amendments to the accounting policies could affect the presentation of our income statement
and balance sheet.
Disputes
Actual outcomes for disputed amounts can differ from the recognized amounts, which are based on management’s best
assessment.
Tax
Changes in tax laws and changes to practice in the interpretation of tax laws can have a significant impact on the size of
reported deferred tax.
74
INDUSTRY
Overview
The Scandinavian Building Services Market comprises electrical, plumbing and other construction installation
activities. The size of the Scandinavian Building Services Market was estimated at approximately SEK252 billion (€28 billion) in
terms of revenues in 2011, according to Eurostat. Sweden, Norway and Denmark comprised approximately one-half, one-third
and one-fifth, respectively, of the Scandinavian Building Services Market in 2011.
The Scandinavian Building Services Market is a segment of the broader Scandinavian construction market (the
“Scandinavian Construction Market”) which comprises residential and non-residential building, repair and maintenance activities,
but excludes civil engineering works. According to Euroconstruct, the size of the Scandinavian Construction Market (not
including civil engineering works) was estimated at approximately SEK645 billion (€71 billion) in terms of revenue in 2011. The
Scandinavian Building Services Market has been relatively stable in recent years compared to the Scandinavian Construction
Market. This was largely due to an increase in the density of installations in new construction as well as increasing demand for
energy-saving and green solutions. An increase in public sector investments and larger infrastructure projects has also helped the
market to maintain stability. These trends have led to the Scandinavian Building Services Market representing an increasing share
of the overall Scandinavian Construction Market (from approximately 29% in 2006 to 39% in 2011 (not including civil
engineering works)).
We believe that installation and services offered in the Scandinavian Building Services Market comprise two distinct
segments: (i) renovation and maintenance and (ii) new construction. We estimate that renovation and maintenance represented a
larger share of the total Scandinavian Building Services Market than new construction in 2011.
•
Renovation and maintenance. During economic downturns, customers have a demonstrated preference for
renovation and maintenance as opposed to new construction, which has traditionally resulted in countercyclical
effects in the renovation and maintenance segment. Expenditures on renovation and maintenance are more
flexibly managed and constitute part of a customer’s general operating expenses, making them less susceptible to
reductions in customer spending and resulting in stable revenue flow. Moreover, demand for renovation and
maintenance is primarily driven by the age and composition of real estate. The residential building services
market in Sweden also presents growth opportunities owing to the high proportion of new residential buildings
constructed under the “Million Programme” in Sweden in the 1970s that are now in need of renovation and
maintenance services. EU directives on Energy Performance of Buildings and related regulation in Member
States are likely to drive increased spending on renovation and maintenance activities. See “—Growth Drivers.”
•
New construction. Macroeconomic trends have historically had a greater impact on the new construction
segment compared to the renovation and maintenance segment of our industry. Demand for new technical
installations has generally followed trends in investment in new buildings with a slight time lag. Although the
new construction segment is generally cyclical, significant local and regional variations within different countries
influence end-market exposure. Generally, the public sector has exhibited less volatility compared to the
residential or commercial sectors, primarily because government spending in Scandinavia has historically
increased during economic downturns.
The Scandinavian Building Services Market comprises different fields of technology which span both the renovation
and maintenance and new construction segments. We operate in the electrical, heating, plumbing and HVAC fields of technology.
According to Eurostat, electrical, which includes the installation of wiring and fittings, lighting systems, street lighting, electrical
signals, airport runway lighting satellite dishes, alarms, solar energy collectors and connecting of electronic appliances, accounted
for approximately 47% of the total Scandinavian Building Services Market in 2010. Heating and plumbing and HVAC, which
includes the installation of plumbing, heating and air-conditioning systems, as well as their maintenance and repair, accounted for
a combined share of approximately 47% of the total Scandinavian Building Services Market in 2010.
Industry Characteristics
Market Fragmentation and Competitive Environment
The market for building services in Scandinavia is highly fragmented with the three leading market competitor having a
combined market share of approximately 17% in Sweden, 11% in Norway and 10% in Denmark. According to management
estimates, the Scandinavian Building Services Market comprises approximately 33,000 providers, of which the vast majority have
few employees.
We believe that customers demand an increasingly broad range of services and expertise from service providers,
including a single point of contact for delivery of integrated solutions, in order to optimize their procurement process.
Furthermore, we believe that customers often require a quick response for critical maintenance services, which requires close
proximity to customers. We believe that this has led to the consolidation of small, local businesses into larger groups and
international companies, including Imtech’s acquisition of NVS and NEA in 2008 and 2010, respectively, and our acquisition of
Siemens Installation AS in 2009.
75
In the case of larger customers with multiple locations, we believe that service providers need an extensive network in
order to service these larger contracts. There are only a few building services providers in Sweden, Norway and Denmark that can
deliver the full spectrum of services across all three fields of technology and have sufficient resources to deliver larger, multilocation projects, and include YIT Corporation in Finland, Imtech N.V. in the Netherlands and Bravida.
On a local level, there is greater competition with smaller companies, many of which specialize in a particular field of
technology and regional area but are unable to offer “one-stop shop” solutions and compete on a national basis, including Midroc
Electro AB in Sweden, Kemp & Lauritzen A/S in Denmark and ORAS AS in Norway.
Tender Process and Customer Relationships
Although the tender process varies significantly according to size and geographic location, larger projects in the
Scandinavian Building Services Market are generally awarded based on price. However, we believe qualitative factors such as
breadth and depth of services, overall project coordination, state-of-the-art technological know-how, the ability to provide
customer-tailored adaptations and the ability to supply multi-location services across multiple fields of technology are important
factors that are also considered.
Local contracts, which are generally smaller in size, are often awarded based on customer relationships with managers
at local branches in addition to price considerations. Initial invitations to participate in tenders at the local level are frequently
extended to providers with strong relationships with the customer based on past performance and local presence. Similarly, once
an invitation to bid is extended, winning a tender in a local market usually requires close relationships with local decision-makers
and a recognized local market share.
Barriers to Entry
We believe that there are very few providers in each market with the capability of providing services in multiple fields
of technology on a national scale. This creates a barrier to entry on larger projects, but also across larger networks on national and
regional bases. The requisite offering platform and network required to provide services in multiple fields of technology is costly
and time-consuming to build. Barriers to entry for single services are generally lower at a local level, with customer relationships
remaining a significant factor in winning business.
Late Cycle Exposure
The Scandinavian Building Services Market tends to be late-cyclical due to the fact that building services are provided
at a late stage of overall construction projects. This provides some flexibility to adjust the cost base to the expected level of
demand. In the new construction segment, local, regional and global economic growth are important drivers; however, the
renovation and maintenance segment remains countercyclical and relatively stable.
Growth Drivers
In addition to macroeconomic indicators, the growth in the Scandinavian Building Services Market is driven by a
number of factors, including (i) demand for more complex technical installations; (ii) the increased outsourcing of technical
services; (iii) proactive demand for maintenance; and (iv) energy efficiency and sustainability considerations.
Growing Demand for More Complex Technical Installations
The use of technical applications in buildings, such as security and energy management, has increased over time. We
believe that the Scandinavian population, in particular, tends to be at the forefront of adopting and utilizing new technologies. We
have observed that property owners have increasingly requested more sophisticated, complex systems that require a high level of
integration between different fields of technology, including cooling systems for server rooms, the laying of cables for broadband
services and the automatic control of technical systems coupled with advanced lighting, sprinkler, alarm and access control
systems. The share of building services in overall construction projects has grown from approximately 29% in 2006 to
approximately 39% in 2011. With the increased complexity of installations, the need for reliable installation and service has
increased.
Growing Outsourcing Potential
As a result of the increased complexity of installations, companies are less able to provide installations in-house. As
companies shift their focus to core activities, we believe the outsourcing of complex installations will increase. The current level
of outsourcing remains low, providing a significant growth opportunity.
Proactive Approach to Maintenance
Although the approach to maintenance was more reactive in the past, the service market has become more proactive in
its approach to service and maintenance. A growing number of property owners now realize that a well-defined strategy for
service and maintenance tends to reduce the total cost of ownership over the life-cycle of a property by reducing accidents and
production outages. We believe customers are increasingly more likely to request framework service agreements that cover the
76
servicing of an entire property and span several years as opposed to taking a more reactionary approach to service and
maintenance as they have done in the past.
Energy Efficiency and Sustainability Focus
Energy is typically the largest running cost in maintaining a property. Property owners are increasingly choosing to
invest in energy-efficient installations in order to strengthen the environmental profile of the property and reduce energy costs. We
expect that more rigorous government rules, regulations and directives regarding energy consumption will continue to drive the
focus of the Scandinavian Building Services Market. For example, under the Energy Performance of Buildings Directive
(2002/91/EC) (the “2002 Directive”), the European Union aims to increase the energy efficiency of buildings. According to the
Directive, the residential and tertiary sector, the majority of which is buildings, accounts for more than 40% of final energy
consumption and 36% of carbon dioxide emissions in the European Union. The European Union’s climate and energy objectives
under the 2002 Directive include a 20% reduction in greenhouse gas emissions, a 20% increase in the share of energy
consumption produced from renewable resources and a 20% improvement in energy efficiency by 2020. Buildings constructed
after December 31, 2020 are required to consume almost no energy. On May 19, 2010, the European Union adopted the Energy
Performance of Buildings Directive (2010/31/EU) (the “2010 Directive”) which recast the 2002 Directive as the main legislative
instrument to reduce the energy consumption of buildings. Under the 2010 Directive, Member States must establish and apply
minimum energy performance requirements for new and existing buildings, ensure the certification of building energy
performance and require the regular inspection of boilers and air-conditioning systems in buildings. Moreover, the 2010 Directive
requires Member States to ensure that by 2021 all new buildings are “nearly zero-energy buildings.”
Market Size and Development
Within the European Union, Sweden, Norway and Denmark are countries that have historically exhibited stability and
resilience. The following table sets forth the real GDP growth rate in Sweden, Norway and Denmark from 2007 to 2012 compared
to the European average.
Year ended December 31,
2007A
Sweden............................................................................
Norway ...........................................................................
Denmark .........................................................................
European Union (27).......................................................
3.3
2.7
1.6
3.2
2008A
(0.6)
0.1
(0.8)
0.3
2009A
(5.0)
(1.6)
(5.7)
(4.3)
2010A
6.6
0.5
1.6
2.1
2011A
3.7
1.2
1.1
1.6
2012A
0.8
3.2
(0.5)
(0.3)
Average
growth
1.5
1.0
(0.5)
0.4
Source: Eurostat.
These economies also benefit from strong public finances and lower public deficits than most developed countries. The
tables below set forth, respectively, the government surplus (deficit) as a percentage of GDP and the government total gross debt
as a percentage of GDP, in each case, from 2007 to 2012.
2007A
Sweden............................................................................
Norway ...........................................................................
Denmark .........................................................................
European Union (27).......................................................
3.6
17.5
4.8
(0.9)
2008A
2.2
18.8
3.2
(2.4)
2009A
(0.7)
10.6
(2.7)
(6.9)
2010A
0.3
11.2
(2.5)
(6.5)
2011A
0.2
13.6
(1.8)
(4.4)
2012A
(0.5)
—
(4.0)
(4.0)
Average
growth
0.9
14.3
(0.5)
(4.2)
Source: Eurostat.
2007A
Sweden............................................................................
Norway ...........................................................................
Denmark .........................................................................
European Union (27).......................................................
40.2
51.5
27.1
59.0
2008A
38.8
48.2
33.4
62.3
2009A
42.6
43.5
40.7
74.6
2010A
39.4
43.7
42.7
80.0
2011A
38.4
29.0
46.4
82.5
2012A
38.2
—
45.8
85.3
Average
growth
39.6
43.2
39.4
74.0
Source: Eurostat.
Over the last few years, there have been regional differences in the development of the Scandinavian Building Services
Market. Denmark has encountered difficulties through the financial crisis while Sweden and Norway have experienced
comparatively better economic conditions. The Scandinavian macroeconomic outlook is positive with Denmark expected to
recover gradually.
The Scandinavian Building Services Market grew at a compound annual growth rate of approximately 4.5% from 2006
to 2011, despite the financial crisis and a slowdown in the underlying Scandinavian Construction Market. The growth has largely
been driven by the increasing volume per building as well as raw material prices, consequently increasing the share of installation
77
cost per project or contract. In 2011, the Scandinavian Building Services Market represented approximately 39% of the
Scandinavian Construction Market, compared to approximately 29% in 2006.
The following table sets forth the size of the Scandinavian Construction Market and the Scandinavian Building Services
Market from 2006 to 2011, as well as the compound annual growth rate for the period from 2006 to 2011. It also shows the
relative share of building services compared to the overall construction market over the same period.
2006A
2007A
2008A
2009A
2006–2011
2010A
2011A
625.7
175.7
270.6
179.4
216.9
90.2
71.1
55.6
618.6
187.3
269.8
161.6
223.8
100.3
73.4
50.1
645.0
190.4
287.1
167.4
252.1
115.7
81.6
54.9
34.7
36.2
39.1
CAGR
(SEK billions)
Scandinavian Construction Market
Sweden..........................................................................
Norway .........................................................................
Denmark .......................................................................
Scandinavian Building Services Market
Sweden..........................................................................
Norway .........................................................................
Denmark .......................................................................
700.4
196.1
277.0
227.4
202.0
86.0
62.8
53.2
735.8
206.4
301.6
227.9
232.5
97.0
75.4
60.0
Scandinavian Building Services / Scandinavian
Construction Market .............................................
28.8
31.6
705.5
200.4
290.8
214.4
249.2
102.3
83.8
63.1
(%)
35.3
(%)
(1.6)
(0.6)
0.7
(5.9)
4.5
6.1
5.4
0.6
Source: Scandinavian Construction Market (total construction output, excluding civil engineering) estimates according to Euroconstruct; Scandinavian Building Services
Market estimates for 2006 to 2011 are based on aggregating figures published by Eurostat. Data converted from euro to Swedish kronor at 9.03 as used by Eurostat for the
release of euro data in 2011. Eurostat industry classifications underwent revision in 2008.
The table below sets forth the exchange rates used by Eurostat to convert local currencies into euro for the respective
years.
(€1.00)
SEK.............................................................................................................
NOK............................................................................................................
DKK............................................................................................................
78
2006
2007
2008
2009
2010
2011
9.25
8.05
7.46
9.25
8.02
7.45
9.62
8.22
7.46
10.62
8.73
7.45
9.54
8.00
7.45
9.03
7.79
7.45
BUSINESS
Overview
were the leading provider of installation and services solutions in Sweden and the number two and number three provider of such
plumbing; and HVAC.
•
•
•
Our customers are located in five main geographic divisions: Stockholm; northern Sweden; southern Sweden; Norway;
and Denmark. These regions also constitute our reporting segments, consisting of: (i) the Stockholm division; (ii) the Sweden–
North division; (iii) the Sweden–South division; (iv) the Norway division; and (v) the Denmark division.
79
The table below shows the proportion of our net sales and EBITDA, respectively, generated by each of our divisions
for the twelve months ended March 31, 2013 on a Recalculation Basis.
Division
Total Net Sales%
Sweden (total) ..................................
Sweden–North division .
Sweden–South division .
Stockholm division ........
Norway division...............................
Denmark division.............................
65
18
28
19
23
12
EBITDA%
72
22
31
19
18
6
The following map shows the footprint of our local network, representing the locations in which we operated in
Scandinavia as of March 31, 2013.
Competitive Strengths
Leading Market Positions in the Scandinavian Market Benefiting from Our Large Scale
We are a leading provider of electrical, heating and plumbing, HVAC and other installation and service solutions in
Scandinavia in terms of revenue. In 2011, we were the leading provider of installation and service solutions in Sweden and the
number two and number three provider of such services in Norway and Denmark, respectively, in each case in terms of revenue.
We believe that we have achieved our strong market positions primarily due to our size and scale, wide reach and presence at the
local level, broad service offering, long-standing customer relationships, strong brand recognition and reputation for quality. Our
strong market positions provide us with a number of significant competitive advantages including, among others, strong brand
recognition in the markets in which we operate and the ability to attract and retain key personnel and customers.
In addition to our strong positions, we believe that we also benefit from our size and scale. We are one of a small
number of service providers in the Scandinavian Building Services Market that competes on large, complex projects while also
competing effectively on smaller projects, which we attribute primarily to our deep local relationships. We have an extensive
geographic presence in Scandinavia, with approximately 200 branches in approximately 150 locations, which has helped us
maintain and develop a strong customer base. With a workforce of 7,868 employees, we have the ability to carry out a variety of
projects ranging from small-scale, local projects to large-scale, complex projects. Due to our size and scale, we have been able to
develop a broad offering of installation and services solutions. This has enabled us to execute projects for many different types of
infrastructure and buildings, including hospitals, shopping centers, schools, residential buildings and industrial buildings, making
us a “one-stop shop” for our customers. We believe our size and scale also allow us to command favorable pricing and rebate
terms from our suppliers compared to our smaller competitors, enabling us to consistently achieve higher margins and offer more
attractive pricing terms to our customers.
As a result of our strong market positions, broad service offering, reputation for quality and one-stop shop capabilities,
we believe we have become the supplier of choice to many of our large customers who have large-scale, multi-site, complex
projects. We believe we are attractive to these customers because we are able to assume responsibility for all stages of their
installation and service projects. Our broad offering also gives us the opportunity to cross-sell our installation and services
businesses and our different fields of technology to our customers.
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Favorable Macroeconomic Environment in Scandinavia and Attractive Industry Characteristics
We operate in Sweden, Norway and Denmark, which have historically exhibited greater stability and resilience
compared to other European nations. Between 2010 and 2012, for example, these countries experienced a real average GDP
growth rate exceeding 2.0% per year, compared with the European Union which experienced a real average GDP growth rate of
1.1% per year. Scandinavian economies also benefit from relatively robust public finances and lower levels of sovereign
indebtedness than most developed countries. In 2011, Sweden, Norway and Denmark had an average sovereign debt to GDP ratio
of 4.0% (surplus) to 4.4% (deficit) across the European Union. We have historically generated significant net sales from public
sector projects (22% of our total net sales for the year ended December 31, 2012 were attributable to public sector projects), and
have benefitted from the strong and resilient economic performance of the Scandinavian countries.
In addition to relatively stable macroeconomic conditions in Scandinavia compared to other European nations, we have
also benefitted from certain growth drivers in the construction market. Installation costs as a percentage of total construction costs
have increased in Scandinavia. We believe this is the result of increasingly stringent energy efficiency regulations in Scandinavia
and a growing demand for technically sound and sophisticated building services providers who are able to deliver complex
installation solutions to customers. This increased complexity of installation projects has led to a growing need for service
providers who are able to provide comprehensive installation solutions that can be adapted to the particular needs of the customer.
We also have a distinct advantage in being able to partner with major construction companies in our markets to tender jointly,
often on a cost-plus basis, for larger projects. We believe that our strong historical relationships with key construction companies
in Scandinavia, such as NCC, Skanska and PEAB, have positioned us well to capitalize on this advantage in the future. Various
market segments within the broader construction market in Scandinavia have also demonstrated resilience during the recent
periods of economic uncertainty. For example, the Scandinavian Building Services Market in which we operate grew at a rate of
4.5% per annum on average between 2006 and 2011. We benefit from a strong presence in the renovation and maintenance market
in Scandinavia, which represents approximately 59% of the Scandinavian Construction Market and has remained resilient through
the recent economic downturns and the decline in demand in Scandinavia’s new construction market of approximately 22%
between 2008 and 2012.
Diversified Operations with a Large Share of Recurring Revenues
We believe that our diversified operations, including our broad customer base, various end-markets, wide-ranging
service offering, extensive local networks, focus on maintenance services and small average order sizes, provide us with recurring
and relatively predictable revenues. For the year ended December 31, 2012, our top ten customers represented 20% of our total net
sales, and our largest customer represented 6% of our total net sales. Our customers’ businesses range from construction, the
public sectors, and industrial sectors to private real estate, which has helped us to withstand adverse conditions in any single
customer industry. Our customer base spans Sweden, Norway and Denmark and, as a result, our exposure to the effects of
macroeconomic volatility experienced in any single country is reduced. Our broad range of installation and service solutions in the
electrical, heating and plumbing and HVAC fields also protects us against a decline in demand in any one of these fields. We
believe that such diversification reduces volatility in our results, limits our exposure to any single industry, country or field, and
provides us with the flexibility to respond promptly to changing trends and customer requirements.
We also benefit from a portfolio made up of a large number of small contracts. For the year ended December 31, 2012,
for example, 75% of our projects individually generated less than SEK10 million in revenues and 44% of our projects generated
less than SEK1 million in revenues. A significant portion of our revenues are attributable to renovation and maintenance projects,
which have historically exhibited resilient and stable growth, and consequently more-predictable revenues compared to our
revenues from new construction. For the year ended December 31, 2012, 45% of our total net sales from our installation business
was generated from renovation and maintenance projects with the remaining 55% generated by new construction. With a strong
presence in both the installation and services markets, we are able to cross-sell our offering in each of these business areas to
customers. Moreover, our expertise in the electrical, heating and plumbing, and HVAC fields has enabled us to sell multiple addon services to customers who initially approached us for our services in only one field. We prioritize maintenance services
contracts with our customers, the demand for which we have found to be relatively inelastic.
Proven Ability to Sustain Profitable Operations Owing to High Revenue Visibility, a Variable Cost Structure and Effective
Operational Structure
We have historically demonstrated our ability to maintain stability in our EBITDA performance and EBITDA margins,
including during times of macroeconomic volatility. Our ability to sustain profitable operations is underpinned in large part by our
strong order book and high incidence of repeat business, which together provide high revenue visibility. As of December 31,
2012, our order backlog was SEK4,809 million, which represented 82% of our installation net sales for the year ended
December 31, 2012, and as of March 31, 2013, our order backlog was SEK4,914 million, which included net sales likely to occur
beyond 2013 and represented 85% of our installation net sales for the twelve months ended March 31, 2013. We also benefit from
a high rate of repeat business. For example, customers who did business with us in 2011 represented over 90% of our net sales for
the year ended December 31, 2012. In addition, the majority of our net sales from our services business is attributable to recurring
service agreements which typically have terms of between one and three years, offering consistent and predictable revenue
generation. We also have the ability to systematically pass through raw material price increases, such as price increases in
petroleum, copper, steel and aluminum, to our customers, consequently limiting the impact of raw material price volatility on our
revenue flow.
81
We usually experience the impact of adverse economic conditions late in the macroeconomic cycle, which allows for
timely adjustments to our cost structure. For example, in 2009, during the most recent economic downturn in Sweden, we
successfully initiated cost rationalization programs early in the cycle with the aim of reducing our administrative expenses in
anticipation of lower levels of business activity. Additionally, we have in the past been able to relocate our personnel from regions
experiencing lower demand for our services to regions experiencing higher demand, which gave us the flexibility to reallocate our
resources based on market conditions and customer requirements. For example, in March 2013, we relocated a team of installers
from our Sweden–South division to Norway, where we were experiencing higher demand for our services but had limited
numbers of skilled personnel available. At the same time, we made a concerted effort to grow our more stable services business,
signing agreements for a number of major service projects while market prices were still relatively favorable and performing those
contracts later in the cycle. We also benefit from low fixed costs, because most of our costs are highly variable.
We believe that our management structure also contributes to the profitability of our operations. Our decentralized
management model promotes enterprise and accountability at all levels of our structure and encourages local branches to operate
as individual profit centers. We believe that the autonomy that we offer our branch managers incentivizes them to capitalize on
their local market knowledge and to deliver strong results. We encourage our local offices to grow sales by collaborating with
offices located nearby to increase the share of projects covering more than one field of technology. In a market that is
predominantly customer-facing, the quality of our branch managers is fundamental to building and maintaining strong and lasting
customer relationships. We believe that, due to our leadership position, brand visibility, national and local reputation and
involvement in industry-leading projects, we have been able to attract and retain some of the leading talent in the industry. We
closely monitor branch performance to identify under-performing branches, enabling us to quickly determine whether to
restructure under-performing branches or to close them.
Strong Track Record of High Cash Flow Generation
We have historically demonstrated consistently strong cash flow generation, which we believe has been driven
primarily by our negative working capital requirements due to required customer prepayments for installation projects and our
historically low capital expenditure requirements. As a services company, our business is characterized by low capital
expenditures, representing less than 0.1% of our total net sales for each of the years ended December 31, 2010, 2011 and 2012.
Our strong cash flow generation has allowed us to pursue our external growth strategy, and we have made more than 28
acquisitions since 2007. Our cash conversion ratio was 67.5%, 97.7% and 80.6% for the years ended December 31, 2010, 2011
and 2012, respectively.
Acquisitions in a Consolidating Market Supplement Organic Growth
We have a strong track record of organic growth, which growth is complemented by through acquisitions. We believe
that our strong market positions give us an advantage in pursuing attractive acquisition opportunities, because providers of
building services who may be contemplating selling their businesses are more likely to contact us rather than, or prior to, our
smaller or lesser-known competitors. The Scandinavian Building Services Market is a highly fragmented market with more than
33,000 operators. We have market shares of approximately 6% in Sweden, 3% in Norway and 3% in Denmark. The Scandinavian
Building Services Market is composed of a large number of small companies, although approximately 89% of operators in the
market had fewer than ten full-time employees on their payroll in 2010, which we believe presents attractive consolidation
opportunities to complement our current offering. We believe we are well positioned to take advantage of this increasing
consolidation in a fragmented market to grow our market share and presence. We have a strong track record of growth through
acquisitions, having completed and integrated more than 28 acquisitions since 2007. We operate an organizational structure that
encourages regional and local managers to identify and pursue accretive bolt-on acquisitions that lead to operational synergies,
while maintaining group-level oversight over larger acquisitions. We follow a disciplined acquisition strategy focused on the
retention of key personnel and the expansion of our geographic footprint and our technical capabilities, with a focus on
attractively priced businesses that offer significant opportunities for margin improvements. We work to systematically improve
our target companies’ performance by aligning their operations with our business model, minimizing non-core activities,
increasing shares of recurring business, expanding customer bases and rationalizing low-profit, high-risk projects. We have also
sought to improve the profitability and cash flow of the companies we acquire by realizing synergies, particularly in purchasing
and rationalizing their cost structure and support functions such as human resources, procurement and administration, as well as
improving their working capital management.
Experienced Management Team, Incentivized Employees and Shareholder Support
Our senior management team is led by our chief executive officer Staffan Påhlsson, who has extensive experience in
managing installation and services businesses, integrating acquired companies and rationalizing operational costs. Mr. Påhlsson
has been with us for more than 30 years in various capacities, having begun as an electrical installer in our organization. Our
senior management also includes a strong team of executive officers, including heads of our geographic divisions, who on average
have over 20 years of industry experience. We believe that the incentives of our management are aligned with our long-term
goals, with over 125 key employees holding an equity stake in our group. We also benefit from the extensive market expertise,
business relationships and ongoing strong support of our shareholder, Bain Capital.
82
Our Strategy
Continue to Grow Our Leading Market Positions by Focusing on Our Local Operations and Investing in Our Employees
We aim to be the largest or second-largest operator in at least one of our fields of technology in each of the localities in
which we do business. We believe that we are well positioned to grow our leading market positions throughout Scandinavia and
strong local market positions by continuing to provide high-quality services and support to our customers and employees, and by
focusing on our local operations. We intend to continue to operate a large, decentralized organization, with local branch units
operating as individual profit centers. Maintaining a well-established, local presence throughout Scandinavia also provides our
customers with a large number of local access points. We intend to continue to leverage our strong customer relationships and
local market knowledge to meet our customers’ needs promptly and efficiently, in order to establish ourselves as the provider of
choice in the markets in which we operate.
Our employees are key to maintaining and growing our leading-market positions. We also intend to utilize our
reputation, brand awareness and scale to continue to recruit and retain the best talent in the industry and to position us as the
employer of choice. We intend to improve the performance of our managers and technicians by continuing to develop professional
and technical training programs and by assigning our engineers and technicians to a wide range of fields. We also intend to
continue to incentivize our managers and technicians by maintaining a performance-based compensation structure.
Continue to Improve Profitability Through Operational Excellence and Economies of Scale
While we differentiate our offering by providing consistent, high-quality installation and technical services and offering
a wide range of services to our customers, we believe we also are able to drive cost savings by standardizing, simplifying and
sharing systems and best practices across our group. In order to continue to improve our margins and cash flow, we intend to
pursue the following initiatives:
•
Sales initiatives. We intend to focus our sales initiatives on cross-selling opportunities across the electrical,
heating and plumbing, and HVAC fields and on increasing the total number of customers that utilize our
installation and technical services offering.
•
Cost-saving initiatives. Our competitiveness and long-term profitability depend, to a significant degree, on our
ability to control costs and maintain efficient operations. We believe that we are well positioned to leverage our
scale to optimize our cost structure. In particular, we intend to continue to reduce our costs by using our scale to
negotiate volume discounts in supply chain sourcing and procurement, to focus on the disciplined management of
our administrative costs and improve the efficiency of our workforce.
•
Operational initiatives. We intend to focus our operational initiatives on developing local logistical capabilities in
order to reduce onsite downtime, on effectively monitoring project costs and working capital requirements and on
streamlining our operations across our network of branch offices. We recently completed an extensive diagnostic
review of our operations and have identified several opportunities to improve operational excellence in these
areas. We also plan to continue our strategy of rationalizing our operations that were loss-making.
Continue to Leverage Our Comprehensive, Integrated Offering
Many of our large customers are increasingly seeking providers who are able to operate in electrical, heating and
plumbing, and HVAC, due to the technical complexity of the systems and cost pressures. Many customers are also making their
purchasing decisions at the group level rather than on a facility-by-facility basis. This has resulted in a growing number of multisite contracts that require experience with different fields of technology, as well as the scale to enable the efficient management of
complex logistics that are a part of large, multi-site projects. Our multiple locations and broad local network allow us to remain
responsive to customers’ needs, and to optimize our response to demand for increasingly complex installations. We believe that
we are well positioned to benefit from these market trends, and that our wide range of expertise across various fields of
technology, our technical and logistical expertise and our dense local network will continue to provide a “one-stop” installation
and service offering.
Continue to Focus on Recurring Revenues
We believe that the diversity of our customers and our contract portfolio across our operating segments result in strong,
recurring revenues, which help us withstand negative business cycles in any single aspect of our business. Under our business
model, we avoid riskier, large one-off contracts, which we view as riskier than relatively small contracts for recurring services.
We intend to increase our share of recurring projects with all of our customers by continuing to focus on small installation projects
and maintenance service contracts. We intend to extend this strategy to the companies we acquire. We also plan to maintain a
balance between our installation and services businesses and to continue to capitalize on our ability to provide add-on
maintenance services following the completion of our installation projects.
83
Continue to Leverage “Green Economy” Initiatives
As energy prices rise and concerns over climate change increase, local, national and regional authorities, corporate
customers and the public are increasingly demanding socially responsible energy consumption. We believe that we are well
positioned to take advantage of growth in the “green economy.” The energy consumption of a building is significantly influenced
by the design of its electrical, heating and plumbing, and HVAC systems. As a leading Scandinavian installer and servicer of these
systems, we are able to support customers seeking to optimize energy utilization in both new and existing buildings. We also offer
energy efficiency solutions for several different types of power generation. We aim to increase our revenues attributable to the
“green economy” by further developing innovative installation and service offerings in the area of energy efficiency.
Continue to Grow Our Market Presence Through Bolt-on Acquisitions and Continued Participation in Industry Consolidation
The installation and technical services industry remains highly fragmented, presenting us with attractive acquisition
opportunities. We continually evaluate opportunities to acquire and integrate other installation and technical services providers in
Scandinavia in order to strengthen our competitive position, broaden the range of our offering and increase our presence in our
existing markets. We make acquisition decisions at the branch level or centrally, depending on the size of the target and pursue
acquisition opportunities that meet our strategic goals on terms acceptable to us. We believe we have significant experience in
identifying, executing and integrating acquisitions while remaining focused on our financial policies. We intend to continue to
grow through strategic bolt-on acquisitions by pursuing a two-prong acquisition strategy. First, in our core geographic markets, we
intend to continue to consolidate our leading position through bolt-on acquisitions. In these markets, we intend to focus on targets
that provide access to technical capabilities or geographic coverage that complements our existing capabilities and address any
gaps within our current offering, particularly in Sweden and Norway. We also plan to identify targets based on their potential to
supplement our offering in our strategic geographic locations. Secondly, we intend to grow selectively within complementary
geographic markets, where we believe we will be able to efficiently replicate our core business model. We aim to continue to
realize the operational synergies offered by the companies we acquire and to improve their performance by aligning their
operations with our business.
History
We were formed as a result of the merger in 2000 of BPA (Byggproduktion Aktiebolag), a Swedish building and
installation company with an operating history of over 80 years that was formerly listed on the Stockholm stock exchange, and the
installation business of Telenor AS, the incumbent telecommunication services operator in Norway. In 2003, we acquired Semco
A/S, an installation service provider, which helped us to expand our business into Denmark. Subsequently, we reorganized our
corporate and operating structure by consolidating our subsidiaries and support functions across the group and focusing our
operations on the core areas of our business. Since 2007, we have made 28 bolt-on acquisitions of small and medium-sized
companies, expanding and strengthening our footprint in several key Scandinavian local markets. In 2009, we acquired Siemens
Installation AS, further expanding our presence in Norway.
Certain affiliates of Triton Advisors Limited purchased a majority interest in our group in December 2006. On July 31,
2012, we were acquired by Bain Capital investment funds.
Our Operations
We are a leading provider of installation and service solutions for buildings and infrastructure in Scandinavia. Our main
business areas consist of installation and services. We offer our customers a comprehensive installation and secondary
maintenance service in four fields of technology: (i) electrical; (ii) heating and plumbing; (iii) HVAC; and (iv) other specialty
areas. We operate throughout Scandinavia under our five geographic divisions: (i) the Stockholm division; (ii) the Sweden–North
division; (iii) the Sweden–South division; (iv) the Norway division; and (v) the Denmark division.
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The table below presents a summary of our services organized by the business areas and fields of technology in which
we operate.
For the year ended December 31, 2012, approximately 21% of our total net sales were attributable to offices, 14% to
apartment buildings, 16% to industry, 10% to hospitals, healthcare and remand centers, 9% to education and research institutions,
9% to retail, shopping centers and trade fairs, 7% to infrastructure, 4% to sports, leisure and culture and the remaining 10% were
attributable to other types of buildings and infrastructure.
Our Business Areas
Installation
Our installation business represented 52% of our total net sales, or SEK5,886 million, for the year ended December 31,
2012, and comprises new installations as well as the renovation and maintenance of technical systems in office buildings, retail
centers, apartment complexes, manufacturing plants, healthcare, education and government facilities and other commercial,
industrial and institutional facilities. The majority of our installation business comprises “turnkey” installations
(utförandeentreprenad), as opposed to bespoke installations, in which a customer purchases a specific function, such as a certain
indoor climate. In addition, we also undertake general installations, ranging from smaller projects that involve the installation of
individual units to more comprehensive projects that involve integrated building services solutions. Installation projects vary
significantly in terms of value and length and may extend over several years. Depending on the characteristics of the installation
project, different specialists and experts are involved (such as electricians, plumbers and fitters), which may also include
subcontractors if the necessary skills are not available internally.
Services
Our services business represented 48% of our total net sales, or SEK5,513 million for the year ended December 31,
2012, and comprises maintenance, repair, operation, replacement, reconfiguration and the monitoring of completed installations in
buildings, plants and infrastructure. In our services business, we perform the following functions:
•
maintenance and repair, which involves corrective maintenance to existing installations as well as periodic
planned maintenance;
•
operations, which involve the supervision and upkeep of existing installations;
•
consulting services, which cover statutory HVAC inspections and energy optimization; and
•
minor redevelopment and extensions, which involve repair, renovation and extension projects, as well as
adaptations for tenants, upgrading and modernization.
Our largest services customers include large real estate developers and owners as well as certain public sector
organizations.
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Our Fields of Technology
We operate our installation and services businesses in four principal fields of technology: electrical, heating and
plumbing, and HVAC, as well as certain other specialist areas.
Electrical
Electrical installation and services, which comprised 53% of our total net sales for the year ended December 31, 2012,
or SEK6,004 million, consist of:
•
electrical power switchgears, which direct electrical power safely downstream to consumers of the electricity
supply and convert electricity voltage from high to low, depending on individual consumer needs;
•
automatic control and surveillance systems, which can be programmed to integrate energy management and
remote computer-based monitoring and remote diagnosis for security, fire, lighting, elevators and other building
systems;
•
security functions, including access control, closed-circuit television surveillance, and burglar and fire alarm
systems, which can be integrated into automatic control systems;
•
lighting solutions, including configuration of the power supply and the installation of light fixtures in residential
and commercial buildings, sports stadiums, parking lots and road tunnels;
•
rail power supply systems, which comprise overhead lines as well as power substations where alternating current
voltage is converted into 15,000 volt direct current voltage for rail traffic; and
•
telecommunications and other light-current installations, including installations for telecommunications, radio
and data communication systems.
Heating and Plumbing
Heating and plumbing installation and services, which comprised 27% of our total net sales for the year ended
December 31, 2012, or SEK3,065 million, consist of:
•
water-based heating and cooling systems, which are used to provide heat through radiators or under-floor heating
or to remove heat from components and industrial equipment;
•
pumps, heat exchangers and boilers, which are required to heat rooms and tap water;
•
district heating and cooling, which distributes heat or chilled water generated in a centralized location for
residential and industrial facilities, which can provide higher efficiencies and better pollution control than
localized boilers;
•
geothermal heating, which makes direct use of geothermal energy for heating applications, including borehole
heat exchanges, which extract heat stored in the ground through a heat pump;
•
sewage installations, used in both below and above-ground sewage systems;
•
sprinkler systems, which generally use water-based agents that are installed as part of our fire prevention
solutions; and
•
industrial piping, including expertise in all types of pipe welding.
HVAC
HVAC installation and services, which comprised 16% of our total net sales for the year ended December 31, 2012, or
SEK1,824 million, consist of:
•
indoor HVAC systems, which provide comfort cooling, air cleaning and heat recovery, while also focusing on
energy efficiency;
•
outdoor HVAC systems, which provide adequate air ventilation in road tunnels under varying conditions;
•
building automation control systems, which are used to control a facility’s HVAC system, often on a room-byroom basis, and can be programmed to integrate energy management and onsite or remote monitoring and
diagnosis for purposes of security, fire, lighting, elevators and other building systems; and
•
process heating and cooling systems, used primarily in industrial facilities to provide heating and/or cooling to
precise temperature and climate standards for the products manufactured and for the manufacturing equipment.
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Other
As part of the comprehensive offering in our services business, we also offer services in a number of other specialist
areas that draw on professionals and resources from different fields of technology. These other specialist areas represented
approximately 4% of our total net sales for the year ended December 31, 2012, or SEK506.6 million. Through our various
operating companies, we specialize in fire and safety technology, including alarm, surveillance and security systems; permanent,
onsite maintenance services for customers’ properties; and project management services in the construction and real estate sectors.
We also offer rail technology installation relating to signal systems in Denmark, oil and gas installations for onshore and offshore
maritime industries in Norway and energy management services for certifying and optimizing energy output.
Packaged Solutions and Integrated Offering
Our breadth and depth across business areas and fields of technology enable us to deliver a complete package of
installation and service offerings, ranging from complex integrated solutions to minor renovation projects. As a complement to
our basic services, and in response to the industry trend toward increased demand among customers for a full-service portfolio
among providers, we have created a number of packaged solutions, notable among them being the Bravida Plus project and the
Bravida Energy Agreements. For our services business, we have created Bravida Service Agreements, which provide customers
periodic and regular planned service and maintenance.
•
Under our Bravida Plus projects, we offer complete installation for large-scale and complex projects under a
single, full-responsibility contract. By assuming full responsibility for the installation, we can optimize all project
installations while carrying out each task in a structured and efficient manner. This integrated approach seeks to
improve overall functionality and promote more-efficient energy use.
•
Similarly, with our Bravida Energy Agreements, we take an integrated approach to a property’s energy
consumption, offering a single integrated solution, improving administration and increasing cost efficiency. Our
goal is to provide customers with lower-cost solutions over several years by reducing their initial investment in
new equipment installation by implementing energy savings.
•
On the services side, our Bravida Services Agreements comprise framework contracts under which we analyze
and identify a property’s specific requirements and produce proposals for short- and long-term improvements, as
well as the regular service and maintenance of installations for the entire property. Our Bravida Services
Agreement customers are typically regional or nationwide organizations whose operations are spread over a wide
geographic area. However, we perform our work locally to ensure customers a single point of contact and
competitive pricing based on local delivery of the service. Our local presence allows us to efficiently perform
comprehensive analyses and comparisons showing our customers exactly where and how much energy they can
save. Examples of the services we provide under our Bravida Services Agreements are: maintenance of HVAC
installations, filters and grills; energy-saving proposals; regular inspections of fire safety systems; server
monitoring and software update; water and sewage maintenance; boiler room inspection; switchgear inspection;
lamp and light fixture replacement; the measurement and adjustment of pressure settings; and documentation and
service reports.
Our Geographic Divisions
We operate in Sweden, Norway and Denmark, which accounted for SEK456 million, SEK132 million and
SEK40 million, respectively, of our Adjusted EBITDA on a Recalculation Basis for the year ended December 31, 2012. We
operate under five designated geographic operating divisions, which also constitute our primary reporting segments, and include:
(i) the Stockholm division; (ii) the Sweden–North division; (iii) the Sweden–South division; (iv) the Norway division; and (v) the
Denmark division. The chart below shows the distribution of net sales across our geographic divisions.
•
Sweden–North division. In 2012, the Sweden–North division was our second most-profitable division, with an
EBITDA margin 5.5% for the year ended December 31, 2012. For the year ended December 31, 2012, the
Sweden–North division maintained on average 1,353 employees and, as of March 2013, maintained 48 branches.
The Sweden–North division has experienced variation in demand between different locations and regions. Areas
of strong performance include the industrial segment in North Norrland, which improved in 2010 and
experienced strong demand in 2011, and public sector investments in the southern part of the division.
•
Stockholm division. For the year ended December 31, 2012, the Stockholm division maintained on average
1,326 employees and, as of March 2013, maintained 25 branches. Regions within the Stockholm division are
organized by technical field (electrical, heating and plumbing, HVAC, technical service management and other
specialist areas) rather than geographic region. Large, complex public and private investments are an important
component of the Stockholm division’s business operations and our major installation projects include civil
projects, public transportation projects and sports arenas. Our competition in Stockholm consists of other national
and international companies, who we compete with us for large, complex multi-technical projects.
•
Sweden–South division. The Sweden–South division was our most profitable division with an EBITDA margin
of 5.6% for the year ended December 31, 2012. For the year ended December 31, 2012, the Sweden–South
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division maintained on average 2,289 employees and, as of March 2013, maintained 65 branches. Sweden–South
division serves a mix of end-markets in cities such as Gothenburg and Malmö, which in 2011 demonstrated the
strongest demand in our installation and services businesses areas, particularly in infrastructure and housing. In
recent years, the division has also experienced stable demand, strong market shares and high margins from
smaller towns where we have a strong local presence. The Sweden–South division has benefitted particularly
from growth in regional mining, increased expenditures on energy investments and growing public infrastructure
expenditures. In 2010, the division implemented a merger of the two regions comprising the Malmö region,
which strengthened the division’s position in the Öresund region. The division seeks to continue to strengthen its
local presence through acquisitions in line with our growth strategy.
•
Norway division. For the year ended December 31, 2012, the Norway division maintained on average 1,903
employees and, as of March 2013, maintained 37 branches. The Norway division generated net sales of
approximately SEK2,696 million. This division experienced significant public investment in 2011, driven by
strong activity in the oil and gas sector and infrastructure, as well as increased demand for new construction in
the industrial and residential segments in 2011, despite increased competition and price pressures. In 2009, the
Norway division doubled in size as a result of our acquisition of Siemens Installation AS. In 2011, additional
acquisitions in heating and plumbing in the Oslo region further strengthened the Norway division’s market
position.
•
Denmark division. As of December 31, 2012, the Denmark division maintained 31 branches and 1,203
employees, while generating net sales of approximately SEK1,406 million. The division was impacted by
macroeconomic volatility during the recent economic downturn, experiencing weak demand in response to a
slowdown in the Danish construction sector. As a result, in 2010 we decided to close our installation business in
Sjaelland, which contributed to that year’s decline in net sales. In 2011, the Denmark division intensified sales
activities in the services business and continued to take a selective approach to contracts in the installation
business in order to adapt to weak market activity, increased competition and growing pricing pressure.
In addition, the group maintains 58 employees whose function relates to the group’s Swedish operations generally,
none of whom are allocated to a particular Swedish division.
Our Governance Model
Our operations are decentralized. Management and administration are performed at the branch level by our branch-level
managers at over 200 of our local branch offices in 150 locations throughout Scandinavia. Each of our five geographic divisions
comprises several regions to which each branch-level manager reports. Each of our branches consists of one or more profit
centers. We characterize our profit centers as either installation profit centers or services profit centers, based on the predominant
operations of that profit center.
We interact with our customers at the branch level and have delegated to our branch managers completed autonomy
and responsibility for maintaining and building customer relationships. Activities at the branch level include sales and invoicing,
cost calculations, tenders, contract management, resource and staff planning, project execution, warranties and administration.
Each branch manager is responsible for the organization, staffing and operation of installation and services assignments for his or
her branch as well as the overall results, net sales, profitability and capacity utilization of the branch. We believe that our
decentralized operational structure facilitates a deep local presence, heightened awareness of local market conditions and stronger
ties to local customers.
Generally, the branch manager is responsible for the management of projects local to their area, including the
organization, staffing and operational aspects of installation and services projects, ensuring that set targets for profitability and
other goals are achieved. This facilitates face-to-face contact between the individuals responsible for carrying out a project and the
end-customer, helping to strengthen our business relationships with our customers and promote recurring sales through repeat
business with these customers.
At the same time, to create a cost-effective support structure for the local branches and branch managers, we have
centralized group-relevant functions, such as our common enterprise resource planning (“ERP”) system, purchasing and overall
control. Our purchasing function is managed at a group level to ensure that we are able to leverage our scale in pricing
negotiations with our suppliers. In addition, our larger, more-extensive projects may be coordinated at a regional, divisional or
group level. We continuously work to refine processes such as planning, production and logistics and further improve existing
sourcing processes and/or international sourcing channels.
In addition, we undertake frequent and rigorous performance reviews of each branch to identify opportunities for cash
flow and margin improvement. We have a strong track record in restructuring underperforming branches. To the extent we believe
a particular branch cannot be restructured effectively, we may decide to close down or dispose of the branch. From 2006 to 2012,
we closed several underperforming branches and sold certain branches during that same period.
The chart below illustrates our bottom-up governance model, noting the total number of our branches, regions and
divisions as of December 31, 2012.
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Our Customer Base and Customer Contracts
Our Customer Base
We have a large and diverse customer base operating in a wide range of industries, including a significant number of
customers in the public sector. Sales to public sector customers have grown consistently and became increasingly important to our
business operations as demand from private sector customers declined during the economic downturn. Our customers range in size
and type from private businesses and government entities seeking integrated installation projects to smaller, local businesses and
local government entities requiring a one-time service. The chart below demonstrates the various end-markets that we serve.
Building contractors, who purchase installation services as part of larger construction projects, comprise our largest
customer group, followed by public sector customers and real estate companies. While building contractors account for our largest
customers in aggregate, we perform a large number of individual projects in partnership with these companies, each of which are
separately negotiated and comprise a relatively small proportion of our overall sales. For the year ended December 31, 2012,
building contractors accounted for 36% of total net sales, the public sector accounted for 22%, other business accounted for 16%,
industry accounted for 10%, private property companies accounted for 8% and others accounted for 8%. Small and medium-sized
projects, such as adaptations to offices, the redevelopment and extension of real estate and related services, are the largest
contributors to our total net sales.
The graph below shows our net sales distribution across our diverse customer base.
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For the year ended December 31, 2012, our ten largest customers together accounted for 20% of our net sales.
Generally, our project base tends to consist of smaller-scale projects, with 75% of our total installation and services projects being
less than SEK10 million in value, and 44% being less than SEK1 million in magnitude. The average contract value for our
installation and services contracts is approximately SEK24,000. In addition, for the year ended December 31, 2012, over 90% of
net sales were derived from customers who were also customers in the prior year. The chart below shows the distribution of types
that exceed and fall below the SEK10 million threshold.
Over the last few years, we have developed the expertise and resources necessary to carry out large installation projects
and nationwide services agreements. Some of our more notable recent assignments include:
•
the installation of ventilation systems for The New Karolinska Solna University Hospital in Stockholm, Sweden’s
first public-private partnership project in the healthcare industry and among the first in the world to be
environmentally certified consistent with standards promulgated by the Leadership in Energy and Environmental
Design (the “LEED”);
•
a services agreement with Nordea Bank in Denmark and Norway covering all three of our fields of technology;
•
the installation of electrical systems in a new central hospital in Østfold, Norway;
•
an installation contract for a new hospital in Aarhus, Denmark which, when completed, will be Denmark’s
largest-ever hospital project;
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•
a turnkey installation contract for installation of all electrical, plumbing, HVAC, controls, sprinkler, elevator and
cooling units in the new multi-sport facility in Gothenburg, Sweden;
•
a multi-year contract to design, plan and install all electrical, heating and plumbing, and ventilation systems for
Facebook Inc.’s servers in the initial part of a new data center outside Luleå in northern Sweden, which
represents our single largest contract to date;
•
a partnering contract with NCC Construction Sweden, which we won in the Malmö region for electrical
installations in central Malmö, including a mall, offices, apartments and garages, to be completed in 2013–2014;
and
•
a number of notable public sector projects currently in progress, including the installation of electrical, heating
and plumbing, HVAC, and sprinkler and fire alarm systems for Norra Länken, Sweden’s largest ongoing road
construction project, which is scheduled to open in 2015.
Tender Process and Pricing
We obtain projects through competitive bidding. The process for obtaining business differs with respect to installation
projects, on the one hand, and services assignments, on the other hand. The tender process for installation projects typically
involves substantial preparation work, calculations, planning and negotiations with the potential customer. Depending on the size
of the potential project, a tender process can last from a few days to more than a year.
By contrast, our services projects are typically based on framework agreements. During the tender process for services
assignments, we work with the customer to detail items such as price, current organization, experience and availability. We are
then usually appointed based on a weighted average of these items. Prior involvement usually offers competitive advantages.
Pricing for installation and services projects takes place at the local branch level, but pricing decisions are established at
the group level. Factors that we typically take into account when pricing installation projects and services assignments may
include: (i) the purchase price of materials; (ii) wages and hourly billing of project managers and employees; (iii) subcontractor
costs; (iv) price differentiation for volume, geography or competence; (v) the fixed price of subscription agreements (in the
service sector); and/or (vi) pricing adjustments relating to the economic cycle and general pricing adjustments.
Historically our customers have invited separate tenders for all electrical, heating and plumbing, and HVAC projects.
Building services providers are engaged at a later stage of a project after the commencement of construction and the appointment
of a lead contractor. As a result, pricing traditionally has been the primary competitive advantage of installation providers.
However, we believe that the market has shown an apparent shift towards taking qualitative factors, such as integrated, energyefficient proposals and customer adaptations, into account. In our experience, an increasing number of construction firms have
recently chosen to procure integrated solutions for all electrical, heating and plumbing, and HVAC installations directly from one
provider, rather than through a construction firm that may employ several subcontractors, in order to achieve significant cost and
performance synergies. This development has contributed to support our growth.
Customer Contracts and Framework Agreements
The terms of our customer contracts vary widely by customer segment and jurisdiction due to differing customer
requirements and applicable industry standards. In Sweden, Norway and Denmark, the industry has established generally
acknowledged and accepted industry standard contracts. Such standard contracts are available for a variety of different building,
construction, installation and contracting situations.
•
Sweden. In Sweden, our customer agreements in the installation business area consist primarily of construction
contracts in which the purchaser is responsible for the overall project and the design and we are responsible for
only the installation. Where the purchaser remains responsible for design of a project, we act as subcontractor and
enter into standard subcontracting arrangements. By contrast, in “turnkey” projects where we act as a main
contractor with principal responsibility for the design and execution of a project, our contracts will contain
general terms that will allocate different responsibilities between us and the customer. Customer agreements in
the Swedish services business area include individual services agreements for a fixed period, long-term
framework agreements (with or without agreed volumes) and oral agreements (in daily operations).
•
Norway. We utilize four standard-form customer contracts for installation projects in Norway, which are based
upon industry standards for construction in the country. As in Sweden, these contracts vary depending on whether
the purchaser or contractor is responsible for the overall project and design and on whether we are acting as a
contractor or a subcontractor. We also have a standard framework agreement used for our services contracts in
Norway.
•
Denmark. In Denmark, installation contracts are similarly based on standardized agreements with standard terms
and conditions that follow generally accepted industry terms and conditions. Services agreements cover the
operation or maintenance of installations in technical systems, properties and infrastructure as well as ordinary
services agreements, often for a fixed period of time. Some services agreements are made as framework
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agreements in which standard terms and conditions are used, and other services agreements are very short and are
not based on standard forms.
We also typically provide to our customers guarantee and support service coverage. A standard guarantee period for
customer agreements for installation projects is five years on materials and workmanship from the date of acceptance and
approval by the customer. Where applicable, the parties may sometimes agree on longer guarantee periods for special equipment.
We often negotiate extension clauses in our supply agreements that provide a warranty period of up to 66 months (i.e., five and
one-half years) where a purchase is made for an installation project. This ensures adequate back-to-back coverage during the
standard warranty period.
Order Intake and Order Backlog
We measure our order backlog by geographic division as of a single date by calculating the anticipated revenues from
signed and binding contractual commitments existing on that date less amounts invoiced on those commitments up to that date.
We have experienced a steady year-on-year increase in order intake and order backlog in most of our divisions as a result of an
increase in the frequency of higher-profile and more-complex installation projects. Our order backlog grew by approximately 5%
to SEK4,809 million from December 31, 2011 to December 31, 2012, primarily due to the number of large installation orders that
we obtained during this period.
The Sweden–North division and the Stockholm division had order backlogs of SEK791 million and SEK1,303 million,
respectively, as of December 31, 2012, which represented 40% and 61%, respectively, of our net sales for this division for the
year ended December 31, 2012. In the Stockholm division and the Sweden–North division, our strong order backlog has been
driven primarily by our contract to carry out the second phase of installations at Facebook Inc.’s new data center in Luleå in
northern Sweden, which we are currently in the process of completing. The new contract award was primarily responsible for a
33% year-on-year increase in order backlog in 2011 in both divisions. In addition, in 2011 the Stockholm division expanded our
existing installation contract for Norra Länken, Sweden’s largest ongoing road construction project, to cover fire extinguishing
systems in addition to HVAC systems and also was awarded the installation contract for Quality Hotel Arena Solna. The
Stockholm division also received a contract to install the HVAC system for the new Stockholm Arena that is being built next to
the Stockholm Globe Arena and has been given full responsibility for all installations in the new shopping center in the Hornstull
district of Södermalm in Stockholm. In 2012, the completion of our installation project for Facebook, Inc.’s data center in Luleå
led to a fall in order backlog for Sweden–North as of December 31, 2012 as compared to the previous year. Our 2012 order
backlog for the Stockholm division grew as a result of new contracts to install HVAC systems and systems across all fields of
technology for, respectively, The New Karolinska Solna University Hospital and Stockholm’s new post terminal.
The Sweden–South division had an order backlog of SEK1,262 million as of December 31, 2012, which represented
39% of our net sales for this division for the year ended December 31, 2012. While our order backlog decreased year-on-year in
the Sweden–South division in 2011, this was primarily the result of several large contract awards in 2010, including a project to
carry out all installations in a new remand center in Helsingborg, all installations for the conversion of an old post office building
in Gothenburg into the 36,000 square meter Clarion Hotel Post, heating and plumbing and HVAC installations in the new
Emporia shopping center in Malmö and the services assignment at the largest nuclear power plant in the Nordic region, Ringhals.
Our 2012 order backlog for Sweden–South fell slightly as a result of the completion of the Emporia shopping center in Malmö
and the completion of the Clarion Hotel Post in Gothenburg. The fall in order backlog as a result of these project completions was
partially offset by a new contract to install electrical, heating and plumbing and HVAC systems at the new Ängladården arena in
Gothenburg.
The Norway division and the Denmark division had respective order backlogs of SEK939 million and SEK514 million
as of December 31, 2012, which represented 35% of our net sales for the Norway division and 37% of our net sales for the
Denmark division for the year ended December 31, 2012. The Norway division and the Denmark division showed weaker order
backlog growth in 2010 and 2011, generally attributable to a shift toward increased services projects. Both divisions experienced
an increase in order backlog from December 31, 2011 to December 31, 2012 as a result of several large hospital projects being
awarded to us in each division during the period.
Sales and Marketing Strategy
Our sales and marketing strategy reflects the local nature of the market for installation and services. Generally, our
sales and marketing activities are carried out by each branch in coordination with its respective regional and divisional offices,
instead of through a central sales organization. Branch managers report to our marketing managers at each of the five divisions
and seek to maintain working relationships with local branches of construction companies, municipal authorities and local
industries to solidify recurring sales. Contracts with a value exceeding SEK50 million require the approval of our chief executive
officer.
We typically seek to enter projects at an early stage in order to better understand customers’ needs and identify
opportunities for assuming greater responsibility. In addition, in connection with any installation project, customers are also often
offered a services agreement to lock in going-forward sales. Prior to the completion of any project or assignment, we conduct an
end meeting with the customer to evaluate any potential developments and areas in which we can continue to provide our services
to the customer.
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We undertake quarterly reviews of our existing and potential customer base to develop customer action plans that
provide us greater insight into whether customers are growing and profitable, the mix of installation projects and/or services
assignments that customers may undertake, customers’ reputation and prior work relationships with customers. We then utilize
this action plan as a guide for future marketing activities and to set target turnover and contribution margins.
Supply and Procurement
Our purchasing organization ensures that our customers have access to a competitive range of high-quality products.
Consistent with our objective of providing our customers with competitive prices, we seek to continuously decrease our total cost
of materials while increasing our competitiveness with new suppliers, new purchasing channels and new products or solutions. To
that end, we have standardized our procurement processes and continually leverage economies of scale to ensure competitive
pricing.
In addition, we are not dependent on any single supplier. In 2012, we had approximately 15,000 direct and indirect
suppliers providing a range of products, including direct materials, such as piping, electrical and HVAC materials, and indirect
materials such as vehicle financing. For the year ended December 31, 2012, we estimate that our top ten suppliers accounted for
32% of our total supply costs, while our top 250 suppliers accounted for approximately 80% of our total supply costs.
Human Resources and Personnel
Employees
As of March 31, 2013 we had 7,868 employees located throughout Sweden, Norway and Denmark. The average
number of employees for the years ended December 31, 2012, 2011 and 2010 was 8,139, 7,955 and 7,834, respectively. Our
employees are divided between group, divisional, regional and branch level, with the vast majority being employed at branch
level. We also employed over 6,000 installers and technicians (including electricians, plumbers, fitters and engineers) as of
December 31, 2012. When a particular project requires skills outside our technical fields, we employed subcontractors.
Recruitment and Development
The building services industry in Scandinavia has demonstrated a trend towards growth in the long term and
technological advances will require more highly skilled employees. In particular, project managers will need stronger technical
and commercial expertise. In addition, our decentralized management structure requires us to ensure a high level of competence
among our employees. As a result, we seek to attract younger employees with high levels of education. We have expanded our
activities at universities in order to attract more engineers to the group, in particular by offering competitive compensation levels
in each local market, and aim to recruit staff internally by offering opportunities for further career development.
In addition, we have implemented a central leadership development program in order to identify and train current and
future managers. The program is carried out by management in collaboration with our local branches, which are encouraged to
draw up succession plans as well as to identify and coach new managers. Since 2007, over half of our managers have initiated or
completed the course, which runs over 18 months and culminates in the award of an internal diploma. In addition, in 2010 we
established the Bravida School, which offers specialist training courses in areas such as project management, the group’s common
ERP system and occupational health and safety. In 2011 more than 1,100 employees took part in the courses.
We also have implemented simple but effective incentive schemes focused on profitability improvement, to create local
ownership and increase our attractiveness as an employer. For example, branch managers can earn discretionary compensation
related to profits and based on certain profitability thresholds, after social costs and benefits are deducted.
Labor Relations and Pension Issues
Our employees are covered by either a defined contribution pension plan or a benefit pension plan. For more
information, see “Risk Factors—Risks Related to Our Business and Industry—We may be required to make further contributions
to our pension schemes if the value of pension fund assets is not sufficient to cover potential obligations.”
We are bound by various collective bargaining agreements in each of the countries in which we operate. We consider
our relationship with our employees to be good.
Facilities and Leases
In addition to our headquarters in Stockholm, Sweden, we have five operating divisions divided geographically into 26
regions, with each division comprised of between four and six regions. Each region has a number of locations that may be
comprised of one or more branches, each specializing in one field of technology. We maintained approximately 200 branches as
of March 31, 2013, the largest of which accounted for less than 3% of our net sales for the year ended December 31, 2012.
Our group management is located at our headquarters in Stockholm and activities performed at this level include
overhead and support functions such as purchasing, process development, information technology, communications, human
resources and performance management, legal affairs, and accounting and finance. With respect to our five operating divisions,
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activities performed are primarily overhead functions such as financial control, legal, competence centers, national negotiations
and staff functions, and coordinating and following up on strategies and goals set at the group management level.
In addition to our head office in Stockholm, Sweden, our facilities comprise primarily branch offices for local
operations. We lease approximately 150 premises in Sweden, Norway and Denmark as well as parking and garage spaces. Leasing
costs related to these premises and spaces amounted to SEK148 million and represented approximately 1.3% of net sales for the
year ended December 31, 2012. Our leasing costs for the year ended December 31, 2012 represented SEK148 million for office
rent and SEK191.3 million for other costs and expenses such as vehicles, office equipment, information technology and other
equipment. We believe that our properties are generally adequate for our present needs and that suitable additional or replacement
space will be available when needed.
Health and Safety
Our operations are subject to various health and safety laws in the jurisdictions in which we operate that require us to
comply with various security measures and to implement discrete policies.
In the last three years, we have experienced one serious work-related accident that resulted in the death of an employee.
In 2011, we introduced a target of zero workplace accidents in our operations.
We have adopted a uniform work environment policy at the group level, which is complemented by a electrical safety
policy. The primary aim of these policies is to ensure that employees have the right competence and experience to carry out their
assignments, that a good work environment, with a minimum of incidents, is maintained and that electrical work is performed by
designated professionals and fulfill the requirements on electrical safety.
Information Technology
Our information technology operations and network services are mainly outsourced to external providers through
outsourcing agreements. We have one provider for basic information technology services, such as server monitoring and
maintenance, whereas our wide area network and internet communication are outsourced to a separate provider. Our information
technology systems are primarily based around the common ERP system, Agresso, which, together with our feeding systems, is a
complete business system that maintains all of our commercial processes, including time registry, procurement, invoicing, billing,
accounting, financial monitoring and reporting. Agresso allows for detailed cost allocation during the appraisal phase of projects
and is highly adaptable, making it possible to integrate a medium-sized branch—newly established or recently acquired—within
less than three months.
Employees are able to enter their online workplace from any location and easily access different registers containing
data such as client information and history, experience from previous assignments, key ratios for tender proposals and resource
availability. The information technology environment is designed to be easily adaptable to meet the needs of different
organizational structures and operations, and the common technology platform is scalable and modular. It consists of basic
modules for operations control, quality assurance, mandatory regulations and central functions.
We have security measures in place regarding the personal data of our employees and customers, which take into
account relevant employment laws and personal data legislation in Sweden, Norway and Denmark. We do not transfer personal
data outside the EEA without observing legal obligations applicable to such transfers.
Insurance
Our group-wide insurance coverage includes policies for risks associated with our business, including general liability,
contract and property, directors’ and officers’ liability, as well as automobile, buildings and contents and workers’ compensation
policies. Our key insurance underwriters include Moderna Försäkringar AB and Zurich Insurance Group Ltd. We believe that our
insurance coverage is consistent with industry standards.
Litigation
We provide a complex range of services to a large number of customers. As such, in the ordinary course of business,
we are subject to various administrative, legal and/or regulatory proceedings. On the basis of current information, we do not
expect that the actual claims, lawsuits and other proceedings to which we are subject, or potential claims, lawsuits and other
proceedings relating to matters of which we are aware, will ultimately have a material adverse effect on our results of operations,
financial condition or liquidity. We note, however, that the outcome of legal proceedings is extremely difficult to predict with
certainty, and we offer no assurance in this regard. The most significant actual or potential claims, lawsuits and other proceedings
of which we are currently aware are described below.
Thule Air Base Litigation (Denmark)
Our subsidiary, Bravida Danmark A/S (“Bravida Danmark”), was a member of the Danish Construction Company
(“DCC”), which is a consortium of five construction companies. DCC is party to a claim brought before the U.S. Department of
Labor, Office of Administrative Law Judges in New York City under the Defense Base Act by four former employees of DCC. A
former member of the DCC consortium, E.Pihl & Søn AS, is defending the claim on behalf of DCC. The case concerns an
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American bomber aircraft that crashed near the Thule air base in Greenland in January 1968, the construction site where the
plaintiffs were working at the time of the accident. The aircraft was carrying nuclear weapons at the time of the accident and the
plaintiffs have alleged that they suffered severe illness as a result of exposure to radioactive discharge resulting from the accident.
Two of the four former employees are deceased from cancer and are represented by their families.
Between 1985 and 1990, the accident resulted in a number of legal proceedings in the United States and Denmark. In
the United States these cases were dismissed and in Denmark the Danish government paid compensation of DKK50,000 to each
of the employees at the air base. The plaintiffs have not yet quantified their claim and, as a result, we are not presently able to
determine the magnitude and extent of the claim. If the DCC were to be held liable and ordered to pay damages, there is at present
no agreement on how the damages will be distributed among the former members of the consortium. We are in discussion with
DCC regarding the potential allocation of any liability that may result from this case. We believe that we may be able to claim
partial indemnification from Semco Maritime A/S that was part of the Bravida Danmark’s group prior to its demerger in 1990
should we be held jointly or severally liable.
Danmarks Radio Claim (Denmark)
Between 2004 and 2008, Bravida Danmark was engaged to perform certain installation works at the headquarters of the
Danish Broadcasting Corporation (Danmarks Radio). Bravida Danmark had been commissioned to install the indoor climate
system at the headquarters of Danmarks Radio in accordance with specifications from third-party architects and consultants
independently engaged by Danmarks Radio. Following the completion of the construction of the headquarters in 2008, Danmarks
Radio alleged that they had experienced certain problems with the indoor climate at their headquarters due to, what they alleged
were, faults related to the design and installation of the indoor climate system and components.
In 2009, Danmarks Radio initiated preliminary proceedings with the Danish Board of Arbitration for Building and
Construction (Voldgiftsnævnet for Bygge og Anlægsvirksomhed) (“Board of Arbitration”) to have experts appointed to determine
and opine on the facts of the matter. In October 2010, Bravida Danmark and certain other parties involved in the construction of
the headquarters received notice that Danmarks Radio had allegedly incurred costs in the amount of DKK60.1 million (not
including value-added tax) as a result of faults with the indoor climate system and components and that Danmarks Radio intended
to assert a claim against Bravida Danmark and certain other third parties for indemnification. In October 2012, Danmarks Radio
submitted a complaint to the Board of Arbitration against Bravida Danmark and Danmarks Radio’s project management liability
insurer claiming damages in the amount of DKK30 million. Danmarks Radio later withdrew its complaint conditioned upon
Bravida Danmark consenting to waive the applicable statutory limitation period until the end of 2013. The experts appointed by
the Board of Arbitration provided their first opinion in the summer of 2012 following which Danmarks Radio requested a
supplementary opinion from them. Based on the findings of the panel of experts, Danmarks Radio may initiate proceedings with
the Board of Arbitration. At present, however, no writ of summons or complaint has been filed with the Board of Arbitration by
Danmarks Radio. We believe that costs incurred by Danmarks Radio are attributable to the design of the indoor climate system
and not to any defect in Bravida Danmark’s performance of its obligations under the contract with Danmarks Radio and as such
have not made any reservation for this claim in our financial statements.
NCC Construction Claim (Norway)
In 2012, we were engaged as a subcontractor by NCC Construction (“NCC”), to provide electronic installation services
in connection with the construction of the Comfort Hotel Grand Central (Østbanehotellet) in Oslo, Norway, with the original
proposed completion date of April 30, 2012. Subsequently, proposed project modifications made it difficult for us to meet the
April 30, 2012 completion deadline. After notifying NCC of the likelihood of a delay, NCC formally requested us to accelerate
our construction work, causing us to incur additional costs in the amount of NOK7.7 million (not including VAT), of which we
have received only NOK1.5 million till date. We currently hold a claim against NCC in an aggregate amount of NOK6.6 million
(not including value-added tax). We have made a provision of NOK4.0 million to cover a loss in the event that we are not
successful in receiving a full settlement of our claim.
Sevan Marine–AS Nymo Claim (Norway)
Between 2010 and 2012, we were engaged as a subcontractor to AS Nymo to perform electrical, instrument,
telecommunications and pipe maintenance works on the “Sevan Voyageur,” a floating production storage and offloading unit
operated by Sevan Marine in the offshore oil and gas industry. Our payment from AS Nymo under the subcontracting arrangement
was dependent on AS Nymo’s receipt of payment from Sevan Marine. Currently, we have an outstanding receivable owing from
AS Nymo of approximately NOK27.7 million (not including value-added tax), NOK22.1 million of which we have accounted for
as revenue. AS Nymo has commenced proceedings against Sevan Marine on account of amounts owed, including amounts owed
to us as subcontractor. We have made a provision in the amount of NOK10.0 million to cover a loss in the event that we are not
successful in obtaining a full settlement of our claim.
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BOARD OF DIRECTORS, MANAGEMENT AND AUDITOR
Board of the Issuer
The Issuer is a public limited liability company organized under the laws of Sweden and is indirectly controlled by
investment funds advised by Bain Capital.
The board of the Issuer (the “Issuer Board”) comprises 10 directors. The Issuer Board is responsible for managing the
operations of the Issuer in accordance with applicable laws, constitutional documents and resolutions of the shareholders’
meeting. The principal functions of the Issuer Board are to carry out the business of the Issuer and to legally represent the Issuer in
its dealings with third parties. The executive address of our directors is Bravida, SE-126 81 Stockholm, Sweden.
The following table sets forth the name, age and positions of the members of the Issuer Board, as of December 18,
2013.
Name
Age
Michael Siefke .......................................................
Ivano Sessa ............................................................
Marc M. Valentiny.................................................
Michel Plantevin ....................................................
Jay Corrigan...........................................................
Jan Johansson.........................................................
Jan-Erik Arvidsson ................................................
Kai-Otto Helmersen ...............................................
Anders Mårtensson ................................................
Peter Sjöquist .........................................................
Kaj Levisen ............................................................
Göran Jonsson........................................................
Roger Krig .............................................................
Position
46
36
49
57
42
54
63
40
48
56
55
57
48
Non-executive director and Chairman of the board
Non-executive director
Employee representative
Employee representative, deputy
Michael Siefke has been a director of the Issuer since December 2013. Mr. Siefke joined Bain Capital in 2001 and is a
managing director of the firm. Prior to joining Bain Capital, Mr. Siefke worked for The Carlyle Group in Germany where he
focused predominantly on industrial goods and automotive deals. Mr. Siefke also serves as chairman of the board of directors of
FTE Automotive and IMCD. Previously, he worked as an assistant lecturer at Westfaelische-Wilhelms-University specializing in
accounting, auditing and finance. Mr. Siefke holds a summa cum laude PhD from Westfaelische-Wilhelms-University, where he
also received an MBA.
Ivano Sessa has been a director of the Issuer since May 2012. Mr. Sessa joined Bain Capital in 2004. Prior to joining
Bain Capital, Mr. Sessa was a consultant with Bain & Company in New York, Atlanta and Milan, where he provided strategic and
operational advice to private equity, industrial and financial services clients. Mr. Sessa also serves on the board of directors of
TeamSystem S.r.l. and IMCD. Mr. Sessa received a BS magna cum laude in business administration from Bocconi University in
Milan. He also spent one semester at the Richard Ivey Business School in Canada in 1997.
Marc M. Valentiny has been a director of the Issuer since May 2013. Mr. Valentiny joined Bain Capital in 2003 and is a
managing director of the firm. Prior to joining Bain Capital, Mr. Valentiny was managing director of Rexel UK and Northern
Europe. Previously he was vice president strategy and planning of the Pinault-Printemps-Redoute group, the controlling
shareholder of Rexel. Prior to that, he was senior manager at McKinsey & Company, worked for Braxton Associates, and served
as an officer in the French Air Force. Mr. Valentiny also serves on the board of directors of FCI and Edcon Holdings.
Mr. Valentiny received a master’s degree in business administration from Harvard Business School and a master’s degree in civil
engineering from ENPC. He is also a graduate of Ecole Polytechnique in France.
Michel Plantevin has been a director of the Issuer since May 2013. Mr. Plantevin joined Bain Capital in 2003 and is a
managing director of the firm. Before joining Bain Capital, Mr. Plantevin was a managing director of Goldman Sachs
International in London, initially in the investment banking division, then in the merchant banking division (PIA). Prior to that, he
was a consultant with Bain & Company in London and later headed the Bain & Company Paris office as a managing director.
Mr. Plantevin is also on the board of directors for Maisons du Monde, NXP Semiconductors, IMCD, FCI S.A. and Trinseo
(formerly Styron). Mr. Plantevin received a master’s degree in business administration from Harvard Business School and an
undergraduate and master’s degree in engineering from the Ecole Supérieure d’ Electricité (Supélec) in France.
Jay Corrigan has been a director of the Issuer since May 2013. Mr. Corrigan joined Bain Capital in 1996 and is the
chief financial officer for private equity. Prior to joining Bain Capital, Mr. Corrigan spent three years at Ernst & Young LLP. Mr.
Corrigan received a bachelor’s degree in accounting from Fordham University and is a certified public accountant.
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Jan Johansson has been a director of the Issuer since December 2013. Mr. Johansson is also currently serving on the
board of directors of Fastighets AB ML 4, Fastighets AB Centur and Centuria AB. Previously, Mr. Johansson was CEO at PEAB.
Mr. Johansson holds a Master of Engineering from Lund University.
Jan-Erik Arvidsson has been an employee representative at the board of the Issuer since December 2013. Mr.
Arvidsson is representing Elektrikerförbundet i Sverige.
Kai-Otto Helmersen has been an employee representative at the board of the Issuer since December 2013.
Anders Mårtensson has been an employee representative at the board of the Issuer since December 2013. Mr.
Mårtensson is representing Byggnads i Sverige.
Peter Sjöquist has been an employee representative at the board of the Issuer since December 2013. Mr. Sjöquist is
representing Ledarna i Sverige.
Kaj Levisen has been a deputy employee representative at the board of the Issuer since December 2013.
Göran Jonsson has been a deputy employee representative at the board of the Issuer since December 2013.
Roger Krig has been a deputy employee representative at the board of the Issuer since December 2013.
Management
Our group is managed by an executive management team. The current executive management team consists of ten key
members, each of whom oversees a specific aspect of our business. The following table sets forth the name, age and positions of
the current members of our executive management team as of December 18, 2013.
Name
Age
Staffan Påhlsson........................................................
Peter Hedlin ..............................................................
Petter Håkanson ........................................................
Position
61 Chief Executive Officer
57 Interim Chief Financial Officer
46 Chief Information Officer, Chief Communications
Officer and Chief Business Development Officer
50 Chief Legal Officer
44 Head of the Stockholm division
47 Head of Sweden–North division
47 Head of Sweden–South division
40 Head of the Norway division
52 Head of the Denmark division
47 Chief Procurement Officer
Magnus Liljefors.......................................................
Filip Bjurström..........................................................
Mikael Lidström .......................................................
Anders Ahlquist ........................................................
Mattias Johansson .....................................................
Bent Andersen...........................................................
Lars Korduner ...........................................................
Staffan Påhlsson has been chief executive officer of our group since September 2012. Mr. Påhlsson joined our group in
1980 and was appointed head of our Sweden–South division in 2001. Mr. Påhlsson has also been a member of the board of the
Issuer. Previously, Mr. Påhlsson was deputy chief executive officer of our group, chairman of the board of Tornet Lustgârden AB
and a director of ENACO Göteborg AB. Mr. Påhlsson qualified as an electrical engineer in 1970.
Magnus Liljefors chief legal officer of the group since 2005. Since 2005, Mr. Liljefors has also been a member of the
boards of the Issuer, Bravida Sverige AB, Bravida Norge AS and Bravida Danmark A/S, and secretary to the board of Bravida
AB. Mr. Liljefors is also currently on the board of directors of AB Rosenmasen. Mr. Liljefors holds a master’s degree in law from
Uppsala University as well as from the University of Amsterdam.
Peter Hedlin has been the interim chief financial officer since 2013. Previously, Mr. Hedlin has served, inter alia, as
chief financial officer of Imtech and Executive VP Strategic Business Control of Maxit Group (then part of the Heidelberg
Cement group). Mr. Hedlin holds a bachelor of science (economics) from Uppsala University and Lund University.
Petter Håkanson has been the chief information officer and chief communications officer since 2005, and chief
business development officer since 2010. Previously, Mr. Håkanson has served as the chief information officer, chief financial
officer and information technology manager of Scandiaconsult AB, chief information officer and deputy chief financial officer of
Fastighets AB Näckebro AB and a director of Exacon Holding AB. Mr. Håkanson is also currently serving on the board of
directors of Inhouse Tech Infra Goteborg AB. Mr. Håkanson holds a master’s of science degree in economics and business
administration from the Stockholm School of Economics.
Filip Bjurström is a director of Bravida Sverige AB, having served as head of the Stockholm division since 2009.
Previously, Mr. Bjurström was a regional manager at NCC Boende AB and NCC Construction Sverige AB and a business
manager at NCC Construction Sverige AB. Mr. Bjurström is also currently serving on the board of directors of Aktiebolaget
Svensk Byggtjänst, Erfator Projektledning AB, Bravida Sakerhet AB, C2M Sprinkler AB and Rorspecialisten Stockholm AB.
Mr. Bjurström holds a master’s of science degree in civil engineering from the Royal Institute of Technology, Stockholm and a
degree in business administration from Uppsala University.
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Mikael Lidström has been the head of the Stockholm–North division since February 2013. Previously, Mr. Lidstrom
was a regional manager of Veidekke Sverige AB. Mr. Lidstrom is also currently on the board of directors of ES Intressenter AB
and PQR International AB. Mr. Lidstrom holds a diploma in mechanical engineering from Tyresö Gymnasium.
Anders Ahlquist has been the head of the South division since 2013, having been a marketing manager of the
Stockholm–South division from 2008 to 2013. Mr. Ahlquist is also currently on the board of directors of Bravida Prenad AB.
Mr. Ahlquist holds an engineering degree from the Technical College of Frölunda Gymnasiet.
Mattias Johansson is a director of Bravida Norge AS and has served as head of the Norway division since 2013.
Mr. Johansson holds a master’s degree in science and engineering from Lund University.
Bent Andersen joined us in 2003, and is a director of Bravida Danmark A/S, having been the head of the Denmark
division since 2006. Previously, Mr. Andersen was regional manager for Fyn and Jylland at Bravida Denmark, manager at ABB
A/S, division manager at ABB Service A/S and technical manager at ABB Service A/S. Mr. Andreson is also currently on the
board of directors of Danloft A/S and Tekniq. Mr. Andersen holds a bachelor’s degree in electrical engineering from Odense
Teknikum and an executive master of business administration degree from Handelshøjskolen Arhus and Syddansk Universitet.
Lars Korduner has been the chief procurement officer since 2005. Mr. Korduner is also currently serving on the board
of directors of Resultatfabriken AB. Mr. Korduner holds a bachelor’s degree in business administration (accounting and finance)
from the Institute of Business Administration in Stockholm, and has also completed an executive management education program
at the Institute of Business Administration (Stockholm Business School).
Executive Compensation
We currently maintain an executive compensation program in order to:
•
recruit and retain key leaders;
•
link compensation to an executive’s individual performance and our financial performance; and
•
align the executives’ compensation opportunities with our short-term and long-term financial objectives.
In furtherance of these objectives, we have designed an executive compensation package that includes (i) fixed
compensation in the form of base salary and benefits and (ii) variable compensation based on the executive’s performance and our
financial performance, in the form of annual cash bonus awards and, in some cases, equity incentive awards.
Conflicts of Interest
As at the date of this Prospectus, there are no material conflicts of interest between each Issuer board member’s private
interests and their legal duties in respect of the Issuer.
Auditors
The historical consolidated financial statements of Bravida AB as of and for the years ended December 31, 2010, 2011
and 2012, incorporated through reference into this Prospectus, have been audited by KPMG AB with Per Gustafsson as the
auditor in charge.
The historical consolidated financial statements of Bravida AB as of and for the three months ended March 31, 2012
and of the Issuer as of and for the three months ended March 31, 2013 and the nine months ended September 30, 2013,
incorporated through reference into this Prospectus, have been reviewed by KPMG AB with Per Gustafsson as the auditor in
charge.
Per Gustafsson is an authorised public accountant and a member of FAR, the professional institute for accountants in
Sweden.
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PRINCIPAL SHAREHOLDER
Investment funds advised by Bain Capital controls approximately 98.0% of the outstanding share capital of Bravissima
(BC) Luxco S.C.A. (“Luxco”), which indirectly holds all the outstanding equity interests of the Issuer. Members of our
management indirectly control approximately 2.0% of the outstanding share capital of share capital of Luxco. The management
team’s equity interest in Luxco are held through AB Rosenmåsen, a private limited liability company organized under the laws of
Sweden that acts as an aggregator vehicle for the management equity interests (“Manageco”). The Bain Capital funds, Manageco,
each of the managers and Luxco are party to a subscription and security holders’ agreement dated July 31, 2012 (the
“Shareholders’ Agreement”), which regulates the governance and equity interests of the group.
Shareholders’ Agreement
The Shareholders’ Agreement contains customary provisions restricting the direct or indirect transfer of equity interests
by the managers other than in connection with a transfer of equity interests by Bain Capital or, with respect to “Tier-2” managers
only, between themselves. The managers are entitled to customary pro rata tag-along rights in the event of a sale of securities by
the Bain Capital funds, provided that if the Bain Capital funds are selling control of the group, the managers can elect to sell all of
their securities. There are customary leaver provisions in place, whereby the Bain Capital funds or their designee can purchase the
equity interest of any manager who ceases to be employed by the group. The Bain Capital funds has customary drag-along rights
on any sale of control of the group.
As majority shareholder, the Bain Capital funds control the size and appointments to the boards of directors of the
group companies. In addition, there is a customary list of restricted matters set forth in the Shareholders’ Agreement, and each
manager agrees to exercise all powers to ensure that none of the group companies takes such restricted actions without the prior
consent of the board of the manager of Luxco. The Shareholders’ Agreement gives management the right to appoint two persons
to the board of the manager of Luxco, and to each of the Swedish holding companies within the group.
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
As part of our business, we have entered into several transactions with related parties, including our principal
shareholders. The following is a summary of our most significant transactions with related parties as of the date hereof.
Consulting Services Agreement and Transaction Services Agreements
On July 31, 2012, Bain Capital entered into a consulting services agreement with us (the “Consulting Services
Agreement”), pursuant to which Bain Capital provides us with management and consulting services and financial and other
advisory services. The Consultancy Services Agreement provides that in consideration for such services we shall pay an annual
aggregate fee to Bain Capital of SEK10 million plus reimbursement for reasonable out-of-pocket expenses. The Consulting
Services Agreement is for an initial term of one year and shall automatically extend thereafter on a year-to-year basis unless Bain
Capital provides written notice to terminate at least 90 days prior to the expiration of the initial term or any extension thereof.
On July 31, 2012, we entered into a transaction services agreement (the “Transaction Services Agreement”) with Bain
Capital, pursuant to which we received certain advice and services related to transaction-specific functions in connection with the
acquisition by the Bain Capital funds in 2012 of our group, including, among others, assistance in the negotiation with the vendors
of sale and purchase and other terms and conditions of the Acquisition Transactions and advice and assistance relating to the
raising of finance by our group. Pursuant to the Transaction Services Agreement, we paid Bain Capital a fee of approximately
SEK62 million on July 31, 2012.
Shareholder Loan Agreements
Luxco and the Parent are parties to two shareholder loan agreements (together, the “First Shareholder Loan
Agreements”), pursuant to which Luxco has agreed to lend an aggregate principal amount of SEK2,500 million to the Parent on an
unsecured basis (the “First Shareholder Loans”). Interest accrues on the unpaid principal amount of the loans at the rate of
10.125% per annum. As of March 31, 2013, the total accrued interest on the First Shareholder Loans was SEK66 million. The
First Shareholder Loans are repayable on the date falling 20 years after the date of the First Shareholder Loan Agreements. The
First Shareholder Loan Agreements contain customary events of default, including, among others, failure to pay any principal or
interest when due (subject to a three business day grace period) and the insolvency of the borrower.
The Parent subscribed for convertible equity certificates issued by the Issuer in an aggregate principal amount of
SEK2,500 million. Prior to the Issue Date, the Parent transferred all equity certificates issued by the Issuer to Goldcup 8768 AB
and Goldcup 8768 AB paid for these equity certificates by issuing equity certificates to the Parent on the same terms as the equity
certificates transferred to it by the Parent. At the same time, Goldcup 8768 AB converted the equity certificates issued by the
Issuer into ordinary shares by way of unconditional shareholder contribution.
The Issuer has subscribed for convertible equity certificates issued by Bravida Installation och Service AB (formerly
Bravissima Acquisitions AB) in the aggregate principal amount of SEK2,370 million, a portion of which was repaid in 2012. The
equity certificates bear interest at a fixed rate of 10.125%, which will accrue and be carried forward and treated as part of the
principal for purposes of calculating interest due in succeeding periods. The terms of the equity certificates entitled the holder(s)
to elect to convert such equity certificates into ordinary shares by dividing the par value of the equity certificates by a fixed
conversion price. The equity certificates will mature in 2062, but may be redeemed earlier at the election of the board of Bravida
Installation och Service AB, subject to certain restrictions set forth in the terms thereof. The terms of the equity certificates require
holders who wish to transfer their equity certificates to also transfer a pro rata number of ordinary shares in Bravida Installation
och Service AB. The equity certificates rank prior to the ordinary shares, but will be subordinated to all other existing and future
indebtedness.
The Issuer and Bravida Installation och Service AB are parties to a shareholder loan agreement (the “Second
Shareholder Loan Agreement”), pursuant to which the Issuer agreed to lend a principal amount of SEK2,600 million to Bravida
Installation och Service AB on July 31, 2012 on an unsecured basis (the “Second Shareholder Loan”). Interest accrues on the
unpaid principal amount of the loan at the rate of 10.125% per annum. The Second Shareholder Loan is repayable on the date
falling 20 years after the date of the Second Shareholder Loan Agreement. The Second Shareholder Loan Agreement contains
customary events of default, including, among others, the failure to pay any principal or interest when due (subject to a three
business day grace period) and the insolvency of the borrower.
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DESCRIPTION OF CERTAIN FINANCING ARRANGEMENTS
Revolving Credit Facility
Overview and Structure
In connection with the Issue, the Issuer and the Guarantors entered into the Revolving Credit Facility Agreement, dated
on the Issue Date, with Handelsbanken Capital Markets, Svenska Handelsbanken AB (publ) and Nordea Bank (publ) (together the
“Arrangers”), Handelsbanken Capital Markets, Svenska Handelsbanken AB (publ) as Agent, and the financial institutions named
therein as original lenders.
The Revolving Credit Facility Agreement provides for borrowings up to an aggregate principal amount of SEK550
million on a committed basis. The Revolving Credit Facility may be utilized by any current or future borrower under the
Revolving Credit Facility in Swedish kronor, Norwegian kroner, euro, Danish kroner and U.S. dollars and any other currency
approved by the lenders by the drawing of cash advances, the issuance of bank guarantees and letters of credit and by way of
ancillary facilities. Subject to certain exceptions, amounts may be borrowed, repaid and reborrowed at any time. Borrowings will
be available for general corporate and working capital purposes of the Issuer and its Restricted Subsidiaries and, without prejudice
to the generality of the foregoing, for financing or refinancing, capital expenditure, acquisitions and investments (including any
purchase price adjustments or earn out payments, the refinancing of indebtedness of the relevant entity or business acquired
pursuant to such acquisitions and investments and paying all related transaction or restructuring fees, costs and expenses) and the
operational restructurings and reorganization requirements of the Issuer and its Restricted Subsidiaries (including related fees,
costs and expenses).
In addition, the Issuer may elect to request, subject to certain terms and conditions, additional facilities either as a new
facility or as additional tranches of the Revolving Credit Facility (the “Additional Facility Commitments”) up to an aggregate
principal amount of SEK360 million on a committed basis. The Issuer may agree to certain terms in relation to the Additional
Facility Commitments, including the termination date (subject to parameters as set forth in the Revolving Credit Facility
Agreement) and the availability period.
Availability
The Revolving Credit Facility may, subject to the satisfaction of customary conditions precedent, be utilized from the
Issue Date until the date falling one month prior to the termination date of the Revolving Credit Facility.
Borrowers and Guarantors
The Issuer is an original borrower under the Revolving Credit Facility. The Revolving Credit Facility is guaranteed by
the Issuer and the Guarantors. A mechanism is included in the Revolving Credit Facility Agreement to enable any of the Issuer’s
Restricted Subsidiaries to accede as a borrower under the Revolving Credit Facility subject to certain conditions.
Maturity and Repayment Requirements
The Revolving Credit Facility matures on the earlier of (i) the date falling five years and nine months after the Issue
Date and (ii) the date falling three months prior to the earliest scheduled maturity of any indebtedness constituted by the Notes, the
Pari Passu Debt and Second Lien Debt which shares in the Transaction Security (subject to certain exclusions including all
hedging liabilities).
Each advance will be repaid on the last day of the interest period relating thereto, subject to a netting mechanism
against amounts to be drawn on such date. All outstanding amounts under the Revolving Credit Facility must be repaid in full on
or prior to the maturity date for the Revolving Facility.
The maturity date for a facility under an Additional Facility Commitment is the date agreed between the Issuer and the
relevant lenders providing the relevant Additional Facility Commitments. Amounts repaid by the borrowers on loans made under
the Revolving Credit Facility may be reborrowed during the availability period for that facility, subject to certain conditions.
Interest Rate and Fees
The interest rate on cash advances under the Revolving Credit Facility will be the rate per annum equal to the aggregate
of the applicable margin, IBOR (as defined in the Revolving Credit Facility Agreement) and mandatory costs (if any). The margin
under the Revolving Credit Facility will initially be 4.00% for the first six months from the Issue Date. However, after this time,
the margin on the loans is subject to a ratchet whereby it can be reduced or increased if the Consolidated Leverage Ratio is (i)
greater than 3.50:1 (in which case the margin shall be 4.00%, (ii) equal to or less than 3.50:1 but greater than 2.50:1 (in which
case the margin shall be 3.75%) and (iii) equal to or less than 2.50:1 (in which case the margin shall be 3.50%).
The margin on any cash advances under the Additional Facility Commitments will be agreed between the Issuer and the
relevant lenders providing the relevant Additional Facility Commitments.
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A commitment fee will be payable on the aggregate undrawn and uncancelled amount of the Revolving Credit Facility
from (and excluding) the Issue Date to (and including) the last day of the availability period for the Revolving Credit Facility. The
commitment fee will be payable quarterly in arrears, on the last day of the availability period of the Revolving Credit Facility and
on the date the Revolving Credit Facility is cancelled in full or on the date on which a lender cancels its commitment. No
commitment fee shall be payable unless the Issue Date occurs.
Default interest will be calculated as an additional 1% on the overdue amount.
The Issuer is also required to pay customary agency fees to the Agent and the Security Agent in connection with the
Revolving Credit Facility Agreement and/or the Intercreditor Agreement.
Guarantees
Each guarantor under the Revolving Credit Facility Agreement has provided a senior guarantee of all amounts payable
to the finance parties and the hedging banks under any secured hedging agreements by each other obligor (including any
additional borrowers which accede to the Revolving Credit Facility Agreement) and the hedging banks under any secured hedging
agreements.
In addition, each member of the Group which becomes a material company (as defined in the Revolving Credit Facility
Agreement) after the Issue Date (by reference to the most recent annual financial statements delivered to the Agent under the
provisions of the Revolving Credit Facility Agreement) shall be subject to, and on terms consistent with, certain agreed security
principles accede as a Guarantor within 90 days of delivery of such annual financial statements for the relevant financial year
(commencing with the financial year ending December 31, 2013) demonstrating that it has become a material company and shall
grant transaction security over its material assets.
If at the end of each financial year (commencing with the financial year ending December 31, 2013) the Guarantors
represent less than 85% of the consolidated EBITDA of the group or less than 85% of aggregate turnover of the group (subject to
certain exceptions) (the “Guarantor and Security Coverage Test”), the Issuer shall ensure that within 90 days of the delivery of the
annual audited consolidated financial statements for the relevant financial year such other members of the restricted group (as the
Issuer may elect in its sole discretion) shall (subject to certain agreed security principles) (i) accede as Guarantors to ensure that
the Guarantor and Security Coverage Test are satisfied (calculated as if such additional guarantors had been Guarantors at the end
of such financial year) and (ii) grant security over its material assets.
Security
The initial security provided for the Revolving Credit Facility is described under the heading “Description of the Senior
Secured Notes—Security.”
Under the terms of the Intercreditor Agreement, proceeds from the enforcement of the Collateral (whether or not shared
with the holders of the Notes) will be required to be applied to repay indebtedness outstanding under the Revolving Credit Facility
in priority to the Notes.
Representations and Warranties
The Revolving Credit Facility Agreement contains certain customary representations and warranties, subject to certain
customary materiality, actual knowledge and other qualifications, exceptions and baskets, and with certain representations and
warranties being repeated, including: (i) status and incorporation; (ii) binding obligations; (iii) non-conflict with constitutional
documents, laws or other obligations; (iv) power and authority; (v) validity and admissibility in evidence; (vi) governing law and
enforcement; (vii) the accuracy of most recent financial statements delivered; (viii) ranking; (ix) legal and beneficial ownership;
and (x) “center of main interests” and establishments.
Covenants
The Revolving Credit Facility Agreement contains certain of the same incurrence covenants and related definitions
(with certain adjustments) that apply to the Notes. In addition, the Revolving Credit Facility also contains certain affirmative and
negative covenants and a financial covenant. Set forth below is a brief description of such covenants, all of which are subject to
customary materiality, actual knowledge and other qualifications, exceptions and baskets.
Notes Purchase Condition
The Revolving Credit Facility requires that if more than 60% of the face value of the Notes and any other note
indebtedness are repurchased prior to their scheduled repayment date, the Revolving Credit Facility will be permanently cancelled
and repaid on a matching pro rata basis until the Revolving Credit Facility has been reduced to SEK250.0 million (or its
equivalent in any other currency or currencies) after which no further cancellation and repayment shall be required.
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Affirmative Covenants
The affirmative covenants include, among others: (i) providing certain financial information, including annual audited
and quarterly financial statements, compliance certificates and an annual budget and information relating to material litigation,
changes in the group structure and, upon request, the financial condition of the group and/or any member of the group;
(ii) authorizations; (iii) compliance with laws and regulations; (iv) no default; (v) the payment of taxes; (vi) the maintenance of
material assets; (vii) the maintenance of pari passu ranking of the Revolving Credit Facility; (viii) pensions; (ix) the maintenance
of Guarantor and Security Coverage Test; (x) the granting of additional guarantors and security in prescribed circumstances; and
(xi) further assurance provisions.
Negative Covenants
The negative covenants include restrictions, among others, with respect to: (i) changing the general nature of our
business; (ii) mergers; (iii) incurring indebtedness below the Issuer; (iv) transferring receivables intra-group; and (v) compliance
with the regulations set forth by the Office of Foreign Assets Control. The negative covenants in the Revolving Credit Facility are,
in all other respects, substantially similar to the negative covenants in the Indenture.
Mandatory Prepayment Requirements upon a Change of Control or a Sale
Upon a Change of Control or a Sale (each as defined in the Revolving Credit Facility Agreement) the facilities under
the Revolving Credit Facility Agreement will be cancelled and all outstanding utilizations and all outstanding amounts under any
ancillary facility, together with accrued interest, and all other amounts accrued under the Finance Documents (as defined in the
Revolving Credit Facility Agreement) shall become immediately due and payable and shall be repaid within three business days
of such date.
Notwithstanding the foregoing, an ancillary lender or, as the case may be, the Issuing Bank (as defined in the Revolving
Credit Facility Agreement) may, as between itself and the relevant Restricted Subsidiary, agree to continue to provide such
ancillary facility or, as the case may be, letters of credit, in which case, after notification thereof to the Agent such arrangements
shall continue on a bilateral basis and not as part of, or under, the Finance Documents and save for any rights and obligations
against any other finance party under the Finance Documents arising prior to such cancellation, no such rights or obligations in
respect of the letters of credit or, as the case may be, ancillary facility shall, as between the Finance Parties, continue and the
transaction security shall not, following the release thereof by the Security Agent, secure any such letters of credit or ancillary
facility in respect of any claims that arise after such cancellation.
Financial Covenant
Under the Revolving Credit Facility, we are required to comply with a Super Senior Leverage ratio (as defined in the
Revolving Credit Facility and based on the ratio of consolidated total drawn super-senior facilities debt under the Revolving
Credit Facility to consolidated EBITDA for the relevant twelve-month period) which must not exceed 2.5:1. The financial
covenant will be calculated and tested on December 31, 2013 and quarterly thereafter (if any amount is outstanding under the
Revolving Credit Facility on the last day of the relevant period), in each case, on a rolling twelve-month basis by reference to our
consolidated annual financial statements and our consolidated quarterly financial statements.
Events of Default
The Revolving Credit Facility Agreement provides for the same events of default (with certain adjustments as
necessary) as under the Notes.
In addition, the Revolving Credit Facility provides for customary events of default, all of which are subject to
customary materiality, actual knowledge and other qualifications, exceptions, baskets and/or grace periods, as appropriate,
including: (i) breach of financial covenant (subject to certain equity cure rights); (ii) representations or warranties found to be
untrue or misleading when made or deemed repeated subject to a 15-business day grace period; (iii) cross-default; (iv) repudiation
and rescission; (v) unlawfulness and invalidity; (vi) any failure to comply with a material term of, or breach of representation or
warranty under, the Intercreditor Agreement; and (viii) cessation of business.
Governing Law
The Revolving Credit Facility Agreement and any non-contractual obligation arising out of or in connection with it is
governed by and construed and enforced in accordance with English law although the restrictive covenants, which are included in
the Revolving Credit Facility Agreement, will be interpreted in accordance with New York law (without prejudice to the fact that
the Revolving Credit Facility Agreement is governed by, and shall be governed by English law).
Hedging Obligations
The Issuer is party to certain interest rate and cross currency hedging arrangements to mitigate against its interest rate
exposures under its Senior Secured Floating Rate Notes and cross currency exposures under its EUR Senior Secured Floating Rate
Notes.
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The Issuer currently intends to hedge at least 66% of the notional amount of its Senior Secured Floating Rate Notes for
interest rate exposure and 75% of the notional amount of its EUR Senior Secured Floating Rate Notes for cross-currency
exposure, in each case for a period of at least three years from the Issue Date.
Intercreditor Agreement
In connection with entering into the Revolving Credit Facility and the Senior Secured Notes Indenture, the Issuer, the
Guarantors and certain other subsidiaries of the Issuer have entered into the Intercreditor Agreement to govern the relationships
and relative priorities among: (i) the lenders under the Revolving Credit Facility (the “RCF Lenders”); (ii) any persons that accede
to the Intercreditor Agreement as counterparties to certain hedging agreements (collectively, the “Hedging Agreements,” the
liabilities under such Hedging Agreements, the “Hedging Liabilities” and any persons that accede to the Intercreditor Agreement
as counterparties to the Hedging Agreements are referred to in such capacity as the “Hedge Counterparties”); (iii) the Senior
Secured Notes Trustee, on its own behalf and on behalf of the holders of the Senior Secured Notes (the “Senior Secured
Noteholders”); (v) intra-group lenders and borrowers; and (vi) the direct or indirect shareholder of the Issuer in respect of any
structural debt that the Issuer has or may incur in the future (including shareholder loans). In addition, the Intercreditor Agreement
regulates the relationship between (A) the Issuer and the other creditors of Pari Passu Debt and/or Second Lien Debt and between
(B) the Issuer and its Restricted Subsidiaries, on the one hand, and shareholders of the Issuer and related parties, on the other
hand.
The Issuer and each of its Restricted Subsidiaries that incurs any liability or provides any guarantee under the
Revolving Credit Facility or the Senior Secured Notes Indenture are each referred to in this description as a “Debtor” and are
referred to collectively as the “Debtors.”
In this description “Group” refers to the Issuer and its Restricted Subsidiaries.
The Intercreditor Agreement sets forth:
(a)
the relative ranking of certain indebtedness of the Debtors;
(b)
the relative ranking of certain security granted by the Debtors;
(c)
when payments can be made in respect of certain indebtedness of the Debtors;
(d)
when enforcement actions can be taken in respect of that indebtedness;
(e)
the terms pursuant to which that indebtedness will be subordinated upon the occurrence of certain
insolvency events;
(f)
turnover provisions; and
(g)
when security and guarantees will be released to permit a sale of any assets subject to transaction security
(such assets, the “Collateral”; such security, the “Transaction Security;” and the documents constituting
such Transaction Security, the “Transaction Security Documents”).
The Intercreditor Agreement contains provisions relating to future indebtedness that may be incurred by the members
of the Group, which is permitted or not prohibited under the Revolving Credit Facility, the Senior Secured Notes Indenture, any
existing Pari Passu Debt Document (as defined below) and any existing Second Lien Debt Document (as defined below) or with
the consent of the relevant Creditor Representatives (as defined below) under each document (acting on the instructions of the
requisite level of creditors under such documents) to rank pari passu in right of payment with the liabilities under the Revolving
Credit Facility, the liabilities under the Senior Secured Notes and any existing Pari Passu Liabilities and to be secured on the
Collateral, subject to the terms of the Intercreditor Agreement (such indebtedness being the “Pari Passu Debt,” the creditors in
respect of such indebtedness being the “Pari Passu Creditors,” the liabilities of the Debtors in respect of such indebtedness being
the “Pari Passu Liabilities” and the documents creating or evidencing the Pari Passu Liabilities, the “Pari Passu Debt
Documents”), provided that the Pari Passu Creditors (or their Pari Passu Debt Representative) have acceded to the Intercreditor
Agreement in accordance with its terms (excluding, for the avoidance of doubt, Credit Facility Lender Liabilities, Senior Secured
Notes Liabilities and Second Lien Liabilities).
The Intercreditor Agreement also includes provisions relating to future indebtedness that may be incurred by the
members of the Group which is permitted or not prohibited under the Revolving Credit Facility, the Senior Secured Notes
Indenture, any existing Pari Passu Debt Document (as defined below) and any existing Second Lien Debt Documents (as defined
below) or with the consent of the relevant Creditor Representatives (as defined below) under each document (acting on the
instructions of the requisite level of creditors under such documents) to share in the Transaction Security with the rights and
obligations of Second Lien Creditors (as defined below), subject to the terms of the Intercreditor Agreement (such indebtedness
being the “Second Lien Debt,” the creditors in respect of such indebtedness being the “Second Lien Creditors.” the liabilities of
the Debtors in respect of such indebtedness being the “Second Lien Liabilities” and the documents creating or evidencing the
Second Lien Liabilities, the “Second Lien Debt Documents”), provided that the Second Lien Creditors (or their Second Lien Debt
Representative) have acceded to the Intercreditor Agreement in accordance with its terms (excluding, for the avoidance of doubt,
Credit Facility Lender Liabilities, Senior Secured Notes Liabilities and Pari Passu Liabilities). The Intercreditor Agreement
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includes customary provisions in respect of the rights and obligations of, and restrictions placed upon, Second Lien Creditors;
including in relation to (i) the circumstances in which payments in respect of Second Lien Debt are permitted to be made (ii) the
circumstances when payments under the Second Lien Debt can be suspended (including through the issuance of a stop notice (and
cure provisions in respect thereof)), (iii) restrictions on when the Second Lien Creditors can and cannot take enforcement actions
(including customary standstill provisions in respect of Second Lien Debt) and (v) the ability of Second Lien Creditors to
purchase the Super Senior Liabilities and the Senior Secured Debt in certain circumstances. We urge you to read the document to
understand the rights of holders of the Notes and the rights of, and the restrictions placed upon, the Second Lien Creditors.
No Second Lien Debt had been incurred by the Issuer or its Restricted Subsidiaries on the Issue Date. As set forth in
“—Ranking and Priority” below, any future Second Lien Debt incurred by the Issuer or its Restricted Subsidiaries will be fully
subordinated to the Revolving Credit Facility, the Senior Secured Notes and any existing Pari Passu Debt.
The Intercreditor Agreement also provides for any credit facility constituting a “Credit Facility” under the Senior
Secured Notes Indenture, the creditors of which are entitled under the terms of the Senior Secured Notes Indenture, any existing
Pari Passu Debt Document and any existing Second Lien Debt Document to receive priority in respect of proceeds of the
enforcement against the Collateral (each such facility being a “Credit Facility” and, together with the Revolving Credit Facility,
the “Credit Facilities” and each finance document relating thereto, a “Credit Facility Document”). Each lender under a Credit
Facility is a “Credit Facility Lender” and the liabilities of the Debtors to the Credit Facility Lenders are referred to as the “Credit
Facility Lender Liabilities.”
Unless expressly stated otherwise in the Intercreditor Agreement, in the event of a conflict between the terms of any
Credit Facility, Senior Secured Notes Indenture, any Pari Passu Debt Document or any Pari Passu Debt Document and the
Intercreditor Agreement, the provisions of the Intercreditor Agreement will prevail.
By purchasing a Note, holders of the Notes shall be deemed to have agreed to, and accepted the terms and conditions
of, the Intercreditor Agreement and to have authorized and directed the Senior Secured Notes Trustee and Security Agent to enter
into the Intercreditor Agreement on their behalf.
The following description is a summary of certain provisions, among others, contained in the Intercreditor Agreement.
It does not restate the Intercreditor Agreement in its entirety, and we urge you to read that document because it, and not the
description that follows, defines the rights of holders of the Notes.
Ranking and Priority
The Intercreditor Agreement provides, subject to the provisions in respect of permitted payments described below, that
(i) the Credit Facility Lender Liabilities, (ii) the liabilities of the Debtors with respect to hedging agreements entered into in
relation to interest rate exposures or currency exposures in respect of (x) any Credit Facility, the Senior Secured Notes or (y) in
respect of Pari Passu Debt or any indebtedness ranking pari passu with any of them or any indebtedness referred to in (x) above
the incurrence of which is permitted or not prohibited under any Credit Facility, the Senior Secured Notes Indenture, any Pari
Passu Debt Documents and any Second Lien Debt Document (the “Super Senior Hedging Liabilities” and, together with the
Credit Facility Lender Liabilities and any amounts owed to the Security Agent, the “Super Senior Liabilities” and the creditors of
the Super Senior Liabilities, the “Super Senior Creditors”), (iii) the liabilities of the Senior Secured Notes Issuer and the Debtors
in respect of the Senior Secured Notes (the “Senior Secured Notes Liabilities”), (iv) the Pari Passu Liabilities, (v) the liabilities of
the Debtors with respect to the hedging agreements in respect of (1) any Second Lien Debt or (2) any hedging arrangements
described in (ii) above which are not designated as Super Senior Hedging Liabilities together with any operational hedging which
is permitted or not prohibited under any Credit Facility, the Senior Secured Notes Indenture, any Pari Passu Debt Documents and
any Second Lien Debt Document (the “Non-Super Senior Hedging Liabilities”), (and the Senior Secured Notes Liabilities, the
Pari Passu Liabilities and the Non-Super Senior Hedging Liabilities, together, the “Senior Secured Liabilities” and the creditors of
the Senior Secured Liabilities, the “Senior Secured Creditors”), (vi) the liabilities of the Debtors to the Senior Secured Notes
Trustee (the “Note Trustee Amounts”), (vii) the Second Lien Liabilities and (viii) certain other unsecured liabilities will rank in
right and priority of payment in the following order:
(a)
first, the Super Senior Liabilities and the Senior Secured Liabilities pari passu and without any preference
between them;
(b)
second, the Second Lien Liabilities pari passu and without any preference between them
(c)
third, certain intercompany obligations of members of the Group (each an “Intra-Group Lender” and
collectively the “Intra-Group Lenders”) and such liabilities being referred to in this description as the
“Intra-Group Liabilities”) pari passu and without any preference between them; and
(d)
fourth, liabilities in respect of investor debt owed by any Debtor to any direct or indirect shareholder (or
affiliate who is not a member of the Group) of the Issuer (and any of their respective transferees or
successors) pari passu between themselves and without any preference between them.
In this section any liabilities owed by any Debtor to any shareholder, direct or indirect, of the Issuer are referred to as
“Shareholder Liabilities” and together with the Intra-Group Liabilities, the “Subordinated Liabilities.”
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The parties to the Intercreditor Agreement have agreed in the Intercreditor Agreement that the Transaction Security
provided by the Debtors and the other parties in respect of the Super Senior Liabilities, the Senior Secured Liabilities, the Second
Lien Liabilities and any amounts owing to the Security Agent (together, the “Secured Liabilities”) ranks and secures such
liabilities, in the following order:
(a)
first, the Super Senior Liabilities, the Senior Secured Liabilities pari passu and without any preference
between them, and
(b)
second, the Second Lien Liabilities pari passu and without any preference between them;
in each case irrespective of:
(i)
the order of execution, creation, registration, notice, enforcement or otherwise;
(ii)
the date on which any Liability arose; and
(iii)
any fluctuation in the amount, or any intermediate discharge in whole or in part, of any
Liability.
Under the Intercreditor Agreement, all proceeds from enforcement of the Transaction Security will be applied as
provided under “—Limitation on Enforcement of Intra-Group Liabilities— Application of Proceeds.”
The creditors in respect of the Super Senior Liabilities, the Senior Secured Liabilities and the Second Lien Liabilities
(the Super Senior Liabilities, the Senior Secured Liabilities and the Second Lien Liabilities, together, the “Secured Liabilities,”
and the creditors thereof, the “Secured Parties” and the documents evidencing the Secured Liabilities, the “Secured Debt
Documents”) may take, accept or receive the benefit of additional security and additional guarantees, indemnities or other
assurance against loss from any member of the Group in respect of the Secured Liabilities, provided that, if and to the extent
legally possible and subject to the agreed security principles, such security, guarantee, indemnity or other assurance against loss is
also granted to the Security Agent as agent and trustee of the other Secured Parties. Any such additional security, guarantee,
indemnity or other assurance against loss will rank in the same order of priority as referred to above and the proceeds of the
enforcement of any such security, guarantee, indemnity and/or other assurance against loss will be applied as provided under “—
Limitation on Enforcement of Intra-Group Liabilities—Application of Proceeds.”
The Intercreditor Agreement contemplates the Debtors (or any of them): (i) incurring incremental borrowing liabilities
and/or guarantee liabilities under; or (ii) refinancing (in whole or in part) the borrowing liabilities incurred under, the documents
creating or evidencing indebtedness under or in respect of any Credit Facility, the Senior Secured Notes, the Second Lien Debt,
the Hedging Liabilities, the Pari Passu Debt or the Subordinated Liabilities (such documents or instruments being referred to
collectively as the “Debt Documents”) and/or incurring guarantees in respect of any indebtedness incurred in connection with any
such refinancing which may, without limitation, be in each case implemented in whole or in part by way of debt exchange, noncash rollover or other similar or equivalent transaction (such incremental borrowing liabilities, refinancing liabilities and/or
guarantee liabilities being referred to as “Additional Indebtedness”) which in any such case are intended to rank pari passu with
and/or share pari passu in any Transaction Security with any existing liabilities and/or to rank behind any existing liabilities
and/or to share in the Transaction Security behind such existing liabilities. The Secured Parties and the creditors in respect of the
Subordinated Liabilities (the “Subordinated Creditors”) (each a “Creditor” and collectively, the “Creditors”) will confirm in the
Intercreditor Agreement that, provided such financing or refinancing and such ranking and such security is permitted or not
prohibited under the terms of the Debt Documents, they will (at the Debtors’ cost) enter into such documentation as may be
necessary (including amending the existing Intercreditor Agreement or entering into a new, additional or replacement intercreditor
agreement on substantially the same terms as the Intercreditor Agreement) to ensure that the Additional Indebtedness (and the
liabilities and obligations of the Debtors in respect of such Additional Indebtedness) will have the ranking permitted to be
conferred upon it in accordance with the terms of the Debt Documents, provided that such documentation does not in any
significant respect adversely affect the interests of any of the Secured Parties.
Security: Pari Passu Creditors
The Pari Passu Creditors may take, accept or receive the benefit of:
(a)
security in respect of the Pari Passu Liabilities in addition to the Transaction Security if, to the extent
legally possible and subject to the agreed security principles, at the same time, it is also granted:
(i)
to the Security Agent as agent or as trustee for the other Secured Parties in respect of their
secured obligations;
(ii)
in the case of any jurisdiction in which effective security cannot be granted in favor of the
Security Agent as trustee for the Secured Parties:
(A)
to the other Secured Parties in respect of their secured obligations; or
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(B)
(iii)
to the Security Agent as agent or as trustee under a parallel debt structure, joint and
several creditor structure or agency structure for the benefit of the other Secured
Parties; or
in the case of any security granted after the date of the Intercreditor Agreement, to some of the
Secured Parties provided that such security is incremental to the Transaction Security that has
already been granted in favor of all other Secured Parties and any proceeds derived from the
enforcement of such security will be shared with the Secured Parties in accordance with the
payment waterfalls set forth in “—Limitation on Enforcement of Intra-Group Liabilities—
Application of Proceeds.”
and ranks in the same order of priority as that contemplated in “—Ranking and Priority”; and
(b)
any guarantee, indemnity or other assurance against loss in respect of the Pari Passu Liabilities in addition
to those in:
(i)
the original form of the Pari Passu Debt Documents;
(ii)
the Intercreditor Agreement; or
(iii)
any guarantee, indemnity or other assurance against loss given for the benefit of all the Secured
Parties in respect of their Secured Liabilities,
only if, in each case (A) the grant of such security or the giving of such guarantee, indemnity or other assurance against loss is
permitted by or is not otherwise prohibited (or has otherwise been approved) under the documents or instruments creating or
evidencing the Senior Secured Notes Liabilities (the “Senior Secured Notes Documents”), the Credit Facility Documents and the
documents or instruments creating or evidencing the Second Lien Debt (the “Second Lien Debt Documents”) and (B) at the same
time, it is also granted to the Credit Facility Lenders and granted to the other Secured Parties in respect of their respective Secured
Liabilities and ranks in the same order of priority as that contemplated in “—Ranking and Priority.”
Permitted Payments of Subordinated Debt
The Intercreditor Agreement permits, inter alia, payments to be made by the Debtors under the Revolving Credit
Facility and the Senior Secured Notes Indenture and the Pari Passu Debt Documents and the Second Lien Debt Documents, in
each case in accordance with the terms of the relevant Credit Facility Agreement, Senior Secured Notes Indenture, Pari Passu
Debt Document or Second Lien Debt Document, subject to (A) in the case of payments in respect of the Senior Secured Notes,
compliance with the “Notes Purchase Condition”; (B) in the case of payments in respect of the Pari Passu Liabilities, any
restrictions under the Credit Facilities or the Senior Secured Notes Indenture; and (C) in the case of payments in respect of the
Second Lien Liabilities, subject to certain customary provisions governing permitted payments in respect of the Second Lien Debt
and provided that following the occurrence of a nonpayment event of default under the Revolving Credit Facility or an
acceleration event with respect to the Revolving Credit Facility or any other Credit Facility, the Senior Secured Notes, Pari Passu
Debt or Second Lien Debt, no member of the Group may make (and no Super Senior Creditor or Senior Secured Creditor may
receive) payments of Credit Facility Lender Liabilities, Hedging Liabilities, Senior Secured Notes Liabilities, the Pari Passu
Liabilities and Second Lien Liabilities except for recoveries distributed in accordance with the provisions set out under the caption
“—Application of Proceeds”.
The Intercreditor Agreement also permits payments to be made from time to time when due to lenders owed any IntraGroup Liabilities (“Intra-Group Liabilities Payments”) if at the time of payment no acceleration event has occurred in respect of a
Credit Facility, the Pari Passu Liabilities, the Senior Secured Notes Liabilities, the Second Lien Liabilities (an “Acceleration
Event”). The Intercreditor Agreement permits Intra-Group Liabilities Payments if such an Acceleration Event has occurred if
(i) prior to the date on which the Super Senior Liabilities are discharged (the “Super Senior Discharge Date”), with the consent of
the Senior Secured Instructing Group (as defined below), (ii) after the Super Senior Discharge Date but prior to the date on which
the Senior Secured Liabilities are discharged in full (the “Senior Secured Discharge Date”), with the consent of the Senior Secured
Notes/Pari Passu Required Holders (being at any time, those Senior Secured Notes Required Holders and Pari Passu Debt
Required Holders whose Senior Secured Credit Participations at that time aggregate more than 50% of the total Senior Secured
Credit Participations at that time) (acting through their Creditor Representatives (as defined below)); (iii) after the Senior Secured
Discharge Date but prior to the date on which the Second Lien Liabilities are discharged (the “Second Lien Discharge Date”),
with the consent of the Second Lien Required Holders (as defined below) (acting through their Creditor Representatives (as
defined below)); (iv) if that payment is made to facilitate payment of the Super Senior Liabilities or Senior Secured Liabilities;
(v) if that payment is made to facilitate payment of Second Lien Debt that is permitted to be paid under the Intercreditor
Agreement; or (vi) save in respect of any Intra-Group liabilities that are subject to Transaction Security governed by Swedish law,
that action is taken to facilitate payment of the secured liabilities, Senior Secured Notes Trustee Amounts, the liabilities of
Creditor Representatives or other amounts due and payable to the Security Agent.
Payments may be made on Shareholder Liabilities from time to time when due if: (i) the payment is permitted by or not
prohibited (or has otherwise been approved) under a Credit Facility, the Senior Secured Notes Indenture, the Pari Passu
Debt Documents and the Second Lien Debt Documents; (ii) prior to the Super Senior Discharge Date, the Senior Secured
Instructing Group gives written consent to such payment being made; (iii) after the Super Senior Discharge Date but prior to the
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Senior Secured Discharge Date, the Senior Secured Notes/Pari Passu Required Holders (acting through their Creditor
Representative (as defined below)) give written consent to such payment being made; or (iv) after the Senior Secured Discharge
Date but prior to the Second Lien Debt Discharge Date, the Second Lien Required Holders (acting through their Creditor
Representative (as defined below)) give written consent to such payment being made.
Creditor Representative
Under the Intercreditor Agreement, the parties appoint various creditor representatives.
“Creditor Representative” means:
(a)
in relation to the RCF Lenders, the facility agent under the Revolving Credit Facility (the “RCF Agent”);
(b)
in relation to the Credit Facility Lenders under any other Credit Facility, the facility agent in respect of that
credit facility (an “Additional Credit Facility Agent,” and, together with the RCF Agent, a “Credit Facility
Agent”);
(c)
in relation to the Senior Secured Noteholders, the Senior Secured Notes Trustee;
(d)
in relation to any Pari Passu Creditors, the creditor representative for those Pari Passu Creditors (the “Pari
Passu Debt Representative”);
(e)
in relation to any Second Lien Creditors, the creditor representative for those Second Lien Creditors (the
“Second Lien Debt Representative”); and
(f)
in relation to any Hedge Counterparty, such Hedge Counterparty (which shall be its own Creditor
Representative).
Entitlement to Enforce Transaction Security
The Security Agent may refrain from enforcing the Transaction Security or taking any other enforcement action unless
otherwise instructed by:
(a)
the relevant Senior Secured Instructing Group (as further described in “—Limitation on Enforcement of
Intra-Group Liabilities—Manner of Enforcement”); or
(b)
prior to the later of the Super Senior Discharge Date and the Senior Secured Discharge Date, if the Security
Agent has been instructed by the Senior Secured Instructing Group not to enforce or to cease to enforce the
Transaction Security or the Security Agent has received no instructions from the Senior Secured Instructing
Group and, in each case, the Senior Secured Instructing Group has not required any Debtor to make a
Distressed Disposal (as defined in “—Release of the Guarantees and the Security—Distressed Disposal”),
the Security Agent shall give effect to any instructions to enforce the Transaction Security which the
Second Lien Debt Representative (acting on the instructions of the Second Lien Notes/Second Lien
Required Holders) are then entitled to give,
provided that if the Second Lien Debt Representative either gives such instruction or indicates any intention to give such
instruction, then either the Credit Facility Agent, the Senior Secured Notes Trustee or the Pari Passu Debt Representative may
give the Security Agent instructions to enforce the Transaction Security as such Credit Facility Agent, the Senior Secured Notes
Trustee or Pari Passu Debt Representative sees fit in lieu of any instructions to enforce given by the Second Lien Notes Trustee or
the Second Lien Debt Representative and the Security Agent shall act on the first such instructions received from such Credit
Facility Agent, the Senior Secured Notes Trustee or the Pari Passu Debt Representative.
The Security Agent may disregard any instructions from any other person to enforce the Transaction Security and may
disregard any instructions to enforce any Transaction Security if those instructions are inconsistent with the Intercreditor
Agreement. The Security Agent is not obligated to enforce the Transaction Security if it is not indemnified and secured to its
satisfaction (including by way of prefunding) by the relevant creditors.
Limitation on Enforcement by Super Senior Creditors and Senior Secured Noteholders
If either the Majority Super Senior Creditors or the Senior Secured Notes/Pari Passu Required Holders (acting through
their Creditor Representatives) wish to instruct the Security Agent to commence enforcement of any Transaction Security, such
group of creditors must deliver a copy of the proposed instructions as to enforcement (the “Enforcement Proposal”) to the Security
Agent and the Creditor Representatives for each of the Super Senior Creditors, the Senior Secured Creditors and the Second Lien
Creditors (as appropriate) at least ten business days prior to the proposed date of issuance of instructions under such enforcement
proposal (the “Proposed Enforcement Instruction Date”).
Until the Super Senior Discharge Date, if the Security Agent has received conflicting enforcement instructions (which
for the purposes of this paragraph only, includes a failure to give any instruction by the Majority Super Senior Creditors or the
Senior Secured Notes/Pari Passu Required Holders), then the Security Agent will promptly notify the relevant Creditor
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Representatives and such Creditor Representatives will consult with each other and the Security Agent in good faith for a period
of not less than 30 days (or such shorter period as the relevant Creditor Representatives may agree) (the “Initial Consultation
Period”) from the earlier of (i) the date of the latest such conflicting enforcement instruction that has been delivered to the
Security Agent and (ii) the date falling ten business days after the date the original Enforcement Proposal is delivered, with a view
to coordinating instructions as to enforcement of the Transaction Security.
The Creditor Representatives for each of the Super Senior Creditors and the Senior Secured Creditors shall not be
obliged to consult as described above if:
(a)
the Creditor Representatives are in agreement with regard to any proposed enforcement action (in which
case no Initial Consultation Period, or such shorter consultation period as determined by the Creditor
Representatives, shall apply);
(b)
the Transaction Security has become enforceable as a result of an insolvency event of a material member of
the Group or a third party security provider;
(c)
the Majority Super Senior Creditors or the Senior Secured Notes/Pari Passu Required Holders determine in
good faith that to do so and thereby delay commencement of enforcement of the Transaction Security could
reasonably be expected to have a material adverse effect on (i) the Security Agent’s ability to enforce any
of the Transaction Security or (ii) the realization proceeds of any enforcement of the Transaction Security
in any material respect;
(d)
a period of not less than six months has elapsed since the Proposed Enforcement Instruction Date and no
enforcement is being effected by the Security Agent; or
(e)
the Creditor Representatives for the Super Senior Creditors, each Pari Passu Debt Representative and the
Senior Secured Notes Trustee agree that no consultation period is required.
If consultation has taken place for at least 30 days as described above (or such shorter period as may have been agreed
between the relevant Creditor Representatives) (or was not required to occur as described above) there shall be no further
obligation to consult and the Security Agent may act in accordance with any instructions as to enforcement then or previously
received from the Senior Secured Instructing Group and the Senior Secured Instructing Group may issue instructions as to
enforcement to the Security Agent at any time thereafter.
If the Majority Super Senior Creditors or the Senior Secured Notes/Pari Passu Required Holders (in each case, acting
reasonably) consider that the Security Agent is enforcing the Transaction Security in a manner which is not consistent with the
Security Enforcement Principles (as referred to below), then unless there is no obligation to consult because the circumstances
described in paragraphs (a) to (e) above apply, the Creditor Representatives for the relevant Super Senior Creditors or Senior
Secured Creditors shall give notice to the Creditor Representatives for the other Super Senior Creditors and Senior Secured
Creditors (as appropriate), after which the Creditor Representatives for the other Super Senior Creditors, the Senior Secured Notes
Trustee and each Pari Passu Debt Representative shall consult with the Security Agent for a period of 15 days (or such lesser
period as such Creditor Representatives may agree) with a view to agreeing the manner of enforcement provided that such
Creditors’ Representatives shall not be obliged to consult in the manner referred to in this paragraph more than once in relation to
each enforcement action.
Limitation on Enforcement of Shareholder Liabilities
Creditors in respect of the Shareholder Liabilities will not be permitted to take any enforcement action in respect of
such liabilities prior to the last to occur of the Super Senior Discharge Date, the Senior Secured Discharge Date, the date on which
all Hedging Liabilities are fully discharge and the Second Lien Discharge Date (the “Final Discharge Date”) save that, prior to the
Final Discharge Date and after the occurrence of an insolvency event in relation to any Debtor or member of the Group or grantor
of Transaction Security, each such Creditor may only (unless otherwise directed by the Security Agent or unless the Security
Agent has taken, or has given notice that it intends to take, action on behalf of that Creditor in accordance with the terms of the
Intercreditor Agreement), and shall, if so directed by the Security Agent, exercise any right it may otherwise have against that
member of the Group to:
(a)
accelerate any of that member of the Group’s Shareholder Liabilities or declare them prematurely due and
payable or payable on demand;
(b)
make a demand under any guarantee, indemnity or other assurance against loss given by that member of the
Group in respect of any Shareholder Liabilities;
(c)
exercise any right of set-off or take or receive any payment in respect of any Shareholder Liabilities of that
member of the Group; or
(d)
claim and prove in the liquidation of that member of the Group for the Shareholder Liabilities owing to it,
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but shall not take any other enforcement action.
Limitation on Enforcement of Intra-Group Liabilities
Creditors in respect of the Intra-Group Liabilities will not be permitted to take any enforcement action (other than rights
of set-off to the extent required to enable permitted intra-group payments to be made) in respect of such liabilities prior to the
Final Discharge Date save that, prior to the Final Discharge Date and after the occurrence of an insolvency event in relation to any
member of the Group or grantor of Transaction Security, each Intra-Group Lender may only (unless otherwise directed by the
Security Agent or unless the Security Agent has taken, or has given notice that it intends to take, action on behalf of that IntraGroup Lender in accordance with the Intercreditor Agreement) and shall, if so directed by the Security Agent, exercise any right it
may otherwise have against that member of the Group to:
(a)
accelerate any of that member of the Group’s Intra-Group Liabilities or declare them prematurely due and
payable or payable on demand;
(b)
make a demand under any guarantee, indemnity or other assurance against loss given by that member of the
Group in respect of any Intra-Group Liabilities;
(c)
exercise any right of set-off or take or receive any payment in respect of any Intra-Group Liabilities of that
member of the Group; or
(d)
file claims, or claim and prove in the liquidation of that member of the Group for the Intra-Group
Liabilities owing to it,
but shall not take any other enforcement action.
Security Enforcement Principles
The Majority Super Senior Creditors or Majority Senior Secured Creditors may only give enforcement instructions that
are consistent with the following security enforcement principles (the “Security Enforcement Principles”), including that:
(a)
it shall be the primary and overriding aim of any enforcement of the transaction security to achieve the
security enforcement objective (being to maximize so far as is consistent with prompt and expeditious
realization of value from enforcement of the Transaction Security, the recovery by the Super Senior
Creditors and the Senior Secured Creditors) (the “Security Enforcement Objective”);
(b)
without prejudice to the Security Enforcement Objective, the Transaction Security will be enforced and
other enforcement action will be taken such that either:
(i)
all proceeds of enforcement are received by the Security Agent in cash for distribution in
accordance with the terms of the Intercreditor Agreement (see “—Application of Proceeds”);
or
(ii)
with respect to such actions taken by the Senior Secured Notes/Pari Passu Required Holders,
sufficient proceeds from enforcement will be received by the Security Agent in cash to ensure
that when the proceeds are applied in accordance with the terms of the Intercreditor Agreement
(see “—Application of Proceeds”), the Super Senior Liabilities are repaid and discharged in
full (unless the Majority Super Senior Creditors agree otherwise);
(c)
the enforcement actions are prompt and expeditious it being acknowledged that, subject to the other
provisions of the Intercreditor Agreement, the time frame for the realization of value from the enforcement
of the Transaction Security or distressed disposal pursuant to enforcement will be determined by the Senior
Secured Instructing Group (the Majority Super Senior Creditors or Majority Senior Secured Creditors)
provided that it is consistent with the Security Enforcement Objective;
(d)
to the extent that the Transaction Security that is the subject of the proposed enforcement action is:
(i)
over assets other than shares in a member of the Group where the aggregate book value of such
assets exceeds €1.0 million (or its equivalent); or
(ii)
over some or all of the shares in a member of the Group over which Transaction Security
exists,
the Security Agent shall, upon instruction from the Senior Secured Instructing Group and at the expense of the Senior
Secured Instructing Group (unless it is incompatible with enforcement proceedings in a relevant jurisdiction) appoint, an
internationally recognized investment bank or any one of BDO, Deloitte & Touche, Ernst & Young, Grant Thornton, KPMG or
PricewaterhouseCoopers or, if it is not practicable for the Security Agent to appoint any such bank or firm on commercially
reasonable terms (including for reasons of conflicts of interest) as determined by the Security Agent (acting in good faith), another
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third party professional firm which is regularly engaged in providing valuations in respect of the relevant type of assets (in each
case not being the firm appointed as the relevant Debtor’s administrator or other relevant officer holder) selected by the Security
Agent (a “Financial Advisor”) to opine as expert that the proceeds received from any such enforcement are fair from a financial
point of view after taking into account all relevant circumstances, provided that the Security Agent shall be under no obligation to
appoint a Financial Advisor or to seek the advice of a Financial Advisor, unless expressly required to do so by the Intercreditor
Agreement;
(e)
the Financial Advisor’s Opinion (or any equivalent opinion obtained by the Security Agent in relation to
any other enforcement of the Collateral that such action is fair from a financial point of view after taking
into account all relevant circumstances) will be conclusive evidence that the Security Enforcement
Objective has been met;
(f)
where the Senior Secured Instructing Group is the Senior Secured Notes/Pari Passu Required Holders, the
Senior Secured Notes/Pari Passu Required Holders may waive the requirement for a Financial Advisor’s
Opinion where sufficient proceeds from the proposed enforcement will be received by the Security Agent
in cash to ensure that when the proceeds are applied in accordance with the application of proceeds set out
in the Intercreditor Agreement, the Super Senior Liabilities are repaid and discharged in full; and
(g)
in the event that an enforcement of the Collateral is conducted by way of competitive process, no Financial
Advisor shall be required to be appointed, and no Financial Advisor’s Opinion shall be required, in relation
to such enforcement provided that the Security Agent shall be entitled (but not obliged) to appoint a
Financial Advisor to provide such advice as the Security Agent deems appropriate in relation to such
enforcement by way of competitive process.
In the absence of written notice from a creditor or group of creditors that are not part of the relevant instructing group
that such creditor(s) object to any enforcement of the transaction security on the grounds that such enforcement action does not
aim to achieve the Security Enforcement Objective or is not in accordance with the Security Enforcement Principles (an
“Objection”), the Security Agent is entitled to assume that such enforcement of the transaction security is in accordance with the
Security Enforcement Objective and the Security Enforcement Principles.
If the Security Agent receives an Objection (and without prejudice to the ability of the Security Agent to rely on other
advisors and/or exercise its own judgment in accordance with the Intercreditor Agreement), a Financial Advisor’s Opinion to the
effect that the particular action could reasonably be said to be aimed at achieving the Security Enforcement Objective or the
Security Enforcement Principles will be conclusive evidence that the Security Enforcement Objective and the Security
Enforcement Principles have been met.
The Security Enforcement Principles may be amended, varied or waived with the prior written consent of the Majority
Super Senior Creditors, the Senior Secured Notes Required Holders, the Pari Passu Debt Required Holders of each tranche of Pari
Passu Debt and the Security Agent.
Manner of Enforcement
The Security Agent shall enforce the Transaction Security in such manner (including, without limitation, the selection
of any administrator (or any analogous officer in any jurisdiction) of any Debtor to be appointed by the Security Agent) as:
(a)
the Senior Secured Instructing Group; or
(b)
prior to the Super Senior Discharge Date or the Senior Secured Discharge Date, if:
(i)
the Security Agent has received instructions given by the Second Lien Required Holders to
enforce the Transaction Security; and
(ii)
the Security Agent has been instructed by the Senior Secured Instructing Group not to enforce
or to cease to enforce the Transaction Security (or in the absence of instructions from the
Senior Secured Instructing Group) and, in each case, the Senior Secured Instructing Group has
not required any Debtor to make a Distressed Disposal (as defined in “—Release of the
Guarantees and the Security—Distressed Disposal”) has not given instructions as to the
manner of enforcement of the Collateral,
the Second Lien Required Holders, shall instruct or, in the absence of any such instructions (provided that
the Security Agent is under no obligation to take any action without appropriate instruction), as the Security Agent sees
fit, in each case, taking into account the requirements of each relevant Transaction Security Document and provided
that any such instructions are consistent with the Security Enforcement Principles.
The instructing group entitled to give instructions to the Security Agent in respect of enforcement of Transaction
Security (the “Senior Secured Instructing Group”) will comprise the Majority Super Senior Creditors and the Senior Secured
Notes/Pari Passu Required Holders (in each case acting through their respective Creditor Representative). However, if the
Security Agent has received conflicting enforcement instructions from the Creditor Representatives then, provided that the
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instructions from the Senior Secured Notes/Pari Passu Required Holders (to the extent given) comply with the initial consultation
requirements described above and the Security Enforcement Principles, the Security Agent will comply with the instructions from
the Senior Secured Notes/Pari Passu Required Holders, provided that if the Super Senior Liabilities have not been fully discharged
within six months, or no steps have been taken in relation to the commencement of enforcement of the Transaction Security
within three months, in each case, of the date on which the first such enforcement instructions were issued, then the instructions of
the Majority Super Senior Creditors will prevail.
Exercise of Voting Rights
Each Creditor (other than the Credit Facility Lenders, each Credit Facility Agent, the Senior Secured Notes Trustee, the
Pari Passu Debt Representative and the Second Lien Debt Representative) will cast its vote in any proposal put to the vote by or
under the supervision of any judicial or supervisory authority in respect of any insolvency, pre-insolvency or rehabilitation or
similar proceedings relating to any member of the Group as instructed by the Security Agent and the Security Agent shall give
instructions for these purposes as directed by the Senior Secured Instructing Group, provided that such instructions have been
given in accordance with the terms of the Intercreditor Agreement.
Turnover
Turnover by Primary Creditors
The Intercreditor Agreement also provides that if any creditor of Secured Liabilities receives or recovers or otherwise
realizes the proceeds of any enforcement of any Transaction Security, or the proceeds of any Distressed Disposal where that
Distressed Disposal consists of a disposal of shares or assets which are subject to Transaction Security, or any other amounts
which should otherwise be received, recovered or realized by the Security Agent for application in accordance with “—
Application of Proceeds” (whether before or after an insolvency event) other than in accordance with “—Application of Proceeds”
that it shall:
(a)
in relation to receipts or recoveries not received or recovered by way of set-off, (i) hold that amount on
trust for the Security Agent and separate from other assets, property or funds and promptly pay that amount
to the Security Agent for application in accordance with the terms of the Intercreditor Agreement; and
(ii) promptly pay an amount equal to the amount (if any) by which receipt or recovery exceeds the relevant
liabilities owed to such creditor to the Security Agent for application in accordance with the terms of the
Intercreditor Agreement; and
(b)
in relation to receipts and recoveries received or recovered by way of set-off, promptly pay an amount
equal to that recovery to the Security Agent for application in accordance with the terms of the Intercreditor
Agreement.
Turnover by Second Lien Creditors and the Subordinated Creditors
The Intercreditor Agreement provides that if any Second Lien Creditor or any creditor of any Subordinated Liabilities
receives or recovers:
(a)
any payment or distribution of, or on account of, or in relation to any such liabilities which is not otherwise
permitted under the Intercreditor Agreement or made in accordance with the payment waterfall described in
“—Application of Proceeds”;
(b)
other than by way of set-off permitted under the Intercreditor Agreement, any amount by way of set-off in
respect of any such liabilities which is not otherwise permitted under the Intercreditor Agreement or which
does not give effect to a payment or enforcement action which is otherwise permitted to be made, received
or taken by the relevant creditor under the Intercreditor Agreement;
(c)
other than by way of set-off permitted under the Intercreditor Agreement, any amount on account of, or in
relation to, any of such liabilities after the occurrence of an Acceleration Event or the enforcement of any
Transaction Security (a “Distress Event”) or as a result of any other litigation or proceedings against a
Debtor or a member of the Group (other than after the occurrence of an insolvency event in respect of that
Debtor or that member of the Group), other than, in each case, any amount received or recovered in
accordance with the payment waterfall described in “—Application of Proceeds”;
(d)
other than by way of set-off permitted under the Intercreditor Agreement, any amount by way of set-off in
respect of any of such liabilities after the occurrence of a Distress Event; or
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(e)
other than by way of set-off permitted under the Intercreditor Agreement, any distribution in cash or in kind
or payment of, or on account of or in relation to, any of such liabilities which is not made in accordance
with the payment waterfall described in “—Application of Proceeds” and which is made as a result of, or
after, the occurrence of an insolvency event in respect of that Debtor, the relevant Second Lien Creditor or
Subordinated Creditor (as applicable) will, subject to certain exceptions:
(i)
in relation to receipts or recoveries not received or recovered by way of set-off, (A) hold that
amount on trust for the Security Agent and separate from other assets, property or funds and
promptly pay that amount to the Security Agent for application in accordance with the terms of
the Intercreditor Agreement; and (B) promptly pay an amount equal to the amount (if any) by
which receipt or recovery exceeds the relevant liabilities owed to such creditor to the Security
Agent for application in accordance with the terms of the Intercreditor Agreement; and
(ii)
in relation to receipts and recoveries received or recovered by way of set-off, promptly pay an
amount equal to that recovery to the Security Agent for application in accordance with the
terms of the Intercreditor Agreement.
Application of Proceeds
The Intercreditor Agreement provides that amounts received from the realization or enforcement of all or any part of
the Transaction Security will be applied in the following order of priority:
(a)
first, in payment of the following amounts in the following order: (i) pari passu and pro rata any sums
owing to the Security Agent or any delegate appointed by the Security Agent or any receiver, any agent in
respect of a Credit Facility, any Pari Passu Debt Representative, any senior secured notes trustee amounts
payable to the senior secured notes trustee acting in that capacity and any Second Lien Notes Trustee
Amounts payable to the Second Lien Notes Trustee acting in that capacity; and then (ii) pari passu and pro
rata to each Creditor Representative (to the extent not included in (i) above and excluding any Hedge
Counterparty as its own Creditor Representative) of the unpaid fees, costs, expenses and liabilities (and all
interest thereon as provided in the relevant finance documents) of each such Creditor Representative and
any receiver, attorney or agent appointed by such Creditor Representative under any Transaction Security
Document or the Intercreditor Agreement (to the extent that such Transaction Security has been given in
favor of such obligations);
(b)
second, pari passu and pro rata in or towards payment of all costs and expenses incurred by the holders of
Super Senior Liabilities in connection with any realization or enforcement of the Transaction Security
taken in accordance with the terms of the Transaction Security Documents and the Intercreditor Agreement
or any action taken at the request of the Security Agent;
(c)
third, pari passu and pro rata in or towards payment to: (i) the RCF Agent on its own behalf and on behalf
of the Revolving Credit Facility finance parties and on behalf of the arrangers under the Revolving Credit
Facility and to each Creditor Representative in respect of a Credit Facility on its own behalf and on behalf
of the arrangers and lenders under and in respect of that Credit Facility); and (ii) the Hedge Counterparties
in respect of the Super Senior Hedging Liabilities, for application towards the discharge of (A) the
liabilities owed to the Revolving Credit Facility Agent and the Credit Facility Lender Liabilities and related
liabilities owed to the arrangers under the Revolving Credit Facility and the liabilities owed to the Creditor
Representatives in respect of each Credit Facility, the Credit Facility Lender Liabilities and related
liabilities owed to the arrangers under such Credit Facility) in accordance with the terms of the Credit
Facility Documents and (B) the Super Senior Hedging Liabilities on a pari passu and pro rata basis as
between (A) and (B);
(d)
fourth, pari passu and pro rata in or towards payment to the Senior Secured Notes Trustee on behalf of the
Senior Secured Noteholders, and to the relevant Creditor Representative on behalf of the Pari Passu
Creditors and each Hedge Counterparty for application towards any unpaid costs and expenses incurred by
or on behalf of any Senior Secured Noteholders and Pari Passu Creditors and the Hedge Counterparties in
connection with any realization or enforcement of the Transaction Security taken in accordance with the
terms of the Transaction Security Documents and the Intercreditor Agreement or any action taken at the
request of the Security Agent);
(e)
fifth, pari passu and pro rata to the Senior Secured Notes Trustee on behalf of the Senior Secured
Noteholders for application towards the discharge of the Senior Secured Notes Liabilities (in accordance
with the Senior Secured Notes Indenture) to the relevant Creditor Representative on behalf of the Pari
Passu Creditors for application towards the discharge of the Pari Passu Liabilities (in accordance with the
Pari Passu Documents); and to each of the Hedge Counterparties for application towards any Non-Super
Senior Hedging Liabilities;
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(f)
sixth, pari passu and pro rata, in or towards payment to the relevant Creditor Representative on behalf of
the Second Lien Creditors for application towards any unpaid costs and expenses incurred by or on behalf
of the Second Lien Creditors in connection with any realization or enforcement of the Transaction Security
taken in accordance with the terms of the Transaction Security Documents and the Intercreditor Agreement
or any action taken at the request of the Security Agent;
(g)
seventh, pari passu and pro rata to the relevant Creditor Representative on behalf of the Second Lien
Creditors for application towards the discharge of the Second Lien Debt (in accordance with the Second
Lien Debt Documents); and
(h)
eighth, after the Final Discharge Date, in payment of the surplus (if any) to the relevant Debtor or other
person entitled to it.
Release of the Guarantees and the Security
Non-Distressed Disposal
In circumstances where a disposal of an asset of the Group which is subject to the Transaction Security is not being
effected (i) by enforcement of Transaction Security, (ii) at the request of the Senior Secured Instructing Group or the request of
the Second Lien Debt Required Holders (if the Second Lien Creditors are permitted to make such a request under the terms of the
Intercreditor Agreement) after the Transaction Security has become enforceable or (iii) in the case of a disposal to a person
outside the Group, after an Acceleration Event or an enforcement of the Transaction Security has occurred (a “Distressed
Disposal”) and is otherwise permitted or not prohibited (or has otherwise been approved) under the Credit Facility Documents, the
Senior Secured Notes Documents, the Pari Passu Debt Documents, the Second Lien Debt Documents (together the “Secured Debt
Documents,” and such disposal, a “Non-Distressed Disposal”), the Intercreditor Agreement will provide that the Security Agent is
irrevocably instructed and authorized (at the cost of the relevant Debtor or the Parent and without any consent, sanction, authority
or further confirmation from any Creditor (including, without limitation, any Secured Party or any Creditor Representative) or
debtor of the Parent) (A) to release the Transaction Security (including, for the avoidance of doubt, any shared assurance) or any
other claims relating to a Debt Document over that asset; and (B) if the relevant asset consists of shares in the capital of a Debtor,
to release the Transaction Security (including, for the avoidance of doubt, any shared assurance) or any other claim relating to a
Debt Document over the assets of that Debtor and the shares in and assets of any of its subsidiaries and to execute and deliver or
enter into any release of the Transaction Security (including, for the avoidance of doubt, any shared assurance) or any claim
described in subparagraphs (A) and (B) above and issue any certificates of non-crystallization of any floating charge or any
consent to dealing that may, in the discretion of the Security Agent (acting in good faith), be considered necessary or desirable;
provided that if an asset which is the subject of a Non-Distressed Disposal is transferred to another member of the Group, the
release of the Transaction Security must be permitted under the terms of the Secured Debt Documents and, to the extent that
replacement Transaction Security is required from the transferee under the terms of the Debt Documents, such Transaction
Security will (subject to any other requirements relating to the release, retaking, amendment or extension of the Transaction
Security under the Debt Documents) be granted at the same time as (or before) the relevant disposals is effected.
If any proceeds from a Non-Distressed Disposal are required to be applied in mandatory prepayment of any of the
Secured Liabilities or to be offered to any Secured Party pursuant to the terms of the Secured Debt Documents, then such proceeds
will be applied in or towards payment of such Secured Liabilities or shall be offered to the relevant Secured Parties in accordance
with the terms of the relevant Secured Debt Documents and the consent of any other party will not be required for that application.
Distressed Disposal
Where a Distressed Disposal of an asset is being effected, the Intercreditor Agreement provides that the Security Agent
is irrevocably instructed and authorized (at the cost of the relevant Debtor or the Parent) and without any consent, sanction,
authority or further confirmation from any Creditor, Subordinated Creditor, Debtor or the Parent: (i) to release the Transaction
Security, or any other claim over that asset subject to the Distressed Disposal and execute and deliver or enter into any release of
that Transaction Security, or claim and issue any letters of non-crystallization of any floating charge or any consent to dealing that
may, in the discretion of the Security Agent, be considered necessary or desirable; (ii) if the asset subject to the Distressed
Disposal consists of shares in the capital of a Debtor, to release (or instruct to release) (a) that Debtor and any subsidiary of that
Debtor from all or any part of its borrowing liabilities in respect of the Debt Documents (other than borrowing liabilities owed by
the Senior Secured Notes Issuer to the Primary Creditors, its liabilities as a guarantor in respect of the Secured Debt Documents
(other than the guarantee liabilities owed by the Parent to the Primary Creditors) and any trading or other liabilities it may have to
an Intra-Group Lender or Debtor (“Other Liabilities”); (b) any Transaction Security granted by that Debtor or any subsidiary of
that Debtor over any of its assets; and (c) any other claim of a lender of Intra-Group Liabilities (an “Intra-Group Lender”), or
another Debtor over that Debtor’s assets or over the assets of any subsidiary of that Debtor; (iii) if the asset subject to the
Distressed Disposal which is disposed of consists of shares in the capital of any holding company of a Debtor, to release (or
instruct to release) (a) that holding company and any subsidiary of that holding company from all or any part of its borrowing
liabilities in respect of the Debt Documents (other than the borrowing liabilities owed by the Senior Secured Notes Issuer to the
Primary Creditors), its liabilities as guarantor in respect of the Debt Documents (other than such liabilities owed by the Parent to
the Primary Creditors) and its Other Liabilities; (b) any Transaction Security granted by any subsidiary of that holding company
over any of its assets; and (c) any other claim of an Intra-Group Lender or another Debtor over the assets of any subsidiary of that
holding company; and (iv) provided always that the disposal is in accordance with the Security Enforcement Principles, if the
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asset which is disposed of consists of shares in the capital of a Debtor or a holding company of a Debtor, to dispose of liabilities
and/or the transfer liabilities to another Debtor.
Where a Distressed Disposal of an asset is being effected, the Intercreditor Agreement also provides that the Security
Agent is authorized (at the cost of the relevant Debtor or the Parent) and without any consent, sanction, authority or further
confirmation from any Creditor, Subordinated Creditor, Debtor or the Parent, if the asset being disposed of consists of shares in
the capital of a Debtor or a holding company of a Debtor and the Security Agent (acting in accordance with the terms of the
Intercreditor Agreement) decides to dispose of all or any part of the liabilities of that Debtor or holding company or any subsidiary
of that Debtor or holding company under the Debt Documents (other than borrowing liabilities owed by the Issuer to a Primary
Creditor) or any liabilities owed by such Debtor, holding company or subsidiary to another Debtor (“Debtor Liabilities”): (i) if the
Security Agent does not intend that the relevant transferee will be treated as a Primary Creditor or a Secured Party for the
purposes of the Intercreditor Agreement, to enter into any agreement to dispose of all (but not part) of such liabilities owed to a
Primary Creditor or all (but not part) of such Debtor Liabilities; or (ii) if the Security Agent does intend that the relevant transferee
will be treated as a Primary Creditor or a Secured Party for the purposes of the Intercreditor Agreement, to enter into any
agreement to dispose of all (but not part) of such liabilities owed to a Primary Creditor and all or any part of such Debtor
Liabilities and any other liabilities under the Debt Documents, on behalf of the relevant creditors and Debtors.
Where a Distressed Disposal of an asset is being effected, the Intercreditor Agreement also provides that the Security
Agent is authorized (at the cost of the relevant Debtor or the Parent) and without any consent, sanction, authority or further
confirmation from any Creditor, Subordinated Creditor, Debtor or the Parent, if the asset being disposed of consists of shares in
the capital of a Debtor or a holding company of a Debtor (the “Disposed Entity”) and the Security Agent decides to transfer to
another Debtor all or any part of that Disposed Entity’s obligations (or any obligations of any subsidiary of that Disposed Entity)
in respect of Intra-Group Liabilities or Debtor Liabilities, to enter into any agreement to agree the transfer and acceptance of all or
part of the obligations in respect of those Intra-Group Liabilities or Debtor Liabilities on behalf of the Debtors which owe such
liabilities and the Debtors to which such liabilities are to be transferred.
In the case of a Distressed Disposal, the Security Agent shall take reasonable care to obtain a fair market price in the
prevailing market conditions (though the Security Agent shall not have an obligation to postpone any Distressed Disposal in order
to achieve a higher price).
If before the Second Lien Debt Discharge Date, a Distressed Disposal is being effected such that the Second Lien
Guarantees and the Transaction Security will be released it is a further condition to the release that either and the Second Lien
Debt Representative has approved the release on the instructions of the Second Lien Debt Required Holders; or where shares or
assets of a Second Lien Notes Guarantor are sold:
(a)
the proceeds of such sale or disposal are in cash (or substantially all in cash) or, if the proceeds of such sale
are not in cash (or substantially all in cash), the requirements of paragraph (c)(ii) below are satisfied;
(b)
all present and future obligations owed to the Secured Parties under the Credit Facility Documents,
Hedging Agreements, the Senior Secured Notes Documents and the Pari Passu Debt Documents by a
member of the Group, all of whose shares are pledged in favor of the Secured Parties are sold or disposed
of pursuant to such enforcement action, are unconditionally released and discharged or sold or disposed of
concurrently with such sale (and are not assumed by the purchaser or one of its affiliates), and all security
under the Transaction Security Documents in respect of the assets that are sold or disposed of is
simultaneously and unconditionally released and discharged concurrently with such sale, provided that in
the event of a sale or disposal of any such claim (instead of a release or discharge):
(c)
(i)
the Credit Facility Agent, Senior Secured Notes Trustee and Pari Passu Debt Representative
determine acting reasonably and in good faith that the Credit Facility finance parties, the
Senior Secured Note Creditors and the Pari Passu Creditors (respectively) will recover more
than if such claim was released or discharged; and
(ii)
the Credit Facility Agent, Senior Secured Notes Trustee and Pari Passu Debt Representative
serve a notice on the Security Agent notifying the Security Agent of the same, in which case
the Security Agent shall be entitled immediately to sell and transfer such claim to such
purchaser (or an affiliate of such purchaser); and
such sale or disposal (including any sale or disposal of any claim) is made:
(i)
pursuant to a competitive process; or
(ii)
where a Financial Advisor confirms to the Security Agent that the sale, disposal or transfer
price is fair from a financial point of view after taking into account all relevant circumstances,
although there shall be no obligation to postpone any such sale, disposal or transfer in order to
achieve a higher price.
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Amendment
In addition to customary minor, technical or administrative matter amendments by the Security Agent, the Intercreditor
Agreement provides that it may be amended with only the consent of the Majority Super Senior Creditors, the Senior Secured
Notes Required Holders, the Pari Passu Debt Required Holders, the Second Lien Debt Required Holders, the Parent and the
Security Agent unless it is an amendment, waiver or consent that has the effect of changing or which relates to: (a) any
amendment to the ranking or the order of priority or subordination set out in the Intercreditor Agreement; or (b) any amendment to
the payment waterfall, turnover or redistribution provisions, disposal proceeds provisions or enforcement provisions set out in the
Intercreditor Agreement; or (c) certain provisions relating to the giving of instructions to the Security Agent or the exercise of
discretion by the Security Agent; or (d) the amendment provisions in the Intercreditor Agreement, which shall not be made
without:
(a)
the Credit Facility Lenders;
(b)
the Senior Secured Notes Trustee (acting in accordance with the terms of the Senior Secured Notes
Indenture);
(c)
in the case of any Pari Passu Debt constituting an issuance of debt securities, the Pari Passu Debt
Representative (acting in accordance with the terms of the relevant Pari Passu Debt Documents);
(d)
in the case of any Pari Passu Debt constituting a credit facility, the Pari Passu Creditors in that tranche of
Pari Passu Debt;
(e)
in the case of any Second Lien Debt constituting an issuance of debt securities, the Second Lien Debt
Representative (acting in accordance with the terms of the relevant Second Lien Debt Documents);
(f)
in the case of any Second Lien Debt constituting a credit facility, the Second Lien Creditors in that tranche
of Second Lien Debt;
(g)
each Hedge Counterparty (to the extent that the amendment or waiver would materially and adversely
affect the Hedge Counterparty);
(h)
the Parent; and
(i)
the Security Agent.
If however an amendment, waiver or consent affects only one class of Secured Party and could not reasonably be
expected to materially and adversely affect the interests of the other classes of Secured Party, only agreement from the requisite
affected class is required.
Subject to the paragraphs above and certain other exceptions, no amendment or waiver of the Intercreditor Agreement
may impose new or additional obligations on or withdraw or reduce the rights of any party to the Intercreditor Agreement without
the prior written consent of the affected party.
Option to Purchase: RCF Liabilities and Hedging Liabilities
At any time from the earlier of the commencement of any consultation period, an acceleration event or the enforcement
of any of the transaction security, by giving not less than 10 days’ prior written notice to the Revolving Credit Facility Agent and,
if applicable, the Hedge Counterparties, the Senior Secured Notes Trustee and the Pari Passu Creditor Representative, at the
direction and expense of and having obtained all necessary approvals from the Senior Secured Noteholders and Pari Passu
Creditors (as applicable) (the “Purchasing Senior Secured Creditors”), will have the right to acquire or procure that a nominee
acquires by way of transfer all (but not part only) of the rights and obligations of the Credit Facility Lenders and the Hedge
Counterparties in respect of Super Senior Liabilities and the Super Senior Hedging Liabilities (the “Super Senior Acquisition
Debt”).
If more than one Purchasing Senior Secured Creditor wishes to exercise the option to purchase the Super Senior
Acquisition Debt, each such Purchasing Senior Secured Creditor shall acquire the Super Senior Acquisition Debt pro rata, in the
proportion that its principal amount outstanding under the Senior Secured Notes and its principal amount outstanding under the
Pari Passu Debt Documents (“Senior Secured Credit Participations”) bears to the aggregate Senior Secured Credit Participations
of all the Purchasing Senior Secured Creditors.
Any such purchase will be on terms which will include, without limitation, (i) payment in full in cash of an amount
equal to the Credit Facility Lender Liabilities then outstanding , including in respect of any broken funding costs, as well as
certain costs and expenses of the creditors in respect of the relevant Credit Facility Lender Liabilities; (ii) payment in full in cash
of the super senior hedging purchase amount in respect of the transaction under the relevant Hedging Agreements to the extent
they are or can give rise to Super Senior Hedging Liabilities (the “Relevant Super Senior Hedging Transactions”) together with
costs and expenses (including legal fees) incurred by the relevant Super Senior Hedge Counterparties as a consequence of giving
effect to the transfer to such Purchasing Senior Secured Creditors; (iii) after the transfer, no Credit Facility Lender or Hedge
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Counterparty, will be under any actual or contingent liability to any Debtor or any other person under the Intercreditor Agreement,
any Credit Facility Document or any Hedging Agreement for which it is not holding cash collateral in an amount and on terms
satisfactory to it; the Purchasing Senior Secured Creditors, other than the Senior Secured Notes Trustee, (or if required by the
Credit Facility Lenders or Hedge Counterparties, a third party acceptable to the Credit Facility Lenders or Hedge Counterparties),
shall provide on the date of the transfer an indemnity to each Credit Facility Lender and each other finance party under such
Credit Facility Document or Hedge Counterparty (each an “Indemnified Party”) for any actual or alleged obligation to repay or
claw back any amount received by such Indemnified Party; and the relevant transfer shall be without recourse to, or warranty
from, any Credit Facility Lender or other Finance Party under such Credit Facility Document or Hedge Counterparty under any
Hedging Agreements, except that each Credit Facility Lender and each Hedge Counterparty shall be deemed to have represented
and warranted on the date of that transfer that:
(a)
in the case of a Credit Facility Lender, it is the sole owner, free from all Security and third party interests
(other than any arising under the relevant finance documents or by operation of law), of all rights and
interests under the Revolving Credit Facility finance documents or the Credit Facility Documents
purporting to be transferred by it by that transfer;
(b)
in the case of a Hedge Counterparty, it is the sole owner, free from all Security and third party interests
(other than any arising under the Hedging Agreements or by operation of law) of all rights and interests
under the Hedging Agreements purporting to be transferred by it by that transfer;
(c)
it has the power to enter into and make, and has taken all necessary action to authorize its entry into and
making of, that transfer;
(d)
the Credit Facility Lenders and Hedge Counterparties are satisfied with the results of any “know your
client” or other similar checks relating to the identity of any person that they are required by law to carry
out in relation to such a transfer; and
(e)
the Second Lien Creditors have not exercised the purchase rights available to them under the Intercreditor
Agreement or, having exercised such rights, have not failed to complete the acquisition of the Credit
Facility Lender Liabilities, the Hedging Liabilities under the Hedging Agreements, the Senior Secured
Notes Liabilities and the Pari Passu Liabilities.
Governing Law
The Intercreditor Agreement is governed by and construed in accordance with English law.
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DESCRIPTION OF THE SENIOR SECURED NOTES
You will find definitions of certain capitalized terms used in this “Description of the Senior Secured Notes” under the
heading “Certain Definitions.” For purposes of this “Description of the Senior Secured Notes,” references to the “Issuer” “we,”
“our,” and “us” refer only to Bravida Holding AB (publ).
The Issuer has issued, €225 million aggregate principal amount of Senior Secured Floating Rate Notes due 2019 (the
“EUR Senior Secured Floating Rate Notes”) and SEK 1,300 million aggregate principal amount of Senior Secured Floating Rate
Notes due 2019 (the “SEK Senior Secured Floating Rate Notes” and, together with the EUR Senior Secured Floating Rate Notes,
the “Senior Secured Notes”). The Senior Secured Notes were issued under an indenture dated as of June 11, 2013 (the “Senior
Secured Indenture”), between, inter alios, the Issuer, the Initial Guarantors (as defined below), Deutsche Trustee Company
Limited, as trustee (the “Trustee”) and Deutsche Bank AG, London Branch, as security agent (in such capacity, the “Security
Agent”) and paying agent, in a private transaction that is not subject to the registration requirements of the Securities Act. The
Senior Secured Indenture does not incorporate or include terms of, or be subject to, the U.S. Trust Indenture Act of 1939, as
amended.
The proceeds of the issue of the Senior Secured Notes sold on the Issue Date have been used by the Issuer to fund the
refinancing of its existing credit facilities and to pay costs and expenses incurred in connection with the issue of the Senior
Secured Notes and the Refinancing as set forth in this Prospectus under the caption “Use of Proceeds.”
The Senior Secured Indenture is unlimited in aggregate principal amount. We may, subject to applicable law, issue an
unlimited principal amount of additional Senior Secured Notes having identical terms and conditions as the Senior Secured Notes
(the “Additional Senior Secured Notes”); provided, that if the Additional Senior Secured Notes are not fungible with the Senior
Secured Notes for U.S. federal income tax purposes, the Additional Senior Secured Notes will be issued with a separate ISIN code
or common code, as applicable, from the Senior Secured Notes. We will only be permitted to issue Additional Senior Secured
Notes in compliance with the covenants contained in the Senior Secured Indenture, including the covenants restricting the
Incurrence of Indebtedness and the Incurrence of Liens (as described below under “—Certain Covenants—Limitation on
Indebtedness” and “—Certain Covenants—Limitation on Liens”). Except as otherwise provided for in the Senior Secured
Indenture, the Senior Secured Notes issued in the Issue and, if issued, any Additional Senior Secured Notes will be treated as a
single class for all purposes under the Senior Secured Indenture, including, without limitation, with respect to waivers,
amendments, redemptions and offers to purchase. Unless the context otherwise requires, in this “Description of the Senior Secured
Notes,” references to the “Senior Secured Notes” include the Senior Secured Notes and any Additional Senior Secured Notes that
are actually issued.
The Senior Secured Indenture is subject to the terms of the Intercreditor Agreement and any Additional Intercreditor
Agreements (as defined below). The terms of the Intercreditor Agreement are important to understanding the terms and ranking of
the Liens on the Collateral. See “Description of Certain Financing Arrangements—Intercreditor Agreement” for a description of
the material terms of the Intercreditor Agreement.
This “Description of the Senior Secured Notes” is intended to be an overview of the material provisions of the Senior
Secured Notes, the Senior Secured Indenture and the Security Documents. Since this description of the terms of the Senior
Secured Notes is only a summary, you should refer to the Senior Secured Notes, the Senior Secured Indenture and the Security
Documents for complete descriptions of the obligations of the Issuer and your rights. Copies of such documents are available from
us upon request.
The registered Holder of a Senior Secured Note is treated as the owner of it for all purposes. Only registered Holders
have rights under the Senior Secured Indenture, including, without limitation, with respect to enforcement and the pursuit of other
remedies. The Senior Secured Notes have not been, and will not be, registered under the U.S. Securities Act and are subject to
certain transfer restrictions.
General
The Senior Secured Notes
The Senior Secured Notes:
•
are general senior obligations of the Issuer, secured as set forth under “—Security”;
•
rank pari passu in right of payment with any existing and future Indebtedness of the Issuer that is not
subordinated in right of payment to the Senior Secured Notes, including the obligations of the Issuer under the
Revolving Credit Facility and certain Hedging Obligations;
•
rank senior in right of payment to any existing and future Indebtedness of the Issuer that is expressly
subordinated in right of payment to the Senior Secured Notes;
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•
are effectively subordinated to any existing or future Indebtedness or obligation of the Issuer and its Subsidiaries
that is secured by property and assets that do not secure the Senior Secured Notes, to the extent of the value of the
property and assets securing such Indebtedness;
•
are guaranteed by the Initial Guarantors;
•
are structurally subordinated to any existing or future Indebtedness of the Subsidiaries of the Issuer that are not
Guarantors, including obligations to trade creditors;
•
mature on June 15, 2019; and
•
are represented by one or more registered Senior Secured Notes in global form, but in certain circumstances may
be represented by Definitive Registered Notes (see “Book-Entry, Delivery and Form”).
Under the terms of the Intercreditor Agreement, the holders of the Senior Secured Notes will receive proceeds from the
enforcement of the Collateral only after certain super senior priority obligations, including (i) obligations under the Revolving
Credit Facility (or any Refinancing Indebtedness of the Revolving Credit Facility that is entitled to rank senior to the Senior
Secured Notes with respect to the proceeds of an enforcement of the Collateral) and (ii) certain Hedging Obligations have been
repaid in full.
The Notes Guarantees
The Senior Secured Notes are guaranteed by the Initial Guarantors. In addition, if required by the covenant described
under “—Certain Covenants—Additional Guarantees,” certain other Restricted Subsidiaries may provide a Notes Guarantee in
the future.
The Notes Guarantee of each Guarantor:
•
is a general senior obligation of that Guarantor, secured as set forth under “—Security”;
•
ranks pari passu in right of payment with any existing and future Indebtedness of that Guarantor that is not
subordinated in right of payment to such Notes Guarantee (including Indebtedness Incurred under the Revolving
Credit Facility);
•
ranks senior in right of payment to any existing and future Indebtedness of such Guarantor that is expressly
subordinated in right of payment to such Notes Guarantee; and
•
is effectively subordinated to any existing or future Indebtedness or obligation of such Guarantor that is secured
by property and assets that do not secure such Notes Guarantee, to the extent of the value of the property and
assets securing such Indebtedness.
The obligations of a Guarantor under its Notes Guarantee will be limited as necessary to prevent the relevant Notes
Guarantee from constituting a fraudulent conveyance or unlawful financial assistance under applicable law, or otherwise to reflect
limitations under applicable law. By virtue of these limitations, a Guarantor’s obligation under its Notes Guarantee could be
significantly less than amounts payable with respect to the Senior Secured Notes, or a Guarantor may have effectively no
obligation under its Notes Guarantee. See “Risk Factors—Risks Related to our Structure—The Note Guarantees and security
interests on the Collateral will be subject to certain limitations on enforcement and may be limited by applicable laws or subject
to certain defenses that may limit their validity and enforceability.”
As of the Issue Date, all of our Subsidiaries were “Restricted Subsidiaries” for purposes of the Senior Secured
Indenture. However, under the circumstances described below under “—Certain Definitions—Unrestricted Subsidiary,” we are
permitted to designate certain of our Subsidiaries as “Unrestricted Subsidiaries.” Our Unrestricted Subsidiaries will not be subject
to any of the restrictive covenants in the Senior Secured Indenture and will not guarantee the Senior Secured Notes.
Principal and Maturity
On the Issue Date, the Issuer has issued:
•
SEK 1,300 million in aggregate principal amount of SEK Senior Secured Floating Rate Notes; and
•
€225 million in aggregate principal amount of EUR Senior Secured Floating Rate Notes.
The Senior Secured Notes will mature on June 15, 2019. The SEK Senior Secured Floating Rate Notes were issued in
minimum denominations of SEK 1,000,000 and integral multiples of SEK 10,000 in excess thereof. The EUR Senior Secured
Floating Rate Notes were issued in minimum denominations of €100,000 and in integral multiples of €1,000 in excess thereof.
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Interest
Interest on the SEK Senior Secured Floating Rate Notes will accrue at a rate per annum (the “Applicable Rate”), reset
quarterly, equal to the sum of (i) three-month STIBOR plus (ii) 5.375%, as determined by the Calculation Agent. Interest on the
SEK Senior Secured Floating Rate Notes:
•
accrues from the Issue Date or, if interest has already been paid, from the date it was most recently paid;
•
is payable in cash quarterly in arrears on September 15, December 15, March 15 and June 15, commencing on
September 15, 2013;
•
is payable to the holder of record of such SEK Senior Secured Floating Rate Notes on the September 1,
December 1, March 1 and June 1 immediately preceding the related interest payment date; and
•
is computed on the basis of a 360-day year and the actual number of days elapsed.
Set forth below is a summary of certain of the provisions from the Senior Secured Indenture relating to the calculation
of interest on the SEK Senior Secured Floating Rate Notes.
“Determination Date” with respect to an Interest Period, means the day that is two Stockholm Business Days preceding
the first day of such Interest Period.
“STIBOR” with respect to an Interest Period, means the rate (expressed as a percentage per annum) for deposits in SEK
for a three-month period beginning on the day that is two TARGET Settlement Days after the Determination Date that appears on
Reuters Page Side as of 11:00 a.m. Stockholm time, on the Determination Date. If Reuters Page Side does not include such a rate
or is unavailable on a Determination Date, the Calculation Agent will request the principal Stockholm office of each of four major
banks in the Stockholm inter-bank market, as selected by the Calculation Agent, to provide such bank’s offered quotation
(expressed as a percentage per annum) as of approximately 11:00 a.m., Stockholm time, on such Determination Date, to prime
banks in the Stockholm inter-bank market for deposits in a Representative Amount in SEK for a three-month period beginning on
the day that is two TARGET Settlement Days after the Determination Date. If at least two such offered quotations are so
provided, the rate for the Interest Period will be the arithmetic mean of such quotations. If fewer than two such quotations are so
provided, the Calculation Agent will request each of three major banks in Stockholm, as selected by the Calculation Agent, to
provide such bank’s rate (expressed as a percentage per annum), as of approximately 11:00 a.m., Stockholm time, on such
Determination Date, for loans in a Representative Amount in SEK to leading European banks for a three-month period beginning
on the day that is two TARGET Settlement Days after the Determination Date. If fewer than two such quotations are provided as
requested, the Agent Bank will determine the arithmetic mean (rounded, if necessary, as aforesaid) of the rates quoted by major
banks in Stockholm, selected by the Agent Bank, at approximately 11.00 a.m. (Stockholm time) on the first day of the relevant
Interest Period for loans in SEK to leading European banks for three months and in an amount that is representative for a single
transaction in that market at that time.
“Interest Period” means the period commencing on and including an interest payment date and ending on and including
the day immediately preceding the next succeeding interest payment date, with the exception that the first Interest Period shall
commence on and include the Issue Date and end on and include June 15, 2013.
“Representative Amount” means the greater of (i) SEK 10,000,000 and (ii) an amount that is representative for a single
transaction in the relevant market at the relevant time.
“Reuters Page Side” means the display page so designated on Reuters (or such other page as may replace that page on
that service, or such other service as may be nominated as the information vendor).
“TARGET Settlement Day” means any day on which the Trans-European Automated Real-Time Gross Settlement
Express Transfer (TARGET) System is open.
The Calculation Agent shall, as soon as practicable after 11:00 a.m. (Stockholm time) on each Determination Date,
determine the Applicable Rate and calculate the aggregate amount of interest payable in respect of the following Interest Period
(the “Interest Amount”). The Interest Amount shall be calculated by applying the Applicable Rate to the principal amount of each
Floating Rate Note outstanding at the commencement of the Interest Period, multiplying each such amount by the actual amounts
of days in the Interest Period concerned divided by 360. All percentages resulting from any of the above calculations will be
rounded, if necessary, to the nearest one hundred thousandth of a percentage point, with five one-millionths of a percentage point
being rounded upwards (e.g., 4.876545% (or .04876545) being rounded to 4.87655% (or .0487655). The determination of the
Applicable Rate and the Interest Amount by the Calculation Agent shall, in the absence of willful default, bad faith or manifest
error, be final and binding on all parties. In no event will the rate of interest on the Floating Rate Notes be higher than the
maximum rate permitted by applicable law, provided, however, that the Calculation Agent shall not be responsible for verifying
that the rate of interest on the Floating Rate Notes is permitted under any applicable law.
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The rights of Holders to receive the payments of interest on such Senior Secured Notes are subject to applicable
procedures of Euroclear and Clearstream. If the due date for any payment in respect of any Senior Secured Notes is not a Business
Day at the place at which such payment is due to be paid, the Holder thereof will not be entitled to payment of the amount due
until the next succeeding Business Day at such place, and will not be entitled to any further interest or other payment as a result of
any such delay.
Methods of Receiving Payments on the Senior Secured Notes
Principal, interest and premium and Additional Amounts, if any, on the Global Notes (as defined below) are payable at
the specified office or agency of one or more Paying Agents by wire transfer of immediately available funds to the account
specified by the Paying Agent for onward payment to Euroclear and Clearstream.
Paying Agent and Registrar for the Senior Secured Notes
The Issuer maintains one or more Paying Agents for the Senior Secured Notes in the City of London (including the
Principal Paying Agent). The Issuer also undertakes to maintain a Paying Agent in a European Union member state that is not
obligated to withhold or deduct tax pursuant to the European Union Directive 2003/48/EC or any other directive implementing the
conclusions of the ECOFIN meeting of 26 and 27 November 2000 regarding the taxation of savings income (the “Directive”), or
any law implementing or complying with or introduced in order to conform to, such Directive. The initial Paying Agent is
Deutsche Bank AG, London Branch (the “Principal Paying Agent”).
The Issuer also maintains a registrar (the “Registrar”) in Luxembourg, and a transfer agent (the “Transfer Agent”) in
Luxembourg. The initial Registrar is Deutsche Bank Luxembourg S.A. and the initial Transfer Agent is Deutsche Bank
Luxembourg S.A. The Registrar and Transfer Agent maintain a register reflecting ownership of the Senior Secured Notes
outstanding from time to time, if any, and make payments on and facilitate transfers of the Senior Secured Notes on behalf of the
Issuer.
The Issuer or any of its Subsidiaries may act as Paying Agent or Registrar in respect of the Senior Secured Notes.
Notes Guarantees
General
The obligations of the Issuer pursuant to the Senior Secured Notes, including any payment obligation resulting from a
Change of Control, are guaranteed, jointly and severally on a senior basis, by the Guarantors (each such guarantee, a “Notes
Guarantee”).
The initial Guarantors and their respective jurisdictions of incorporation are as follows (the “Initial Guarantors”):
Bravida Installation och Service AB.........................................................................................................
Sweden
Scandinavian Installation Acquisition AB ................................................................................................
Sweden
Bravida Sverige AB ..................................................................................................................................
Sweden
Bravida Prenad AB ...................................................................................................................................
Sweden
Bravissima AS ..........................................................................................................................................
Norway
Bravida AS................................................................................................................................................
Norway
Bravida Norge AS.....................................................................................................................................
Norway
Bravida Danmark A/S...............................................................................................................................
Denmark
The aggregate amount of the obligations and liabilities of each Guarantor incorporated in Sweden (each a “Swedish
Guarantor”) under the applicable Notes Guarantee, the Revolving Credit Facility Agreement, the Intercreditor Agreement, any
other Security Document and the Purchase Agreement (each undefined term as defined in this Intercreditor Agreement) is limited
in respect of liabilities and obligations owed by any entity which is not that Swedish Guarantor or a wholly-owned Subsidiary to
such Swedish Guarantor as follows: (i) Bravida Holding AB’s aggregate obligations and liabilities are not limited; (ii) Bravida
Installation och Service AB’s aggregate obligations and liabilities are limited to SEK3,451 million; (iii) Scandinavian Installation
Acquisition AB’s aggregate obligations and liabilities are limited to SEK1,722 million; (iv) Bravida AB’s aggregate obligations
and liabilities are limited to SEK1,560 million; (v) Bravida Sverige AB’s aggregate obligations and liabilities are limited to
SEK746 million; and (vi) Bravida Prenad AB’s aggregate obligations and liabilities are limited to SEK56 million. The above
limitations have been made to ensure that the relevant Swedish Guarantor complies with the provisions of the Swedish Companies
Act (Sw. aktiebolagslagen (2005:551)) in force from time to time governing guarantees and regulating distribution of assets
within the meaning of the Swedish Companies Act.
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The obligations and liabilities of each Guarantor incorporated in Norway (each a “Norwegian Guarantor”) under the
applicable Notes Guarantee are limited to the extent necessary to comply with the mandatory provisions of Sections 8-7 and 8-10
of the Norwegian Limited Companies Act (act of 13 June 1997 no 44), regarding unlawful financial assistance and other
restrictions on a Norwegian limited liability company’s ability to grant and/or honor guarantees, loans or securities in favor of or
on behalf of the Issuer or its subsidiaries. The obligations and liabilities of each Norwegian Guarantor are limited to
SEK5,000,000,000, plus any unpaid amount of interest, fees, liability, costs and expenses incurred in connection with the Issue.
The obligations and liabilities of any Guarantor incorporated under the laws of Denmark (each a “Danish Guarantor”)
under the applicable Notes Guarantee are limited if and to the extent required to comply with Danish statutory provisions,
including, without limitation, (i) Section 206(1) (as modified by Section 206(2)) of Consolidated Act No.322 of 11 April 2011 on
public and private limited liability companies, as amended and supplemented from time to time (the “Danish Companies Act”)
and (ii) Section 210(1) (as modified by Section 210(2) and Sections 211 and 212 of the Danish Companies Act) and, accordingly,
will not include, and will not be or be construed as, an indemnity, guarantee or security in respect of (x) any obligations incurred
or undertaken in relation to the financing of a direct acquisition of shares issued or to become issued by such Danish Guarantor or
by a direct or indirect qualifying parent company of such Danish Guarantor (“Acquisition Debt”) or (y) any obligations other than
Acquisition Debt of a shareholder or parent company other than a parent company that is incorporated under the laws of any
country covered by Executive Order No. 275 of 25 March 2010 on loans to foreign parent companies, as amended and
supplemented from time to time. The obligations and liabilities of each Danish Guarantor are further limited to the amount
equivalent to the higher of (i) its distributable equity on the Issue Date and (ii) its distributable equity at the time or times that
payment is requested from it, save that these limitations will not apply to any obligations and liabilities of a Danish Guarantor in
respect of proceeds from the sale of the Senior Secured Notes that are placed at the disposal of the Danish Guarantor by the Issuer
by way of a loan or otherwise (other than as share capital).
The limitations set forth above apply mutatis mutandis to any security created by a Danish Guarantor pursuant to the
Security Documents and to any guarantee, indemnity or any similar obligation resulting in a payment obligation and payment,
including but not limited to set off or subordination, pursuant to the Purchase Agreement or any other Transaction Document and
made by any Danish Guarantor.
As of and for the twelve months ended March 31, 2013, the Initial Guarantors accounted for 91.4% of the consolidated
total tangible assets, 93.0% of the consolidated net sales and 90.7% of the consolidated EBITDA of the Group. For information on
the calculation of the figures contained in this paragraph, see “Presentation of Information.”
Each Notes Guarantee is limited to the maximum amount that would not render the Guarantor’s obligations subject to
avoidance under applicable fraudulent conveyance provisions of the United States Bankruptcy Code or any comparable provision
of foreign or state law, or as otherwise required to comply with corporate benefit, financial assistance and other laws. By virtue of
this limitation, a Guarantor’s obligation under its Notes Guarantee could be significantly less than amounts payable with respect to
the Senior Secured Notes, or a Guarantor may have effectively no obligation under its Notes Guarantee. See “Risk Factors—Risks
Related to Our Structure—The Notes Guarantee and security interests on the Collatoral will be subject to certain limitations on
enforcement and may be limited by applicable laws or subject to certain defenses that may limit their validity and enforceability”.
A substantial portion of the operations of the Issuer will be conducted through their Restricted Subsidiaries. Claims of
creditors of non-Guarantor Restricted Subsidiaries, including trade creditors, secured creditors and creditors holding debt and
guarantees issued by those Restricted Subsidiaries, and claims of preferred and minority stockholders (if any) of those Restricted
Subsidiaries generally will have priority with respect to the assets and earnings of those Restricted Subsidiaries over the claims of
creditors of the Issuer and the Guarantors, including Holders of the Senior Secured Notes. The Senior Secured Notes and each
Notes Guarantee therefore will be effectively subordinated to creditors (including trade creditors) and preferred and minority
stockholders (if any) of Restricted Subsidiaries of the Issuer (other than the Guarantors). As of and for the twelve months ended
March 31, 2012, net sales, EBITDA and tangible assets of our subsidiaries not guaranteeing the Notes represented 7.0%, 9.3% and
8.6% of the consolidated net sales, consolidated EBITDA and consolidated total tangible assets of the Group, respectively.
Although the Senior Secured Indenture will limit the Incurrence of Indebtedness, Disqualified Stock and Preferred Stock of
Restricted Subsidiaries, the limitation is subject to a number of significant exceptions. Moreover, the Senior Secured Indenture
does not impose any limitation on the Incurrence by Restricted Subsidiaries of liabilities that are not considered Indebtedness,
Disqualified Stock or Preferred Stock under the Senior Secured Indenture. See “—Certain Covenants—Limitation on
Indebtedness.” As of March 31, 2013, after giving recalculation effect to the Refinancing, the Issuer and its consolidated
Subsidiaries would have had SEK2,628 million of Indebtedness, all of which would have been represented by the Senior Secured
Notes. As of March 31, 2013, after giving effect to the Issue, the Issuer’s subsidiaries that are not guaranteeing the Senior Secured
Notes would have had no outstanding long-term financial indebtedness. In addition, there would have been SEK550 million
available for drawing under the Revolving Credit Facility.
Notes Guarantees Release
The Notes Guarantee of a Guarantor will terminate and release upon:
•
a sale or other disposition (including by way of consolidation or merger) of the Capital Stock of the relevant
Guarantor (whether by direct sale or sale of a holding company), or the sale or disposition of all or substantially
all the assets of the Guarantor (other than to the Issuer or a Restricted Subsidiary), if the sale or other disposition
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does not violate the Senior Secured Indenture and the Guarantor ceases to be a Restricted Subsidiary of the Issuer
as a result of the sale or other disposition;
•
the designation in accordance with the Senior Secured Indenture of the Guarantor as an Unrestricted Subsidiary;
•
legal defeasance, covenant defeasance or satisfaction and discharge of the Senior Secured Notes, as provided in
“—Defeasance” and “—Satisfaction and Discharge”;
•
so long as no Event of Default has occurred and is continuing, upon the release of the Guarantor’s Notes
Guarantee under any Indebtedness that triggered such Guarantor’s obligation to guarantee the Senior Secured
Notes under the covenant described in “—Certain Covenants—Additional Guarantees”;
•
in accordance with an enforcement action pursuant to the provisions of the Intercreditor Agreement or any
Additional Intercreditor Agreement;
•
as described under “—Amendments and Waivers”;
•
as described in the second paragraph of the covenant described below under “—Certain Covenants—Additional
Guarantees”; or
•
as a result of a transaction permitted by “—Certain Covenants—Merger and Consolidation—The Guarantors.”
The Trustee shall take all necessary actions reasonably requested by the Issuer, including the granting of releases or
waivers under the Intercreditor Agreement or any Additional Intercreditor Agreement, to effectuate any release of a Notes
Guarantee in accordance with these provisions, subject to customary protections and indemnifications. Each of the releases set
forth above shall be effected by Trustee without the consent of the Holders or any other action or consent on the part of the
Trustee.
Restricted Subsidiaries and Unrestricted Subsidiaries
Immediately after the issuance of the Senior Secured Notes, all the Issuer’s Subsidiaries became Restricted
Subsidiaries. However, in the circumstances described below under “—Certain Definitions—Unrestricted Subsidiary,” the Issuer
is permitted to designate Restricted Subsidiaries as Unrestricted Subsidiaries. Unrestricted Subsidiaries will not be subject to any
of the restrictive covenants in the Senior Secured Indenture.
Security
General
The Senior Secured Notes and the Senior Secured Indenture, together with obligations under the Revolving Credit
Facility and certain Hedging Obligations, are secured by security interests granted on an equal and ratable first-priority basis over
all of the shares of the Guarantors and certain material subsidiaries of Bravida Sverige AB, together with security over certain
material real estate, downstream intra-group loans, bank accounts of the Issuer and Bravida Installation och Service AB not
connected to the Group’s cash pooling arrangements, certain Swedish business mortgage certificates and certain Norwegian
floating charges (the “Collateral”).
Subject to certain conditions, including compliance with the covenants described under “—Certain Covenants—
Impairment of Security Interest” and “—Certain Covenants—Limitations on Liens,” the Issuer is permitted to grant security over
the Collateral in connection with future issuances of Indebtedness or Indebtedness of the Restricted Subsidiaries, including
Additional Senior Secured Notes, as permitted under the Senior Secured Indenture and the Intercreditor Agreement.
The Collateral is pledged pursuant to the Security Documents to the Security Agent on behalf of the holders of the
Senior Secured Notes and holders of the other secured obligations that are secured by the Collateral. Any other security interests
that may in the future be granted to secure obligations under the Senior Secured Notes, any Notes Guarantees and the Senior
Secured Indenture would also constitute “Collateral.” All Collateral will be subject to any Permitted Collateral Liens.
The Liens on the Collateral are limited as necessary to recognize certain limitations arising under or imposed by local
law and defenses generally available to providers of Collateral (including those that relate to fraudulent conveyance or transfer,
voidable preference, financial assistance, corporate purpose or benefit, capital maintenance or similar laws, regulations or
defenses affecting the rights of creditors generally) or other considerations under applicable law.
The proceeds from the enforcement of the Collateral may not be sufficient to satisfy the obligations owed to the holders
of the Senior Secured Notes. No appraisals of the Collateral have been made in connection with the Issue of the Senior Secured
Notes. By its nature, some or all of the Collateral will be illiquid and may have no readily ascertainable market value.
Accordingly, the Collateral may not be able to be sold in a short period of time, or at all. See “Risk Factors—Risks Related to the
Notes— The value of the Collateral securing the Notes and the Note Guarantees may not be sufficient to satisfy our obligations
under the Notes, and there may be limitations on your ability to foreclose on the Collateral.”
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Priority
The relative priority with regard to the security interests in the Collateral that are created by the Security Documents
(the “Security Interests” and each, a “Security Interest”) as between (a) the lenders under the Revolving Credit Facility, (b) the
counterparties under certain Hedging Obligations and (c) the Trustee, the Security Agent and the Holders of the Senior Secured
Notes under the Senior Secured Indenture, respectively, is established by the terms of the Intercreditor Agreement, the Revolving
Credit Facility, the Senior Secured Indenture, the Security Documents and the security documents relating to the Revolving Credit
Facility and such Hedging Obligations, which provide, among other things, that the obligations under the Revolving Credit
Facility, certain Hedging Obligations and the Senior Secured Notes are secured equally and ratably by a first-priority Security
Interests; however, under the terms of the Intercreditor Agreement, the holders of Senior Secured Notes will only receive proceeds
from the enforcement of the Collateral after certain super senior priority obligations including (i) obligations under the Revolving
Credit Facility and (ii) certain Hedging Obligations have been paid in full. See “Description of Certain Financing Arrangements—
Intercreditor Agreement.” In addition, pursuant to the Intercreditor Agreements or Additional Intercreditor Agreements entered
into after the Issue Date, the Collateral may be pledged to secure other Indebtedness. See “—Release of Liens,” “—Certain
Covenants—Impairment of Security Interest” and “—Certain Definitions—Permitted Collateral Liens.”
Security Documents
Under the Security Documents, the Issuer and the Guarantors have granted security over the Collateral to secure the
payment when due of the Issuer’s and the Guarantors’ payment obligations under the Notes, the Notes Guarantees and the Senior
Secured Notes Indenture. The Security Documents have been entered into by the relevant security provider and the Security Agent
as agent for the secured parties. When entering into the Security Documents, the Security Agent acted in its own name, but for the
benefit of the secured parties (including itself, the Trustee and the holders of Senior Secured Notes from time to time). Under the
Intercreditor Agreement, the Security Agent also acts as an agent of the lenders under the Revolving Credit Facility and the
counterparties under certain Hedging Obligations in relation to the Security Interests created in favor of such parties.
The Senior Secured Indenture and the Intercreditor Agreement provide that, to the extent permitted by the applicable
laws, only the Security Agent has the right to enforce the Security Documents on behalf of the Senior Secured Notes Trustee and
the holders of the Senior Secured Notes. As a consequence of such contractual provisions, holders of the Senior Secured Notes are
not entitled to take enforcement action in respect of the Collateral securing the Senior Secured Notes, except through the Trustee
under the Senior Secured Indenture, who will (subject to the provisions of the Senior Secured Indenture) provide instructions to
the Security Agent for the Collateral.
The Senior Secured Indenture provides that, subject to the terms thereof and of the Security Documents and the
Intercreditor Agreement, the Senior Secured Notes and the Senior Secured Indenture, as applicable, will be secured by Security
Interests in the Collateral until all obligations under the Senior Secured Notes and the Senior Secured Indenture have been
discharged. However, the Security Interests with respect to the Senior Secured Notes and the Senior Secured Indenture may be
released under certain circumstances as provided under “—Release of Liens.”
In the event that the Issuer or its Subsidiaries enter into insolvency, bankruptcy or similar proceedings, the Security
Interests created under the Security Documents or the rights and obligations enumerated in the Intercreditor Agreement could be
subject to potential challenges. If any challenge to the validity of the Security Interests or the terms of the Intercreditor Agreement
was successful, the Holders may not be able to recover any amounts under the Security Documents. See “Risk Factors—Risks
Related to the Notes.”
Enforcement of Security Interest
The Senior Secured Indenture and the Intercreditor Agreement restrict the ability of the Holders or the Trustee to
enforce the Security Interests and provide for the release of the Security Interests created by the Security Documents in certain
circumstances upon enforcement by the lenders under the Revolving Credit Facility. These limitations are described under
“Description of Certain Financing Arrangements—Intercreditor Agreement”. The ability to enforce may also be restricted by
similar arrangements in relation to future Indebtedness that is secured on the Collateral in compliance with the Senior Secured
Indenture and the Intercreditor Agreement.
The creditors under the Revolving Credit Facility, the counterparties to Hedging Obligations secured by the Collateral
and the Trustee have, and by accepting a Senior Secured Note, each Holder will be deemed to have, appointed the Security Agent
to act as its agent under the Intercreditor Agreement and the security documents securing such Indebtedness, including the
Security Documents. The creditors under the Revolving Credit Facility, the holders of Senior Secured Notes, the counterparties to
Hedging Obligations secured by the Collateral and the Trustee have, and by accepting a Senior Secured Note, each Holder will be
deemed to have, authorized the Security Agent to (i) perform the duties and exercise the rights, powers and discretions that are
specifically given to it under the Intercreditor Agreement and the security documents securing such Indebtedness, together with
any other incidental rights, power and discretions; and (ii) execute each Security Document, waiver, modification, amendment,
renewal or replacement expressed to be executed by the Security Agent on its behalf.
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Intercreditor Agreement; Additional Intercreditor Agreements; Agreement to be Bound
The Senior Secured Indenture provides that the Issuer and the Trustee will be authorized (without any further consent
of the holders of the Senior Secured Notes) to enter into the Intercreditor Agreement to give effect to the provisions described in
the section entitled “Description of Certain Financing Arrangements—Intercreditor Agreement.”
The Senior Secured Indenture also provides that each holder of the Senior Secured Notes, by accepting such Note, is
deemed to have:
(1)
appointed and authorized the Security Agent and the Trustee to give effect to the provisions in the
Intercreditor Agreement, any Additional Intercreditor Agreements and the Security Documents;
(2)
agreed to be bound by the provisions of the Intercreditor Agreement, any Additional Intercreditor
Agreements and the Security Documents; and
(3)
irrevocably appointed the Security Agent and the Trustee to act on its behalf to enter into and comply with
the provisions of the Intercreditor Agreement, any Additional Intercreditor Agreements and the Security
Documents.
See the sections entitled “Risk Factors—Risks Related to the Notes—The security over the Collateral will not be
granted directly to the holders of the Notes, and the holders of the Notes will have limited rights to enforce remedies under the
Security Documents” and “Description of Certain Financing Arrangements—Intercreditor Agreement.”
Similar provisions to those described above may be included in any Additional Intercreditor Agreement (as defined
below) entered into in compliance with the covenant described under “—Certain Covenants—Additional Intercreditor
Agreements.”
Release of Liens
The Issuer and its Subsidiaries are entitled to release the Security Interests in respect of the Collateral under any one or
more of the following circumstances:
(1)
in connection with any sale or other disposition of Collateral to a Person that is not the Issuer or a
Restricted Subsidiary (but excluding any transaction subject to “—Certain Covenants—Merger and
Consolidation”), if such sale or other disposition does not violate the covenant described under “—Certain
Covenants—Limitation on Sale of Assets and Subsidiary Stock” or is otherwise permitted in accordance
with the Senior Secured Indenture;
(2)
in the case of a Guarantor that is released from its Notes Guarantee pursuant to the terms of the Senior
Secured Indenture, the release of the property and assets, and Capital Stock, of such Guarantor;
(3)
as described under “—Amendments and Waivers”;
(4)
upon payment in full of principal, interest and all other obligations on the Senior Secured Notes or legal
defeasance, covenant defeasance or satisfaction and discharge of the Senior Secured Notes, as provided in
“—Defeasance” and “—Satisfaction and Discharge”;
(5)
if the Issuer designates any Restricted Subsidiary to be an Unrestricted Subsidiary in accordance with the
applicable provisions of the Senior Secured Indenture, the release of the property and assets, and Capital
Stock, of such Unrestricted Subsidiary;
(6)
to effect a Permitted Reorganization; or
(7)
as otherwise permitted in accordance with the Senior Secured Indenture.
In addition, the Security Interests created by the Security Documents will be released (a) in accordance with an
enforcement action pursuant to the Intercreditor Agreement or any Additional Intercreditor Agreement and (b) as may be
permitted by the covenant described under “—Certain Covenants—Impairment of Security Interest.”
The Security Agent and the Trustee (but only if required) will take all necessary action reasonably requested by the
Issuer to effectuate any release of Collateral securing the Senior Secured Notes and the Notes Guarantees, in accordance with the
provisions of the Senior Secured Indenture, the Intercreditor Agreement or any Additional Intercreditor Agreement and the
relevant Security Document. Each of the releases set forth above shall be effected by the Security Agent without the consent of the
Holders or any action on the part of the Trustee (unless action is required by it to effect such release).
Notwithstanding the foregoing or any other provision in the Senior Secured Indenture, the Senior Secured Notes, the
Intercreditor Agreement, any Additional Intercreditor Agreement, the Revolving Credit Facility, the Security Documents and the
security documents relating to the Revolving Credit Facility and such Hedging Obligations, the release of any Security Interest in
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respect of Collateral governed by Swedish law will, until the date of irrevocable and unconditional payment in full of principal,
interest and all other obligations of the Senior Secured Notes, always be subject to the prior written consent of the Security Agent.
Optional Redemption
The SEK Senior Secured Floating Rate Notes may be redeemed at the redemption prices set out below. Any
redemption or redemption notice may, in the Issuer’s discretion, be subject to the satisfaction of one or more conditions precedent.
Unless the Issuer defaults in the payment of the redemption price, interest will cease to accrue on the SEK Senior Secured
Floating Rate Notes or portions thereof called for redemption on the applicable redemption date.
Except as described below and except as described under “—Redemption for Taxation Reasons”, the SEK Senior
Secured Floating Rate Notes are not redeemable until June 15, 2015. On and after June 15, 2015, the Issuer may redeem all or,
from time to time, part of the SEK Senior Secured Floating Rate Notes upon not less than 30 nor more than 60 days’ notice, at the
following redemption prices (expressed as a percentage of principal amount) plus accrued and unpaid interest and Additional
Amounts, if any, to, but not including, the applicable redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if redeemed during the twelve-month period beginning
on June 15, 2015 of the years indicated below:
Redemption
Price
Year
2015 .......................................................................................................................................................
2016 and thereafter ................................................................................................................................
101.000%
100.000%
In addition, prior to June 15, 2015, the Issuer may redeem all or, from time to time, a part of each series of the SEK
Senior Secured Floating Rate Notes upon not less than 30 nor more than 60 days’ notice at a redemption price equal to 100% of
the principal amount of the SEK Senior Secured Floating Rate Notes, as the case may be, plus the Applicable Premium and
accrued and unpaid interest and Additional Amounts, if any, to, but not including, the applicable redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date).
“Applicable Premium” means, with respect to any SEK Senior Secured Floating Rate Note on any redemption date
prior to June 15, 2015, the greater of:
(x)
1% of the principal amount of such SEK Senior Secured Floating Rate Note; and
(y)
the excess (to the extent positive) of:
(A)
the present value at such redemption date of (i) the redemption price of such SEK
Senior Secured Floating Rate Note at June 15, 2015 (such redemption price
(expressed in percentage of principal amount) being set forth in the table above
under the first paragraph of this section (excluding accrued and unpaid interest)),
plus (ii) all required interest payments due on such SEK Senior Secured Floating
Rate Note to and including June 15, 2015, computed upon the redemption date
using a discount rate equal to the Swedish Government Bond Rate at such
redemption date plus 50 basis points; over
(B)
the outstanding principal amount of such SEK Senior Secured Floating Rate Note,
as calculated by the Issuer or on behalf of the Issuer by such Person as the Issuer shall designate. For the avoidance of doubt,
calculation of Applicable Premium shall not be an obligation or duty of the Trustee, the Calculation Agent, or any Paying Agent.
“Swedish Government Bond Rate” means the yield to maturity at the time of computation of direct obligations of the Kingdom of
Sweden, acting through the Swedish National Debt Office (a Swedish Government Bond; Sw. statsobligation) with a constant
maturity (such yield to be the weekly average yield as officially compiled and published in the most recent financial statistics that
has become publicly available at least two Business Days (but not more than five Business Days) prior to the redemption date (or,
if such financial statistics are not so published or available, any publicly available source of similar market data selected by the
Issuer in good faith)) most nearly equal to the period from the redemption date to June 15, 2015; provided, however, that if the
period from the redemption date to June 15, 2015 is not equal to the constant maturity of a direct obligation of the Kingdom of
Sweden, acting through the Swedish National Debt Office for which a weekly average yield is given, the Swedish Government
Bond Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average
yields of direct obligations of the Kingdom of Sweden, acting through the Swedish National Debt Office, for which such yields
are given, except that if the period from such redemption date to June 15, 2015 is less than one year, the weekly average yield on
actually traded direct obligations of the Kingdom of Sweden, acting through the Swedish National Debt Office, adjusted to a
constant maturity of one year shall be used.
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General
We may repurchase the Senior Secured Notes at any time and from time to time in the open market or otherwise.
If the optional redemption date is on or after an interest record date and on or before the related interest payment date,
the accrued and unpaid interest will be paid to the Person in whose name the Senior Secured Note is registered at the close of
business on such record date, and no additional interest will be payable to Holders whose Senior Secured Notes will be subject to
redemption by the Issuer.
In connection with any redemption of Senior Secured Notes (including with the proceeds from an Equity Offering, to
the extent applicable), any such redemption may, at the Issuer’s discretion, be subject to one or more conditions precedent.
Sinking Fund
The Issuer is not required to make mandatory redemption payments or sinking fund payments with respect to the Senior
Secured Notes.
Redemption at Maturity
On June 15, 2019, the Issuer will redeem the Senior Secured Notes that have not been previously redeemed or
purchased and canceled at 100% of their principal amount plus accrued and unpaid interest thereon and Additional Amounts, if
any, to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the
relevant interest payment date).
Redemption for Taxation Reasons
The Issuer may redeem any series Senior Secured Notes in whole, but not in part, at any time upon giving not less than
30 nor more than 60 days’ prior notice to the Holders of the relevant series of Senior Secured Notes (which notice will be
irrevocable) at a redemption price equal to 100% of the principal amount thereof, together with accrued and unpaid interest, if
any, to the date fixed for redemption (a “Tax Redemption Date”) (subject to the right of Holders of record on the relevant record
date to receive interest due on the relevant interest payment date) and all Additional Amounts (as defined below under “—
Withholding Taxes”), if any, then due and which will become due on the Tax Redemption Date as a result of the redemption or
otherwise, if any, if the Issuer determines in good faith that, as a result of:
(1)
any change in, or amendment to, the law or treaties (or any regulations or rulings promulgated thereunder)
of a Relevant Taxing Jurisdiction (as defined below) affecting taxation; or
(2)
any amendment to, or change in an official application, administration or written interpretation of such
laws, treaties, regulations or rulings (including by reason of a holding, judgment or order by a court of
competent jurisdiction or a change in published practice) (each of the foregoing in clauses (1) and (2), a
“Change in Tax Law”),
a Payor (as defined below) is, or on the next interest payment date in respect of the relevant series of Senior Secured Notes would
be, required to pay Additional Amounts with respect to the Senior Secured Notes (but, in the case of a Guarantor, only if the
payment giving rise to such requirement cannot be made by the Issuer or another Guarantor who can make such payment without
the obligation to pay Additional Amounts), and such obligation cannot be avoided by taking reasonable measures available to the
Payor (including, for the avoidance of doubt, the appointment of a new Paying Agent where this would be reasonable). Such
Change in Tax Law must be publicly announced and become effective on or after the Issue Date (or if the applicable Relevant Tax
Jurisdiction became a Relevant Tax Jurisdiction on a date after the Issue Date, such later date). The foregoing provisions shall
apply (a) to a Guarantor only after such time as such Guarantor is obligated to make at least one payment on the Senior Secured
Notes and (b) mutatis mutandis to any successor Person, after such successor Person becomes a party to the Senior Secured
Indenture, with respect to a change or amendments occurring after the time such successor Person becomes a party to the Senior
Secured Indenture.
Notice of redemption for taxation reasons will be published in accordance with the procedures described under “—
Selection and Notice.” Notwithstanding the foregoing, no such notice of redemption will be given earlier than 60 days prior to the
earliest date on which the Payor would be obligated to make such payment of Additional Amounts. Prior to the publication or
mailing of any notice of redemption of any series of Senior Secured Notes pursuant to the foregoing, the Issuer will deliver to the
Trustee (a) an Officer’s Certificate stating that it is entitled to effect such redemption and setting forth a statement of facts
showing that the conditions precedent to its right so to redeem have been satisfied and that it cannot avoid its obligation to pay
Additional Amounts by taking reasonable measures available to it and (b) an opinion of an independent tax counsel of recognized
standing and reasonably satisfactory to the Trustee (such approval not to be unreasonably withheld) to the effect that the Issuer has
been or will become obligated to pay Additional Amounts as a result of a Change in Tax Law. The Trustee will accept and shall
be entitled to rely on such Officer’s Certificate and opinion as sufficient evidence of the satisfaction of the conditions precedent
described above, without further inquiry, in which event it will be conclusive and binding on the Holders.
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Withholding Taxes
All payments made by or on behalf of the Issuer or any Guarantor (including any successor entity) (each, a “Payor”) in
respect of the Senior Secured Notes or with respect to any Notes Guarantee, as applicable, will be made free and clear of and
without withholding or deduction for, or on account of, any Taxes unless the withholding or deduction of such Taxes is then
required by law. If any deduction or withholding for, or on account of, any Taxes imposed or levied by or on behalf of:
(1)
any jurisdiction from or through which payment on any such Senior Secured Note is made or any political
subdivision or governmental authority thereof or therein having the power to tax; or
(2)
any other jurisdiction in which a Payor is organized, engaged in business for tax purposes, or otherwise
considered to be a resident for tax purposes, or any political subdivision or governmental authority thereof
or therein having the power to tax (each of clause (1) and (2), a “Relevant Taxing Jurisdiction”),
will at any time be required by law to be made from any payments made by or on behalf of the Payor or the Paying Agent with
respect to any Senior Secured Note or any Notes Guarantee, including payments of principal, redemption price, interest or
premium, if any, the Payor will pay (together with such payments) such additional amounts (the “Additional Amounts”) as may be
necessary in order that the net amounts received in respect of such payments, after such withholding, or deduction (including any
such deduction or withholding from such Additional Amounts), will not be less than the amounts which would have been received
in respect of such payments on any such Note in the absence of such withholding or deduction; provided, however, that no such
Additional Amounts will be payable for or on account of:
(1)
any Taxes that would not have been so imposed but for the existence of any present or former connection
between the relevant Holder (or between a fiduciary, settlor, beneficiary, member, partner or shareholder
of, or possessor of power over the relevant Holder, if the relevant Holder is an estate, nominee, trust,
partnership, limited liability company or corporation) and the Relevant Taxing Jurisdiction (including,
without limitation, being resident for tax purposes, or being a citizen or resident or national of, or carrying
on a business or maintaining a permanent establishment in, or being physically present in, the Relevant
Taxing Jurisdiction) but excluding, in each case, any connection arising solely from the acquisition,
ownership or holding of such Senior Secured Note or the receipt of any payment or the exercise or
enforcement of rights under such Senior Secured Note, the Senior Secured Indenture or a Notes Guarantee;
(2)
any Tax that is imposed or withheld by reason of the failure by the Holder or the beneficial owner of the
Senior Secured Note to comply with a reasonable written request of the Payor addressed to the Holder,
after reasonable notice (at least 30 days before any such withholding or deduction such be payable), to
provide certification, information, documents or other evidence concerning the nationality, residence or
identity of the Holder or such beneficial owner or to make any declaration or similar claim or satisfy any
other reporting requirement relating to such matters, which is required by a statute, treaty, regulation or
administrative practice of the Relevant Taxing Jurisdiction as a precondition to exemption from all or part
of such Tax but only to the extent the Holder or beneficial owner is legally entitled to provide such
certification or documentation;
(3)
any Taxes, to the extent that such Taxes were imposed as a result of the presentation of the Senior Secured
Note for payment (where Notes are in the form of Definitive Registered Notes and presentation is required)
more than 30 days after the relevant payment is first made available for payment to the Holder (except to
the extent that the Holder would have been entitled to Additional Amounts had the Senior Secured Note
been presented on the last day of such 30 day period);
(4)
any Taxes that are payable otherwise than by deduction or withholding from a payment of the principal of,
premium, if any, or interest, if any, on the Senior Secured Notes or with respect to any Notes Guarantee;
(5)
any estate, inheritance, gift, sales, excise, transfer, personal property or similar tax, assessment or other
governmental charge;
(6)
any Taxes that are required to be deducted or withheld on a payment to an individual pursuant to the
Directive or any law implementing, or complying with, or introduced in order to conform to, such
Directive;
(7)
any Taxes imposed in connection with a Senior Secured Note presented for payment by or on behalf of a
Holder or beneficial owner who would have been able to avoid such Tax by presenting the relevant Senior
Secured Note to, or otherwise accepting payment from, another Paying Agent in a member state of the
European Union;
(8)
where such withholding or deduction is required pursuant to section 1471(b) of the U.S. Internal Revenue
Code or otherwise imposed pursuant to sections 1471 through 1474 of the U.S. Internal Revenue Code, any
regulations or agreements thereunder, official interpretations thereof, or any law implementing an
intergovernmental agreement relating thereto; or
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any combination of the items (1) through (8) above.
In addition, no Additional Amounts shall be paid with respect to a Holder who is a fiduciary or a partnership or any
person other than the beneficial owner of the Senior Secured Notes, to the extent that the beneficiary or settler with respect to such
fiduciary, the member of such partnership or the beneficial owner would not have been entitled to Additional Amounts had such
beneficiary, settler, member or beneficial owner held such Senior Secured Notes directly.
The Payor will (i) make any required withholding or deduction and (ii) remit the full amount deducted or withheld to
the Relevant Taxing Jurisdiction in accordance with applicable law. The Payor will provide certified copies of tax receipts
evidencing the payment of any Taxes so deducted or withheld from each Relevant Taxing Jurisdiction imposing such Taxes, or if
such tax receipts are not available, certified copies of other reasonable evidence of such payments as soon as reasonably
practicable to the Trustee. Such copies shall be made available to the Holders upon reasonable request and will be made available
at the offices of the Paying Agent.
If any Payor is obligated to pay Additional Amounts under or with respect to any payment made on any Senior Secured
Note or any Notes Guarantee, at least 30 days prior to the date of such payment, the Payor will deliver to the Trustee an Officer’s
Certificate stating the fact that Additional Amounts will be payable and the amount estimated to be so payable and such other
information necessary to enable the Paying Agent to pay Additional Amounts to Holders on the relevant payment date (unless
such obligation to pay Additional Amounts arises less than 45 days prior to the relevant payment date, in which case the Payor
may deliver such Officer’s Certificate as promptly as practicable thereafter). The Trustee shall be entitled to rely solely on such
Officer’s Certificate as conclusive proof that such payments are necessary.
Wherever in the Senior Secured Indenture, the Senior Secured Notes or this “Description of the Senior Secured Notes”
there is mentioned, in any context:
(1)
the payment of principal;
(2)
purchase prices in connection with a purchase of Senior Secured Notes;
(3)
interest; or
(4)
any other amount payable on or with respect to any of the Senior Secured Notes or any Notes Guarantee,
such reference shall be deemed to include payment of Additional Amounts to the extent that, in such context,
Additional Amounts are, were or would be payable in respect thereof.
The Payor will pay and indemnify the Holder for any present or future stamp, issue, registration, court or documentary
taxes, or similar charges or levies (including any related interest or penalties with respect thereto) or any other excise, property or
similar taxes or similar charges or levies (including any related interest or penalties with respect thereto) that arise in a Relevant
Taxing Jurisdiction from the execution, delivery, registration, enforcement of, or receipt of payments with respect to any Senior
Secured Notes, any Notes Guarantee, the Senior Secured Indenture, or any other document or instrument in relation thereto (other
than in each case, in connection with a transfer of the Senior Secured Notes after the Issue).
The foregoing obligations will survive any termination, defeasance or discharge of the Senior Secured Indenture, any
transfer by a Holder or beneficial owner, and will apply mutatis mutandis to any jurisdiction in which any successor to a Payor is
organized, engaged in business for tax purposes or otherwise resident for tax purposes, or any jurisdiction from or through which
any payment under, or with respect to the Senior Secured Notes (or any Notes Guarantee) is made by or on behalf of such Payor,
or any political subdivision or taxing authority or agency thereof or therein.
Change of Control
If a Change of Control occurs, subject to the terms of the covenant described under this heading “Change of Control,”
each Holder will have the right to require the Issuer to repurchase all or any part (equal to €100,000 or integral multiples of €1,000
in excess thereof or SEK1,000,000 or integral multiples of SEK10,000 in excess thereof, as applicable, provided that Senior
Secured Notes of €100,000 or less or of SEK1,000,000 or less, as the case may be, may only be redeemed in whole and not in
part) of such Holder’s Senior Secured Notes at a purchase price in cash equal to 101% of the principal amount of the Senior
Secured Notes repurchased, plus accrued and unpaid interest and Additional Amounts, if any, to the date of purchase (subject to
the right of Holders of record on the relevant record date to receive interest due on the relevant interest payment date); provided,
however, that the Issuer shall not be obligated to repurchase any series of Senior Secured Notes as described under this heading,
“Change of Control,” in the event and to the extent that it has unconditionally exercised its right to redeem all of the Senior
Secured Notes of such series and given notice of redemption as described under “—Optional Redemption” and that all conditions
to such redemption have been satisfied or waived.
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Unless the Issuer has unconditionally exercised its right to redeem all the Senior Secured Notes and given notice of
redemption as described under “—Optional Redemption” and all conditions to such redemption have been satisfied or waived, no
later than the date that is 60 days after any Change of Control, the Issuer will mail a notice (the “Change of Control Offer”) to
each Holder of any such Senior Secured Notes, with a copy to the Trustee:
(1)
stating that a Change of Control has occurred or may occur and that such Holder has the right to require the
Issuer to purchase all or any part of such Holder’s Senior Secured Notes at a purchase price in cash equal to
101% of the principal amount of such Senior Secured Notes plus accrued and unpaid interest and
Additional Amounts, if any, to, but not including, the date of purchase (subject to the right of Holders of
record on a record date to receive interest on the relevant interest payment date) (the “Change of Control
Payment”);
(2)
stating the repurchase date (which shall be no earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the “Change of Control Payment Date”);
(3)
stating that any Senior Secured Note accepted for payment pursuant to the Change of Control Offer will
cease to accrue interest on the Change of Control Payment Date unless the Change of Control Payment is
not paid, and that any Senior Secured Notes or part thereof not tendered will continue to accrue interest;
(4)
describing the circumstances and relevant facts regarding the transaction or transactions that constitute the
Change of Control;
(5)
describing the procedures determined by the Issuer, consistent with the Senior Secured Indenture, that a
Holder must follow in order to have its Senior Secured Notes repurchased; and
(6)
if such notice is mailed prior to the occurrence of a Change of Control, stating that the Change of Control
Offer is conditional on the occurrence of such Change of Control.
On the Change of Control Payment Date, if the Change of Control shall have occurred, the Issuer will, to the extent
lawful:
(1)
accept for payment all Senior Secured Notes or portion thereof properly tendered pursuant to the Change of
Control Offer;
(2)
deposit with the Principal Paying Agent an amount equal to the Change of Control Payment in respect of
all Senior Secured Notes so tendered;
(3)
deliver or cause to be delivered to the Trustee an Officer’s Certificate stating the aggregate principal
amount of Senior Secured Notes or portions of the Senior Secured Notes being purchased by the Issuer in
the Change of Control Offer;
(4)
in the case of Global Notes, deliver, or cause to be delivered, to the Trustee (or an authenticating agent) the
Global Notes in order to reflect thereon the portion of such Senior Secured Notes or portions thereof that
have been tendered to and purchased by the Issuer; and
(5)
in the case of Definitive Registered Notes, deliver, or cause to be delivered, to the relevant Registrar for
cancellation all Definitive Registered Notes accepted for purchase by the Issuer.
If any Definitive Registered Notes have been issued, the Principal Paying Agent will promptly mail to each Holder of
Definitive Registered Notes so tendered the Change of Control Payment for such Senior Secured Notes, and the Trustee (or an
authenticating agent) will, at the cost of the Issuer, promptly authenticate and mail (or cause to be transferred by book-entry) to
each Holder of Definitive Registered Notes a new Definitive Registered Note equal in principal amount to the unpurchased
portion of the Senior Secured Notes surrendered, if any; provided that each such new Senior Secured Note will be in a principal
amount that is at least €100,000 or SEK 1,000,000 (as applicable) and integral multiples of €1,000 or SEK 10,000 in excess
thereof (as applicable).
Except as described above with respect to a Change of Control, the Senior Secured Indenture does not contain
provisions that permit the Holders to require that the Issuer repurchase or redeem the Senior Secured Notes in the event of a
takeover, recapitalization or similar transaction. Holders’ right to require the Issuer to repurchase Senior Secured Notes upon the
occurrence of a Change of Control may deter a third party from seeking to acquire the Issuer or its Subsidiaries in a transaction
that would constitute a Change of Control.
The Issuer will not be required to make a Change of Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in the Senior
Secured Indenture applicable to a Change of Control Offer made by the Issuer and purchases all Senior Secured Notes validly
tendered and not withdrawn under such Change of Control Offer. Notwithstanding anything to the contrary contained herein, a
Change of Control Offer may be made in advance of a Change of Control, conditioned upon the consummation of such Change of
Control, if a definitive agreement is in place providing for the Change of Control at the time the Change of Control Offer is made.
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The Issuer will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any
other securities laws or regulations in connection with the repurchase of Senior Secured Notes pursuant to this covenant. To the
extent that the provisions of any securities laws or regulations conflict with provisions of the Senior Secured Indenture, the Issuer
will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the
Change of Control provisions of the Senior Secured Indenture by virtue of such compliance.
The Issuer’s ability to repurchase Senior Secured Notes issued by it pursuant to a Change of Control Offer may be
limited by a number of factors. The occurrence of certain of the events that constitute a Change of Control would require a
mandatory prepayment of Indebtedness under the Revolving Credit Facility. In addition, certain events that may constitute a
change of control under the Revolving Credit Facility and require a mandatory prepayment of Indebtedness under such agreement
may not constitute a Change of Control under the Senior Secured Indenture. Future Indebtedness of the Issuer or its Subsidiaries
may also contain prohibitions of certain events that would constitute a Change of Control or require such Indebtedness to be
repurchased upon a Change of Control. Moreover, the exercise by the Holders of their right to require the Issuer to repurchase the
Senior Secured Notes could cause a default under, or require a repurchase of, such Indebtedness, even if the Change of Control
itself does not, due to the financial effect of such repurchase on the Issuer. Finally, the Issuer’s ability to pay cash to the Holders
upon a repurchase may be limited by the Issuer’s then existing financial resources. There can be no assurance that sufficient funds
will be available when necessary to make any required repurchases. See “Risk Factors—Risks Related to the Notes—We may not
have the ability to raise the funds necessary to finance an offer to repurchase the Notes upon the occurrence of certain events
constituting a change of control as required by the Indenture.”
The definition of “Change of Control” includes a disposition, in one or a series of related transactions, of all or
substantially all of the assets of the Issuer and its Restricted Subsidiaries taken as a whole to specified other Persons. Although
there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the
phrase “substantially all” under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to
whether a particular transaction would involve a disposition of “all or substantially all” of the assets of the Issuer and its
Restricted Subsidiaries taken as a whole. As a result, it may be unclear as to whether a Change of Control has occurred and
whether a Holder may require the Issuer to make an offer to repurchase the Senior Secured Notes as described above.
The provisions of the Senior Secured Indenture relating to the Issuer’s obligation to make an offer to repurchase the
Senior Secured Notes as a result of a Change of Control may be waived or modified with the written consent of Holders of a
majority in outstanding principal amount of the Senior Secured Notes.
Certain Covenants
Limitation on Indebtedness
The Issuer will not, and will not permit any of its Restricted Subsidiaries to Incur any Indebtedness (including Acquired
Indebtedness); provided, however, that the Issuer may Incur Indebtedness (including Acquired Indebtedness) if, after giving pro
forma effect to the Incurrence of such Indebtedness (including pro forma application of the proceeds thereof), (1) the Fixed
Charge Coverage Ratio for the Issuer and its Restricted Subsidiaries would have been at least 2.0 to 1.0; and, (2) to the extent that
the Indebtedness is Senior Secured Indebtedness, on the date of such Incurrence the Consolidated Senior Secured Leverage ratio
for the Issuer and its Restricted Subsidiaries would have been no greater than 5.0 to 1.0.
The first paragraph of this covenant will not prohibit the Incurrence of the following Indebtedness (“Permitted Debt”):
(1)
Indebtedness Incurred pursuant to any Credit Facility (including in respect of letters of credit or bankers’
acceptances issued or created thereunder), and any Refinancing Indebtedness in respect thereof and
Guarantees in respect of such Indebtedness in a maximum aggregate principal amount at any time
outstanding not exceeding (i) SEK610.0 million, plus (ii) in the case of any refinancing of any
Indebtedness permitted under this clause (1) or any portion thereof, the aggregate amount of fees,
underwriting discounts, premiums and other costs and expenses Incurred in connection with such
refinancing;
(2)
(a) Guarantees by the Issuer or any Restricted Subsidiary of Indebtedness of the Issuer or any Restricted
Subsidiary, so long as the Incurrence of such Indebtedness is permitted to be Incurred by another provision
of this covenant; provided that, if the Indebtedness being guaranteed is subordinated to or pari passu with
the Senior Secured Notes or a Notes Guarantee, then the guarantee must be subordinated to or pari passu
with the Senior Secured Notes or such Notes Guarantee to the same extent as the Indebtedness being
guaranteed; or
(b) without limiting the covenant described under “—Limitation on Liens,” Indebtedness arising by reason
of any Lien granted by or applicable to such Person securing Indebtedness of the Issuer or any Restricted
Subsidiary so long as the Incurrence of such Indebtedness is permitted under the terms of the Senior
Secured Indenture;
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(3)
(4)
Indebtedness of the Issuer owing to and held by any Restricted Subsidiary or Indebtedness of a Restricted
Subsidiary owing to and held by the Issuer or any Restricted Subsidiary; provided, however, that:
(a)
if the Issuer or a Guarantor is the obligor on any such Indebtedness and the lender is not the
Issuer or a Guarantor, such Indebtedness is unsecured and, to the extent legally permitted (the
Issuer and the Restricted Subsidiaries having completed all procedures required in the
reasonable judgment of directors or officers of the obligee or obligor to protect such Persons
from any penalty or civil or criminal liability in connection with the subordination of such
Indebtedness), expressly subordinated to the prior payment in full in cash of all obligations
with respect to the Senior Secured Notes, in the case of the Issuer, or the applicable Notes
Guarantee, in the case of a Guarantor;
(b)
any subsequent issuance or transfer of Capital Stock or any other event which results in any
such Indebtedness being beneficially held by a Person other than the Issuer or a Restricted
Subsidiary of the Issuer and any sale or other transfer of any such Indebtedness to a Person
other than the Issuer or a Restricted Subsidiary of the Issuer, shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted by this clause (3) by the Issuer or
such Restricted Subsidiary, as the case may be;
(a)
Indebtedness represented by the Senior Secured Notes (other than any Additional Senior
Secured Notes);
(b)
any Indebtedness (other than Indebtedness Incurred under the Revolving Credit Facility or
Indebtedness described in clause (3) of this paragraph) outstanding on the Issue Date after
giving effect to the Refinancing (as described under “Use of Proceeds” in the Offering
Memorandum);
(c)
Refinancing Indebtedness Incurred in respect of any Indebtedness described in clauses (4)(a),
(4)(b), (5) and (13) of this paragraph or Incurred pursuant to the first paragraph of this
covenant, and
(d)
Management Advances;
(5)
Indebtedness of any Person (i) outstanding on the date on which such Person becomes a Restricted
Subsidiary of the Issuer or any Restricted Subsidiary or is merged, consolidated, amalgamated or otherwise
combined with (including pursuant to any acquisition of assets and assumption of related liabilities) the
Issuer or any Restricted Subsidiary or (ii) Incurred to provide all or a portion of the funds utilized to
consummate the transaction or series of related transactions pursuant to which such Person became a
Restricted Subsidiary or was otherwise acquired by the Issuer or a Restricted Subsidiary; provided that,
with respect to this clause (5), at the time of such acquisition or other transaction and after giving pro
forma effect to such acquisition or other transaction and to the related Incurrence of Indebtedness, either
(x) the Issuer would have been able to Incur SEK1.00 of additional Indebtedness pursuant to the first
paragraph of this covenant or (y) the Fixed Charge Coverage Ratio for the Issuer and its Restricted
Subsidiaries would not be less than it was immediately prior to giving effect to such acquisition or other
transaction and to the related Incurred of Indebtedness; provided, further, that, unless the Person Incurring
Indebtedness under this clause (5) (other than Acquired Indebtedness described in sub-clause (i) of such
clause (5)) is the Issuer or a Guarantor, neither the Issuer nor any of its Restricted Subsidiaries (other than
such Person and its Restricted Subsidiaries) will Guarantee any Indebtedness Incurred by such Person
under this clause (5) or any other Indebtedness of such Person or its Subsidiaries;
(6)
Indebtedness under Currency Agreements, Interest Rate Agreements and Commodity Hedging Agreements
not for speculative purposes (as determined in good faith by the Board of Directors or a member of Senior
Management of the Issuer);
(7)
Indebtedness consisting of (A) Capitalized Lease Obligations, mortgage financings, Purchase Money
Obligations or other financings, Incurred for the purpose of financing all or any part of the purchase price
or cost of construction or improvement of property, plant or equipment used in a Similar Business or
(B) Indebtedness otherwise Incurred to finance the purchase, lease, rental or cost of design, construction,
installation or improvement of property (real or personal) or equipment that is used or useful in a Similar
Business, whether through the direct purchase of assets or the Capital Stock of any Person owning such
assets, and any Indebtedness which refinances, replaces or refunds such Indebtedness, in an aggregate
outstanding principal amount which, when taken together with the principal amount of all other
Indebtedness Incurred pursuant to this clause (7) and then outstanding, will not exceed at any time
outstanding the greater of 1.0% of Total Assets or SEK100.0 million; so long as the Indebtedness exists on
the date of such purchase, lease, rental or improvement or is created within 180 days thereafter;
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(8)
Indebtedness in respect of (a) workers’ compensation claims, self-insurance obligations, performance,
indemnity, surety, judgment, appeal, advance payment, customs, VAT or other tax or other guarantees or
other similar bonds, instruments or obligations and completion guarantees and warranties provided by the
Issuer or a Restricted Subsidiary or relating to liabilities, obligations or guarantees Incurred in the ordinary
course of business or in respect of any governmental requirement, (b) letters of credit, bankers’
acceptances, guarantees or other similar instruments or obligations issued or relating to liabilities or
obligations Incurred in the ordinary course of business or in respect of any governmental requirement,
provided, however, that upon the drawing of such letters of credit or other similar instruments, the
obligations are reimbursed within 30 days following such drawing, (c) the financing of insurance premiums
in the ordinary course of business and (d) any customary cash management, cash pooling or netting or
setting off arrangements in the ordinary course of business;
(9)
Indebtedness arising from agreements providing for customary guarantees, indemnification, obligations in
respect of earnouts or other adjustments of purchase price or, in each case, similar obligations, in each case,
Incurred or assumed in connection with the acquisition or disposition of any business or assets or Person or
any Capital Stock of a Subsidiary (other than Guarantees of Indebtedness Incurred by any Person acquiring
or disposing of such business or assets or such Subsidiary for the purpose of financing such acquisition or
disposition); provided that the maximum liability of the Issuer and its Restricted Subsidiaries in respect of
all such Indebtedness shall at no time exceed the gross proceeds, including the fair market value of noncash proceeds (measured at the time received and without giving effect to any subsequent changes in
value), actually received by the Issuer and its Restricted Subsidiaries in connection with such disposition;
(10)
(a) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or
similar instrument drawn against insufficient funds in the ordinary course of business; provided, however,
that such Indebtedness is extinguished within 30 Business Days of Incurrence;
(b)
customer deposits and advance payments received in the ordinary course of business from
customers for goods or services purchased in the ordinary course of business;
(c)
Indebtedness owed on a short-term basis of no longer than 30 days to banks and other financial
institutions Incurred in the ordinary course of business of the Issuer and its Restricted
Subsidiaries with such banks or financial institutions that arises in connection with ordinary
banking arrangements to manage cash balances of the Issuer and its Restricted Subsidiaries;
and
(d)
Indebtedness Incurred by a Restricted Subsidiary in connection with bankers acceptances,
discounted bills of exchange or the discounting or factoring of receivables for credit
management of bad debt purposes, in each case Incurred or undertaken in the ordinary course
of business;
(11)
Indebtedness in an aggregate outstanding principal amount which, when taken together with any
Refinancing Indebtedness in respect thereof and the principal amount of all other Indebtedness Incurred
pursuant to this clause (11) and then outstanding, will not exceed the greater of 2.0% of Total Assets or
SEK200.0 million;
(12)
Indebtedness Incurred by a Receivables Subsidiary in a Qualified Receivables Financing; and
(13)
Indebtedness of the Issuer and the Guarantors in an aggregate outstanding principal amount which, when
taken together with any Refinancing Indebtedness in respect thereof and the principal amount of all other
Indebtedness Incurred pursuant to this clause (13) and then outstanding, will not exceed 100% of the Net
Cash Proceeds received by the Issuer from the issuance or sale (other than to a Restricted Subsidiary) of its
Subordinated Shareholder Funding or Capital Stock (other than Disqualified Stock, Designated Preference
Shares or an Excluded Contribution) or otherwise contributed to the equity (other than through the issuance
of Disqualified Stock, Designated Preference Shares or an Excluded Contribution) of the Issuer, in each
case, subsequent to the Issue Date; provided, however, that (i) any such Net Cash Proceeds that are so
received or contributed shall be excluded for purposes of making Restricted Payments under the first
paragraph and clauses (1), (6) and (10) of the third paragraph of the covenant described below under “—
Limitation on Restricted Payments” to the extent the Issuer and its Restricted Subsidiaries Incur
Indebtedness in reliance thereon and (ii) any Net Cash Proceeds that are so received or contributed shall be
excluded for purposes of Incurring Indebtedness pursuant to this clause (13) to the extent the Issuer or any
of its Restricted Subsidiaries makes a Restricted Payment under the first paragraph and clauses (1), (6) and
(10) of the third paragraph of the covenant described under “—Limitation on Restricted Payments” in
reliance thereon.
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For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness
Incurred pursuant to and in compliance with, this covenant:
(1)
in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in
the first and second paragraphs of this covenant, the Issuer, in its sole discretion, will classify, and may
from time to time reclassify, such item of Indebtedness and only be required to include the amount and type
of such Indebtedness in one of the clauses of the second paragraph or the first paragraph of this covenant;
(2)
all Indebtedness outstanding on the Issue Date under the Revolving Credit Facility shall be deemed initially
Incurred under clause (1) of the second paragraph of this covenant and not the first paragraph or clause
(4)(b) of the second paragraph of this covenant, and may not be reclassified;
(3)
Guarantees of, or obligations in respect of letters of credit, bankers’ acceptances or other similar
instruments relating to, or Liens securing, Indebtedness that is otherwise included in the determination of a
particular amount of Indebtedness shall not be included;
(4)
if obligations in respect of letters of credit, bankers’ acceptances or other similar instruments are Incurred
pursuant to any Credit Facility and are being treated as Incurred pursuant to clause (1), (7), (11) or (13) of
the second paragraph above or the first paragraph above and the letters of credit, bankers’ acceptances or
other similar instruments relate to other Indebtedness, then such other Indebtedness shall not be included;
(5)
the principal amount of any Disqualified Stock of the Issuer or a Restricted Subsidiary, or Preferred Stock
of a Restricted Subsidiary, will be equal to the greater of the maximum mandatory redemption or
repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation
preference thereof;
(6)
Indebtedness permitted by this covenant need not be permitted solely by reference to one provision
permitting such Indebtedness but may be permitted in part by one such provision and in part by one or
more other provisions of this covenant permitting such Indebtedness; and
(7)
the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to
the amount of the liability in respect thereof determined on the basis of IFRS.
Accrual of interest, accrual of dividends, the accretion of accreted value, the accretion or amortization of original issue
discount, the payment of interest in the form of additional Indebtedness, the payment of dividends in the form of additional shares
of Preferred Stock or Disqualified Stock or the reclassification of commitments or obligations not treated as Indebtedness due to a
change in IFRS will not be deemed to be an Incurrence of Indebtedness for purposes of the covenant described under this “—
Limitation on Indebtedness.” The amount of any Indebtedness outstanding as of any date shall be (a) the accreted value thereof in
the case of any Indebtedness issued with original issue discount and (b) the principal amount, or liquidation preference thereof, in
the case of any other Indebtedness.
If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary, any Indebtedness of such Subsidiary shall be
deemed to be Incurred by a Restricted Subsidiary of the Issuer as of such date (and, if such Indebtedness is not permitted to be
Incurred as of such date under the covenant described under this “—Limitation on Indebtedness,” the Issuer shall be in Default of
this covenant).
For purposes of determining compliance with any SEK-denominated restriction on the Incurrence of Indebtedness, the
SEK Equivalent of the principal amount of Indebtedness denominated in another currency shall be calculated based on the
relevant currency exchange rate in effect on the date such Indebtedness was Incurred, in the case of term Indebtedness, or first
committed or first Incurred (whichever yields the lower SEK Equivalent), in the case of Indebtedness Incurred under a revolving
credit facility; provided that (a) if such Indebtedness is Incurred to refinance other Indebtedness denominated in a currency other
than SEK, and such refinancing would cause the applicable SEK-denominated restriction to be exceeded if calculated at the
relevant currency exchange rate in effect on the date of such refinancing, such SEK-denominated restriction shall be deemed not
to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the amount set forth in
clause (2) of the definition of Refinancing Indebtedness; (b) the SEK Equivalent of the principal amount of any such Indebtedness
outstanding on the Issue Date shall be calculated based on the relevant currency exchange rate in effect on the Issue Date; and
(c) if any such Indebtedness that is denominated in a different currency is subject to a Currency Agreement (with respect to the
SEK) covering principal amounts payable on such Indebtedness, the amount of such Indebtedness expressed in SEK will be
adjusted to take into account the effect of such agreement.
Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Issuer or a
Restricted Subsidiary may Incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in
the exchange rate of currencies. The principal amount of any Indebtedness Incurred to refinance other Indebtedness, if Incurred in
a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to
the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.
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Neither the Issuer nor any Guarantor will Incur any Indebtedness (including Permitted Debt) that is contractually
subordinated in right of payment to any other Indebtedness of the Issuer or any Guarantor unless such Indebtedness is also
contractually subordinated in right of payment to the Senior Secured Notes and the applicable Notes Guarantee, if any, on
substantially identical terms; provided, however, that no Indebtedness will be deemed to be contractually subordinated in right of
payment to any other Indebtedness of the Issuer or any Guarantor solely by virtue of being unsecured or by virtue of being secured
with different collateral or by virtue of being secured on a junior priority basis or by virtue of the application of waterfall or other
payment ordering provisions affecting different tranches of Indebtedness.
No Indebtedness will be deemed to be contractually subordinated in right of payment to any other Indebtedness of the
Issuer or any Guarantor solely by virtue of being unsecured or by virtue of being secured on a first or junior Lien basis.
Limitation on Restricted Payments
The Issuer will not, and will not permit any of its Restricted Subsidiaries, directly or indirectly, to:
(1)
declare or pay any dividend or make any other payment or distribution on or in respect of the Issuer’s or
any Restricted Subsidiary’s Capital Stock (including any payment in connection with any merger or
consolidation involving the Issuer or any of its Restricted Subsidiaries) except:
(a)
dividends or distributions payable in Capital Stock of the Issuer (other than Disqualified Stock)
or in options, warrants or other rights to purchase such Capital Stock of the Issuer or in
Subordinated Shareholder Funding; and
(b)
dividends or distributions payable to the Issuer or a Restricted Subsidiary (and, in the case of
any such Restricted Subsidiary making such dividend or distribution, to holders of its Capital
Stock other than the Issuer or another Restricted Subsidiary on no more than a pro rata basis,
measured by value);
(2)
purchase, redeem, retire or otherwise acquire for value any Capital Stock of the Issuer or any direct or
indirect Parent of the Issuer held by Persons other than the Issuer or a Restricted Subsidiary of the Issuer
(other than in exchange for Capital Stock of the Issuer (other than Disqualified Stock));
(3)
make any principal payment on, or purchase, repurchase, redeem, defease or otherwise acquire or retire for
value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any
Subordinated Indebtedness (other than (a) any such payment, purchase, repurchase, redemption, defeasance
or other acquisition or retirement or in anticipation of satisfying a sinking fund obligation, principal
installment or final maturity, in each case, due within one year of the date of payment, purchase,
repurchase, redemption, defeasance or other acquisition or retirement and (b) any Indebtedness Incurred
pursuant to clause (3) of the second paragraph of the covenant described under “—Limitation on
Indebtedness”);
(4)
make any payment (whether of principal, interest or other amounts) on, or purchase, repurchase, redeem,
defease or otherwise acquire or retire for value any Subordinated Shareholder Funding (other than any
payment of interest thereon in the form of additional Subordinated Shareholder Funding); or
(5)
make any Restricted Investment in any Person,
(each such dividend, distribution, payment, purchase, redemption, repurchase, defeasance, other acquisition, retirement
or Restricted Investment referred to in clauses (1) through (5) is referred to herein as a “Restricted Payment”), if at the time the
Issuer or such Restricted Subsidiary makes such Restricted Payment:
(a)
a Default shall have occurred and be continuing (or would result immediately thereafter
therefrom);
(b)
the Issuer is not able to Incur an additional SEK1.00 of Indebtedness pursuant to the first
paragraph of the covenant described under “—Limitation on Indebtedness” after giving effect,
on a pro forma basis, to such Restricted Payment; or
(c)
the aggregate amount of such Restricted Payment and all other Restricted Payments made
subsequent to the Issue Date (and not returned or rescinded) (including Permitted Payments
permitted below by clauses (5), (9), (10), (11), (15), (17) or (18) of the second succeeding
paragraph, but excluding all other Restricted Payments permitted by the second succeeding
paragraph) would exceed the sum of (without duplication):
(i)
50% of Consolidated Net Income for the period (treated as one accounting period)
from the first day of the fiscal quarter commencing immediately prior to the Issue
Date to the end of the most recent fiscal quarter ending prior to the date of such
Restricted Payment for which internal consolidated financial statements of the
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Issuer are available (or, in the case such Consolidated Net Income is a deficit,
minus 100% of such deficit);
(ii)
100% of the aggregate Net Cash Proceeds, and the fair market value (as
determined in accordance with the next succeeding paragraph) of property or
assets or marketable securities, received by the Issuer from the issue or sale of its
Capital Stock (other than Disqualified Stock or Designated Preference Shares) or
Subordinated Shareholder Funding subsequent to the Issue Date or otherwise
contributed to the equity (other than through the issuance of Disqualified Stock or
Designated Preference Shares) of the Issuer subsequent to the Issue Date (other
than (v) Subordinated Shareholder Funding or Capital Stock in each case sold to a
Subsidiary of the Issuer, (w) Net Cash Proceeds or property or assets or marketable
securities received from an issuance or sale of such Capital Stock to a Restricted
Subsidiary or an employee stock ownership plan or trust established by the Issuer
or any Subsidiary of the Issuer for the benefit of its employees to the extent funded
by the Issuer or any Restricted Subsidiary, (x) Net Cash Proceeds or property or
assets or marketable securities to the extent that any Restricted Payment has been
made from such proceeds in reliance on clauses (1) or (6) of the second succeeding
paragraph, and (y) Excluded Contributions;
(iii)
assets or marketable securities, received by the Issuer or any Restricted Subsidiary
from the issuance or sale (other than to the Issuer or a Restricted Subsidiary of the
Issuer or an employee stock ownership plan or trust established by the Issuer or
any Subsidiary of the Issuer for the benefit of its employees to the extent funded by
the Issuer or any Restricted Subsidiary) by the Issuer or any Restricted Subsidiary
subsequent to the Issue Date of any Indebtedness that has been converted into or
exchanged for Capital Stock of the Issuer (other than Disqualified Stock or
Designated Preference Shares) or Subordinated Shareholder Funding (plus the
amount of any cash, and the fair market value (as determined in accordance with
the next succeeding paragraph) of property or assets or marketable securities
received by the Issuer or any Restricted Subsidiary upon such conversion or
exchange) but excluding (w) Disqualified Stock or Indebtedness issued or sold to a
Subsidiary of the Issuer, (x) Net Cash Proceeds to the extent that any Restricted
Payment has been made from such proceeds in reliance on clauses (1) or (6) of the
second succeeding paragraph, and (y) Excluded Contributions; and
(iv)
assets or marketable securities, received by the Issuer or any Restricted Subsidiary
(other than to the Issuer or a Restricted Subsidiary of the Issuer or an employee
stock ownership plan or trust established by the Issuer or any Subsidiary of the
Issuer for the benefit of its employees to the extent funded by the Issuer or any
Restricted Subsidiary) from the disposition of any Unrestricted Subsidiary or the
disposition or repayment of any Investment constituting a Restricted Payment
made after the Issue Date;
(v)
in the case of the designation of an Unrestricted Subsidiary as a Restricted
Subsidiary or all of the assets of such Unrestricted Subsidiary are transferred to the
Issuer or a Restricted Subsidiary, or the Unrestricted Subsidiary is merged or
consolidated into the Issuer or a Restricted Subsidiary, 100% of such amount
received in cash and the fair market value of any property or marketable securities
received by the Issuer or any Restricted Subsidiary in respect of such
redesignation, merger, consolidation or transfer of assets, excluding the amount of
any Investment in such Unrestricted Subsidiary that constituted a Permitted
Investment made pursuant to clause (11) of the definition of “Permitted
Investment”; and
(vi)
100% of any dividends or distributions received by the Issuer or a Restricted
Subsidiary after the Issue Date from an Unrestricted Subsidiary,
provided, however, that no amount will be included in Consolidated Net Income for purposes
of the preceding clause (i) to the extent that it is (at the Issuer’s option) included in any of the
foregoing clauses (iv), (v) or (vi); provided, further, that upon a Specified Change of Control
Event, all amounts calculated pursuant to this clause (c) shall be reset to zero and all references
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to the Issue Date in this clause (c) shall thereafter refer to the date of such Specified Change of
Control Event.
The fair market value of property or assets other than cash covered by the preceding sentence shall be the fair market
value thereof as determined in good faith by an officer of the Issuer, or, if such fair market value exceeds SEK100.0 million, by
the Board of Directors.
The foregoing provisions will not prohibit any of the following (collectively, “Permitted Payments”):
(1)
any Restricted Payment made by exchange (including any such exchange pursuant to the exercise of a
conversion right or privilege in connection with which cash is paid in lieu of the issuance of fractional
shares) for, or out of the proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Issuer) of, Capital Stock of the Issuer (other than Disqualified Stock or Designated Preference Shares),
Subordinated Shareholder Funding or a substantially concurrent contribution to the equity (other than as
through the issuance of Disqualified Stock or Designated Preference Shares or through an Excluded
Contribution) of the Issuer; provided, however, that to the extent so applied, the Net Cash Proceeds, or fair
market value (as determined in accordance with the preceding sentence) of property or assets or of
marketable securities, from such sale of Capital Stock or Subordinated Shareholder Funding or such
contribution will be excluded from clause (c)(ii) of the preceding paragraph;
(2)
any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated
Indebtedness made by exchange for, or out of the proceeds of the substantially concurrent sale of,
Refinancing Indebtedness permitted to be Incurred pursuant to the covenant described under “—Limitation
on Indebtedness” above;
(3)
any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Preferred Stock of
the Issuer or a Restricted Subsidiary made by exchange for or out of the proceeds of the substantially
concurrent sale of Preferred Stock of the Issuer or a Restricted Subsidiary, as the case may be, that, in each
case, is permitted to be Incurred pursuant to the covenant described under “—Limitation on Indebtedness”
above, and that in each case, constitutes Refinancing Indebtedness;
(4)
Indebtedness:
(a)
from Net Available Cash to the extent permitted under “—Limitation on Sales of Assets and
Subsidiary Stock,” but only (i) if the Issuer shall have first complied with the terms described
under “—Limitation on Sales of Assets and Subsidiary Stock” and purchased all Senior Secured
Notes tendered pursuant to any offer to repurchase all the Senior Secured Notes required
thereby, prior to purchasing, repurchasing, redeeming, defeasing or otherwise acquiring or
retiring such Subordinated Indebtedness and (ii) at a purchase price not greater than 100% of
the principal amount of such Subordinated Indebtedness plus accrued and unpaid interest;
(b)
following the occurrence of a Change of Control (or other similar event described therein as a
“change of control”), but only (i) if the Issuer shall have first complied with the terms
described under “—Change of Control” and purchased all Senior Secured Notes tendered
pursuant to the offer to repurchase all the Senior Secured Notes required thereby, prior to
purchasing, repurchasing, redeeming, defeasing or otherwise acquiring or retiring such
Subordinated Indebtedness and (ii) at a purchase price not greater than 101% of the principal
amount of such Subordinated Indebtedness plus accrued and unpaid interest; or
(c)
(i) consisting of Acquired Indebtedness (other than Indebtedness Incurred (A) to provide all or
any portion of the funds utilized to consummate the transaction or series of related transactions
pursuant to which such Person became a Restricted Subsidiary or was otherwise acquired by
the Issuer or a Restricted Subsidiary or (B) otherwise in connection with or contemplation of
such transaction or series of transactions) and (ii) at a purchase price not greater than 100% of
the principal amount of such Subordinated Indebtedness plus accrued and unpaid interest and
any premium required by the terms of such Acquired Indebtedness;
(5)
any dividends paid within 60 days after the date of declaration if at such date of declaration such dividend
would have complied with this covenant;
(6)
the purchase, repurchase, redemption, defeasance or other acquisition, cancellation or retirement for value
of Capital Stock of the Issuer, any Restricted Subsidiary or any Parent (including any options, warrants or
other rights in respect thereof) and loans, advances, dividends or distributions by the Issuer to any Parent to
permit any Parent to purchase, repurchase, redeem, defease or otherwise acquire, cancel or retire for value
Capital Stock of the Issuer, any Restricted Subsidiary or any Parent (including any options, warrants or
other rights in respect thereof), or payments to purchase, repurchase, redeem, defease or otherwise acquire,
cancel or retire for value Capital Stock of the Issuer, any Restricted Subsidiary or any Parent (including any
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options, warrants or other rights in respect thereof), in each case from Management Investors; provided that
such payments, loans, advances, dividends or distributions do not exceed an amount (net of repayments of
any such loans or advances) equal to (1) SEK50.0 million, plus SEK25.0 million multiplied by the number
of calendar years that have commenced since the Issue Date, plus (2) the Net Cash Proceeds received by
the Issuer or its Restricted Subsidiaries since the Issue Date (including through receipt of proceeds from the
issuance or sale of its Capital Stock or Subordinated Shareholder Funding to a Parent) from, or as a
contribution to the equity (in each case under this clause (6), other than through the issuance of
Disqualified Stock or Designated Preference Shares) of the Issuer from, the issuance or sale to
Management Investors of Capital Stock (including any options, warrants or other rights in respect thereof),
to the extent such Net Cash Proceeds are not included in any calculation under clause (c)(ii) of the first
paragraph describing this covenant and are not Excluded Contributions;
(7)
the declaration and payment of dividends to holders of any class or series of Disqualified Stock, or of any
Preferred Stock of a Restricted Subsidiary, Incurred in accordance with the terms of the covenant described
under “—Limitation on Indebtedness”;
(8)
purchases, repurchases, redemptions, defeasances or other acquisitions or retirements of Capital Stock
deemed to occur upon the exercise of stock options, warrants or other rights in respect thereof if such
Capital Stock represents a portion of the exercise price thereof;
(9)
dividends, loans, advances or distributions to any Parent or other payments by the Issuer or any Restricted
Subsidiary in amounts equal to (without duplication):
(a)
the amounts required for any Parent, without duplication, to pay any Parent Expenses or any
Related Taxes; or
(b)
amounts constituting or to be used for purposes of making payments of fees and expenses
Incurred (i) in connection with the Refinancing or disclosed in the Offering Memorandum or
(ii) to the extent specified in clauses (2), (3), (5), (7) and (11) of the second paragraph under
“—Limitation on Affiliate Transactions”;
(10)
so long as no Default or Event of Default has occurred and is continuing (or would result therefrom), the
declaration and payment by the Issuer of, or loans, advances, dividends or distributions to any Parent to
pay, dividends on the common stock or common equity interests of the Issuer or any Parent following a
Public Offering of such common stock or common equity interests, in an amount not to exceed in any fiscal
year the greater of (a) 6% of the Net Cash Proceeds received by the Issuer from such Public Offering or
contributed to the equity (other than through the issuance of Disqualified Stock or Designated Preference
Shares or through Excluded Contributions) of the Issuer or contributed as Subordinated Shareholder
Funding to the Issuer and (b) following the Initial Public Offering, an amount equal to the greater of (i) the
greater of (A) 7% of the Market Capitalization and (B) 7% of the IPO Market Capitalization; provided that
in the case of this clause (i) after giving pro forma effect to such loans, advances, dividends or
distributions, the Consolidated Leverage Ratio shall be equal to or less than 3.25 to 1.0 and (ii) the greater
of (A) 5% of the Market Capitalization and (B) 5% of the IPO Market Capitalization; provided that in the
case of this clause (ii) after giving pro forma effect to such loans, advances, dividends and distributions, the
Consolidated Leverage Ratio shall be equal to or less than 3.5 to 1.0;
(11)
so long as no Default or Event of Default has occurred and is continuing (or would result from), Restricted
Payments in an aggregate amount outstanding at any time not to exceed the greater of SEK125.0 million
and 1.3% of Total Assets;
(12)
payments by the Issuer, or loans, advances, dividends or distributions to any Parent to make payments, to
holders of Capital Stock of the Issuer or any Parent in lieu of the issuance of fractional shares of such
Capital Stock, provided, however, that any such payment, loan, advance, dividend or distribution shall not
be for the purpose of evading any limitation of this covenant or otherwise to facilitate any dividend or other
return of capital to the holders of such Capital Stock (as determined in good faith by the Board of Directors
or a member of Senior Management of the Issuer);
(13)
Restricted Payments in an aggregate amount outstanding at any time not to exceed the aggregate cash
amount of Excluded Contributions, or consisting of non-cash Excluded Contributions, or Investments in
exchange for or using as consideration Investments previously made under this clause (13);
(14)
payment of any Receivables Fees and purchases of Receivables Assets pursuant to a Receivables
Repurchase Obligation in connection with a Qualified Receivables Financing;
(15)
(i) the declaration and payment of dividends to holders of any class or series of Designated Preference
Shares of the Issuer issued after the Issue Date; and (ii) the declaration and payment of dividends to any
Parent or any Affiliate thereof, the proceeds of which will be used to fund the payment of dividends to
holders of any class or series of Designated Preference Shares of such Parent or Affiliate issued after the
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Issue Date; provided that, in the case of clauses (i) and (ii), the amount of all dividends declared or paid
pursuant to this clause (15) shall not exceed the Net Cash Proceeds received by the Issuer or the aggregate
amount contributed in cash to the equity (other than through the issuance of Disqualified Stock or an
Excluded Contribution or, in the case of Designated Preference Shares by such Parent or Affiliate, the
issuance of Designated Preference Shares) of the Issuer or contributed as Subordinated Shareholder
Funding to the Issuer, as applicable, from the issuance or sale of such Designated Preference Shares;
(16)
dividends or other distributions of Capital Stock, Indebtedness or other securities of Unrestricted
Subsidiaries;
(17)
so long as no Default or Event of Default has occurred and is continuing (or would result therefrom), any
dividend, distribution, loan or other payment to any Parent; provided that, on the date of any such dividend,
distribution, loan or other payment, the Consolidated Leverage Ratio for the Issuer and its Restricted
Subsidiaries does not exceed 2.75 to 1.0 on a pro forma basis after giving effect thereto;
(18)
Indebtedness out of the proceeds of the substantially concurrent Incurrence of Indebtedness pursuant to the
first paragraph of the covenant described under “—Limitation on Indebtedness” secured pursuant to
clause (b) of the definition of “Permitted Collateral Liens,” provided that the Consolidated Senior Secured
Leverage Ratio for the Issuer and its Restricted Subsidiaries, on the date of Incurrence of such secured
Indebtedness, does not exceed 4.5 to 1.0 on a pro forma basis after giving effect thereto and to the
purchase, repurchase, redemption, defeasance or other acquisition or retirement of the Subordinated
Indebtedness;
(19)
so long as no Default or Event of Default has occurred and is continuing (or would result therefrom), any
dividend, distribution, loan or other payment to any Parent in an aggregate amount not to exceed
SEK 500 million; provided that, on the date of any such dividend, distribution, loan or other payment, the
Consolidated Senior Secured Leverage Ratio for the Issuer and its Restricted Subsidiaries does not exceed
4.5 to 1.0 on a pro forma basis after giving effect thereto, and provided, further, that such dividend,
distribution, loan or other payment is declared or made on or prior the date that is 18 months after the Issue
Date; and
(20)
any dividends, distributions or other payments to any Parent or Unrestricted Subsidiary to the extent that
such dividends, distributions or payments are made in order to carry out group contributions under Chapter
35 of the Swedish Income Tax Act and in accordance with the Swedish Companies Act, sections 10-2 to
10-4 of the Norwegian Tax Act or any other similar laws or regulations in other jurisdictions, provided that
where such dividends, distributions or payments are made or become due to a Parent or Unrestricted
Subsidiary, the Parent or Unrestricted Subsidiary (as applicable) shall agree to contribute to the Issuer or
the relevant Restricted Subsidiary (as applicable) an amount equal to such dividend, distribution or
payment by way of direct or indirect equity subscription, contribution to share premium or unconditional
shareholder contribution or group contribution without tax effect (as applicable).
The amount of all Restricted Payments (other than cash) shall be the fair market value on the date of such Restricted
Payment of the asset(s) or securities proposed to be paid, transferred or issued by the Issuer or such Restricted Subsidiary, as the
case may be, pursuant to such Restricted Payment. The fair market value of any cash Restricted Payment shall be its face amount,
and the fair market value of any non-cash Restricted Payment shall be determined conclusively by the Board of Directors of the
Issuer acting in good faith.
Limitation on Liens
The Issuer will not, and will not permit any Restricted Subsidiary to, directly or indirectly, create, Incur or suffer to
exist any Lien upon any of its property or assets (including Capital Stock of a Restricted Subsidiary of the Issuer), whether owned
on the Issue Date or acquired after that date, or any interest therein or any income or profits therefrom, which Lien is securing any
Indebtedness (such Lien, the “Initial Lien”), except (a) in the case of any property or asset that does not constitute Collateral,
(1) Permitted Liens or (2) Liens on property or assets that are not Permitted Liens if the Senior Secured Notes and the Senior
Secured Indenture are directly secured equally and ratably with, or prior to, in the case of Liens with respect to Subordinated
Indebtedness, the Indebtedness secured by such Initial Lien for so long as such Indebtedness is so secured, and (b) in the case of
any property or asset that constitutes Collateral, Permitted Collateral Liens.
Any such Lien created in favor of the Senior Secured Notes will be automatically and unconditionally released and
discharged upon (i) the release and discharge of the Initial Lien to which it relates, and (ii) otherwise as set forth under “—
Security—Release of Liens.”
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Limitation on Restrictions on Distributions from Restricted Subsidiaries
The Issuer will not, and will not permit any Restricted Subsidiary to, create or otherwise cause or permit to exist or
become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary to:
(A)
pay dividends or make any other distributions in cash or otherwise on its Capital Stock or pay any
Indebtedness or other obligations owed to the Issuer or any Restricted Subsidiary, or with respect to any
other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Issuer or
any other Restricted Subsidiary;
(B)
make any loans or advances to the Issuer or any Restricted Subsidiary; or
(C)
sell, lease or transfer any of its property or assets to the Issuer or any Restricted Subsidiary,
provided that (x) the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to
dividends or liquidating distributions being paid on common stock and (y) the subordination of (including the application of any
standstill requirements to) loans or advances made to the Issuer or any Restricted Subsidiary to other Indebtedness Incurred by the
Issuer or any Restricted Subsidiary shall not be deemed to constitute such an encumbrance or restriction.
The provisions of the preceding paragraph will not prohibit:
(1)
any encumbrance or restriction pursuant to (a) any Credit Facility (including the Revolving Credit Facility)
or (b) any other agreement or instrument, in each case, in effect at or entered into on the Issue Date;
(2)
any encumbrance or restriction pursuant to an agreement or instrument of a Person or relating to any
Capital Stock or Indebtedness of a Person, entered into on or before the date on which such Person was
acquired by or merged, consolidated or otherwise combined with or into the Issuer or any Restricted
Subsidiary, or on which such agreement or instrument is assumed by the Issuer or any Restricted
Subsidiary in connection with an acquisition of assets (other than Capital Stock or Indebtedness Incurred as
consideration in, or to provide all or any portion of the funds utilized to consummate, the transaction or
series of related transactions pursuant to which such Person became a Restricted Subsidiary or was
acquired by the Issuer or was merged, consolidated or otherwise combined with or into the Issuer or any
Restricted Subsidiary entered into or in connection with such transaction) and outstanding on such date;
provided that, for the purposes of this clause (2), if another Person is the Successor Company (as defined
under “—Merger and Consolidation”), any Subsidiary thereof or agreement or instrument of such Person
or any such Subsidiary shall be deemed acquired or assumed by the Issuer or any Restricted Subsidiary
when such Person becomes the Successor Company;
(3)
any encumbrance or restriction pursuant to an agreement or instrument effecting a refinancing of
Indebtedness Incurred pursuant to, or that otherwise refinances, an agreement or instrument referred to in
clause (1) or (2) of this paragraph or this clause (3) (an “Initial Agreement”) or contained in any
amendment, supplement or other modification to an agreement referred to in clause (1) or (2) of this
paragraph or this clause (3); provided, however, that the encumbrances and restrictions with respect to such
Restricted Subsidiary contained in any such agreement or instrument are no less favorable in any material
respect to the Holders taken as a whole than the encumbrances and restrictions contained in the Initial
Agreement or Initial Agreements to which such refinancing or amendment, supplement or other
modification relates (as determined in good faith by the Board of Directors or a member of Senior
Management of the Issuer);
(4)
any encumbrance or restriction:
(5)
(a)
that restricts in a customary manner the subletting, assignment or transfer of any property or
asset that is subject to a lease, license or similar contract, or the assignment or transfer of any
lease, license or other contract;
(b)
contained in mortgages, charges, pledges or other security agreements permitted under the
Senior Secured Indenture or securing Indebtedness of the Issuer or a Restricted Subsidiary
permitted under the Senior Secured Indenture to the extent such encumbrances or restrictions
restrict the transfer of the property or assets subject to such mortgages, charges, pledges or
other security agreements; or
(c)
pursuant to customary provisions restricting dispositions of real property interests set forth in
any reciprocal easement agreements of the Issuer or any Restricted Subsidiary;
any encumbrance or restriction pursuant to Purchase Money Obligations and Capitalized Lease Obligations
permitted under the Senior Secured Indenture, in each case, that impose encumbrances or restrictions on
the property so acquired in the nature of clause (C) of the preceding paragraph, or any encumbrance or
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restriction pursuant to a joint venture agreement that imposes restrictions on the distribution or transfer of
the assets or Capital Stock of the joint venture;
(6)
any encumbrance or restriction with respect to a Restricted Subsidiary (or any of its property or assets)
imposed pursuant to an agreement entered into for the direct or indirect sale or disposition to a Person of all
or substantially all the Capital Stock or assets of such Restricted Subsidiary (or the property or assets that
are subject to such restriction) pending the closing of such sale or disposition;
(7)
customary provisions in leases, licenses, joint venture agreements and other similar agreements and
instruments entered into in the ordinary course of business;
(8)
encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule,
regulation or order, or required by any regulatory authority;
(9)
any encumbrance or restriction on cash or other deposits or net worth imposed by customers under
agreements entered into in the ordinary course of business;
(10)
any encumbrance or restriction pursuant to Currency Agreements, Interest Rate Agreements or Commodity
Hedging Agreements;
(11)
any encumbrance or restriction arising pursuant to an agreement or instrument (a) relating to any
Indebtedness permitted to be Incurred subsequent to the Issue Date pursuant to the provisions of the
covenant described under “—Limitation on Indebtedness” if the encumbrances and restrictions contained in
any such agreement or instrument taken as a whole are not materially less favorable to the Holders of the
Senior Secured Notes than (i) the encumbrances and restrictions contained in the Revolving Credit Facility,
together with the security documents associated therewith, and the Intercreditor Agreement, in each case,
as in effect on the Issue Date or (ii) as is customary in comparable financings (as determined in good faith
by the Board of Directors or a member of Senior Management of the Issuer) or (b) constituting an
Additional Intercreditor Agreement;
(12)
restrictions effected in connection with a Qualified Receivables Financing that, in the good faith
determination of the Board of Directors or a member of Senior Management of the Issuer, are necessary or
advisable to effect such Qualified Receivables Financing; or
(13)
any encumbrance or restriction existing by reason of any lien permitted under “—Limitation on Liens.”
Limitation on Sales of Assets and Subsidiary Stock
The Issuer will not, and will not permit any Restricted Subsidiary to, consummate any Asset Disposition unless:
(1)
the consideration the Issuer or such Restricted Subsidiary receives for such Asset Disposition is not less
than the fair market value of the assets sold (as determined by the Issuer’s Board of Directors); and
(2)
at least 75% of the consideration the Issuer or such Restricted Subsidiary receives in respect of such Asset
Disposition consists of:
(i)
cash (including any Net Cash Proceeds received from the conversion within 180 days of such
Asset Disposition of securities, notes or other obligations received in consideration of such
Asset Disposition);
(ii)
Cash Equivalents;
(iii)
the assumption by the purchaser of (x) any liabilities recorded on the Issuer’s or such
Restricted Subsidiary’s balance sheet or the notes thereto (or, if Incurred since the date of the
latest balance sheet, that would be recorded on the next balance sheet) (other than Subordinated
Indebtedness), as a result of which neither the Issuer nor any of the Restricted Subsidiaries
remains obligated in respect of such liabilities or (y) Indebtedness of a Restricted Subsidiary
that is no longer a Restricted Subsidiary as a result of such Asset Disposition, if the Issuer and
each other Restricted Subsidiary is released from any guarantee of such Indebtedness as a
result of such Asset Disposition;
(iv)
Replacement Assets;
(v)
any Capital Stock or assets of the kind referred to in clause (4) or (6) in the third paragraph of
this covenant;
(vi)
consideration consisting of Indebtedness of the Issuer or any Guarantor received from Persons
who are not the Issuer or any Restricted Subsidiary, but only to the extent that such
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Indebtedness (i) has been extinguished by the Issuer or the applicable Guarantor, and (ii) is not
Subordinated Indebtedness of the Issuer or such Guarantor;
(vii)
any Designated Non-Cash Consideration received by the Issuer or any Restricted Subsidiary,
having an aggregate fair market value, taken together with all other Designated Non-Cash
Consideration received pursuant to this covenant that is at any one time outstanding, not to
exceed the greater of 0.8% of Total Assets and SEK75.0 million (with the fair market value of
each issue of Designated Non-Cash Consideration being measured at the time received and
without giving effect to subsequent changes in value); or
(viii)
a combination of the consideration specified in clauses (i) through (vii) of this paragraph (2).
If the Issuer or any Restricted Subsidiary consummates an Asset Disposition, the Net Cash Proceeds of the Asset
Disposition, within 365 days of the later of (i) the date of the consummation of such Asset Disposition and (ii) the receipt of such
Net Cash Proceeds, may be used by the Issuer or such Restricted Subsidiary to:
(1)
(i) prepay, repay, purchase or redeem any Indebtedness Incurred under clause (1) of the second paragraph
of the covenant described under “—Limitation on Indebtedness” or any Refinancing Indebtedness in
respect thereof; provided, however, that, in connection with any prepayment, repayment, purchase or
redemption of Indebtedness pursuant to this clause (1), the Issuer or such Restricted Subsidiary will retire
such Indebtedness and will cause the related commitment (if any) to be permanently reduced in an amount
equal to the principal amount so prepaid, repaid, purchase or redeemed; (ii) unless included in the
preceding clause (1)(i), prepay, repay, purchase or redeem Senior Secured Notes or Indebtedness (other
than Subordinated Indebtedness or Indebtedness owed to the Issuer or any Restricted Subsidiary) that is
secured by a Lien on the Collateral on a pari passu basis with the Senior Secured Notes at a price of no
more than 100% of the principal amount of the Senior Secured Notes or such applicable Indebtedness, plus
accrued and unpaid interest and Additional Amounts, if any, to the date of such prepayment, repayment,
purchase or redemption; or (iii) prepay, repay, purchase or redeem any Indebtedness of a Restricted
Subsidiary of the Issuer that is not a Guarantor or any Indebtedness that is secured on assets which do not
constitute Collateral (in each case other than Subordinated Indebtedness of the Issuer or a Guarantor or
Indebtedness owed to the Issuer or any Restricted Subsidiary); provided that the Issuer shall prepay, repay,
purchase or redeem Indebtedness (other than the Senior Secured Notes) pursuant to clause (ii) or (iii) only
if the Issuer makes (at such time or in compliance with this covenant) an offer to Holders to purchase their
Senior Secured Notes in accordance with the provisions set forth below for an Asset Disposition Offer for
an aggregate principal amount of Senior Secured Notes equal to the proportion that (x) the total aggregate
principal amount of Senior Secured Notes outstanding bears to (y) the sum total aggregate principal amount
of the Senior Secured Notes outstanding plus the total aggregate principal amount outstanding of such
Indebtedness (other than the Senior Secured Notes); provided, further, that the Issuer shall prepay, repay,
purchase or redeem pursuant to clause (iii) Indebtedness that is Incurred under clause (5) of the second
paragraph of the covenant described under “—Limitation on Indebtedness” above (other than Acquired
Indebtedness described in sub-clause (i) of such clause (5)) only with the Net Cash Proceeds from the sale
of assets of such non-guarantor Restricted Subsidiaries which do not constitute Collateral;
(2)
purchase Senior Secured Notes pursuant to an offer to all Holders of the Senior Secured Notes at a
purchase price in cash equal to at least 100% of the principal amount thereof, plus accrued and unpaid
interest to, but not including, the date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date);
(3)
invest in any Replacement Assets;
(4)
acquire all or substantially all of the assets of, or any Capital Stock of, another Similar Business, if, after
giving effect to any such acquisition of Capital Stock, the Similar Business is or becomes a Restricted
Subsidiary;
(5)
make a capital expenditure;
(6)
acquire other assets (other than Capital Stock and cash or Cash Equivalents) that are used or useful in a
Similar Business;
(7)
consummate any combination of the foregoing; or
(8)
enter into a binding commitment to apply the Net Cash Proceeds pursuant to clause (1), (3), (4), (5) or
(6) of this paragraph or a combination thereof, provided that, a binding commitment shall be treated as a
permitted application of the Net Cash Proceeds from the date of such commitment until the earlier of
(x) the date on which such investment is consummated, (y) the 180th day following the expiration of the
aforementioned 365 day period, if the investment has not been consummated by that date,
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provided, however, if the assets disposed of constitute Collateral or constitute all or substantially all of the assets of a
Restricted Subsidiary whose Capital Stock has been pledged as Collateral, the Issuer shall pledge or shall cause the
applicable Restricted Subsidiary to pledge any acquired Capital Stock or assets (to the extent such assets were of a
category of assets included in the Collateral as of the Issue Date) referred to in this covenant in favor of the Senior
Secured Notes on a first-priority basis.
The amount of such Net Cash Proceeds not so used as set forth in this paragraph constitutes “Excess Proceeds.”
Pending the final application of any such Net Cash Proceeds, the Issuer may temporarily reduce revolving credit borrowings or
otherwise invest such Net Cash Proceeds in any manner that is not prohibited by the terms of the Senior Secured Indenture.
On the 366th day after an Asset Disposition, if the aggregate amount of Excess Proceeds exceeds SEK100.0 million,
the Issuer will be required within 10 Business Days thereof to make an offer (“Asset Disposition Offer”) to all Holders and, to the
extent the Issuer elects, to all holders of other outstanding Pari Passu Indebtedness, to purchase the maximum principal amount of
Senior Secured Notes and any such Pari Passu Indebtedness to which the Asset Disposition Offer applies that may be purchased
out of the Excess Proceeds, at an offer price in respect of the Senior Secured Notes in an amount equal to (and, in the case of any
Pari Passu Indebtedness, an offer price of no more than) 100% of the principal amount of the Senior Secured Notes and 100% of
the principal amount of Pari Passu Indebtedness, in each case, plus accrued and unpaid interest, if any, to, but not including, the
date of purchase, in accordance with the procedures set forth in the Senior Secured Indenture or the agreements governing the Pari
Passu Indebtedness, as applicable, in minimum denominations of €100,000 or SEK 1,000,000 (as applicable) and in integral
multiples of €1,000 or SEK 10,000 in excess thereof (as applicable).
To the extent that the aggregate amount of Senior Secured Notes and Pari Passu Indebtedness so validly tendered and
not properly withdrawn pursuant to an Asset Disposition Offer is less than the Excess Proceeds, the Issuer may use any remaining
Excess Proceeds for general corporate purposes, subject to other covenants contained in the Senior Secured Indenture. If the
aggregate principal amount of the Senior Secured Notes surrendered in any Asset Disposition Offer by Holders and other Pari
Passu Indebtedness surrendered by holders or lenders, collectively, exceeds the amount of Excess Proceeds, the Excess Proceeds
shall be allocated among the Senior Secured Notes and Pari Passu Indebtedness to be purchased on a pro rata basis on the basis of
the aggregate principal amount of tendered Senior Secured Notes and Pari Passu Indebtedness. For the purposes of calculating the
principal amount of any such Indebtedness not denominated in SEK, such Indebtedness shall be calculated by converting any such
principal amounts into their SEK Equivalent determined as of a date selected by the Issuer that is within the Asset Disposition
Offer Period (as defined below). Upon completion of any Asset Disposition Offer, the amount of Excess Proceeds shall be reset at
zero.
To the extent that any portion of Net Available Cash payable in respect of the Senior Secured Notes is denominated in a
currency other than the currency in which the relevant Senior Secured Notes are denominated, the amount thereof payable in
respect of such Senior Secured Notes shall not exceed the net amount of funds in the currency in which such Senior Secured Notes
are denominated that is actually received by the Issuer upon converting such portion of the Net Available Cash into such currency.
The Asset Disposition Offer, in so far as it relates to the Senior Secured Notes, will remain open for a period of not less
than 20 Business Days following its commencement (the “Asset Disposition Offer Period”). No later than five Business Days
after the termination of the Asset Disposition Offer Period (the “Asset Disposition Purchase Date”), the Issuer will purchase the
principal amount of Senior Secured Notes and, to the extent it elects, Pari Passu Indebtedness required to be purchased by it
pursuant to this covenant (the “Asset Disposition Offer Amount”) or, if less than the Asset Disposition Offer Amount has been so
validly tendered, all Senior Secured Notes and Pari Passu Indebtedness validly tendered in response to the Asset Disposition
Offer.
On or before the Asset Disposition Purchase Date, the Issuer will, to the extent lawful, accept for payment, on a pro rata
basis to the extent necessary, the Asset Disposition Offer Amount of Senior Secured Notes and Pari Passu Indebtedness or
portions of Senior Secured Notes and Pari Passu Indebtedness so validly tendered and not properly withdrawn pursuant to the
Asset Disposition Offer, or if less than the Asset Disposition Offer Amount has been validly tendered and not properly withdrawn,
all Senior Secured Notes and Pari Passu Indebtedness so validly tendered and not properly withdrawn and in minimum
denominations of €100,000 or SEK 1,000,000 and in integral multiples of €1,000 or SEK 10,000 in excess thereof (as applicable).
The Issuer will deliver to the Trustee an Officer’s Certificate stating that such Senior Secured Notes or portions thereof were
accepted for payment by the Issuer in accordance with the terms of this covenant. The Issuer or the Paying Agent, as the case may
be, will promptly (but in any case not later than five Business Days after termination of the Asset Disposition Offer Period) mail
or deliver to each tendering Holder an amount equal to the purchase price of the Senior Secured Notes so validly tendered and not
properly withdrawn by such Holder, and accepted by the Issuer for purchase, and the Issuer will promptly issue a new Senior
Secured Note (or amend the applicable Global Note), and the Trustee (or an authenticating agent), upon delivery of an Officer’s
Certificate from the Issuer, will authenticate and mail or deliver (or cause to be transferred by book entry) such new Senior
Secured Note to such Holder, in a principal amount equal to any unpurchased portion of the Senior Secured Note surrendered;
provided that each such new Senior Secured Note will be in a principal amount with a minimum denomination of €100,000. Any
Senior Secured Note not so accepted will be promptly mailed or delivered (or transferred by book entry) by the Issuer to the
Holder thereof.
The Issuer will comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any
other securities laws or regulations in connection with the repurchase of Senior Secured Notes pursuant to the Senior Secured
Indenture. To the extent that the provisions of any securities laws or regulations conflict with provisions of this covenant, the
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Issuer will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations
under the Senior Secured Indenture by virtue of such compliance.
Limitation on Affiliate Transactions
The Issuer will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or conduct
any transaction or series of related transactions (including the purchase, sale, lease or exchange of any property or the rendering of
any service) with any Affiliate of the Issuer (any such transaction or series of related transactions being an “Affiliate
Transaction”) involving aggregate value in excess of SEK50.0 million unless:
(1)
the terms of such Affiliate Transaction taken as a whole are not materially less favorable to the Issuer or
such Restricted Subsidiary, as the case may be, than those that could be obtained in a comparable
transaction on an arm’s-length basis at the time of such transaction or the execution of the agreement
providing for such transaction in arm’s-length dealings with a Person who is not such an Affiliate;
(2)
in the event such Affiliate Transaction involves an aggregate value in excess of SEK150.0 million, the
terms of such transaction or series of related transactions have been approved by a resolution of the
majority of the disinterested members of the Board of Directors of the Issuer resolving that such transaction
complies with clause (1) above; and
(3)
in the event such Affiliate Transaction involves an aggregate consideration in excess of SEK250.0 million,
the Issuer has received a written opinion (a “Fairness Opinion”) from an Independent Financial Advisor
that such Affiliate Transaction is fair, from a financial standpoint, to the Issuer and its Restricted
Subsidiaries or that the terms are not materially less favorable than those that could reasonably have been
obtained in a comparable transaction at such time on an arm’s-length basis from a Person that is not an
Affiliate.
The provisions of the preceding paragraph will not apply to:
(1)
any Restricted Payment permitted to be made pursuant to the covenant described under “—Limitation on
Restricted Payments,” any Permitted Payments (other than pursuant to clause (9)(b)(ii) of the fourth
paragraph of the covenant described under “—Limitations on Restricted Payments”) or any Permitted
Investment (other than Permitted Investments as defined in paragraphs (1)(b), (2) and (11) of the definition
thereof);
(2)
any issuance or sale of Capital Stock, options, other equity-related interests or other securities, or other
payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, or entering into,
or maintenance of, any employment, consulting, collective bargaining or benefit plan, program, agreement
or arrangement, related trust or other similar agreement and other compensation arrangements, options,
warrants or other rights to purchase Capital Stock of the Issuer, any Restricted Subsidiary or any Parent,
restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or
similar employee benefits or consultants’ plans (including valuation, health, insurance, deferred
compensation, severance, retirement, savings or similar plans, programs or arrangements) or indemnities
provided on behalf of officers, employees, directors or consultants approved by the Board of Directors of
the Issuer, in each case in the ordinary course of business;
(3)
any Management Advances and any waiver or transaction with respect thereto;
(4)
any transaction between or among the Issuer and any Restricted Subsidiary (or entity that becomes a
Restricted Subsidiary as a result of such transaction), or between or among Restricted Subsidiaries or any
Receivables Subsidiary;
(5)
the payment of reasonable fees and reimbursement of expenses to, and customary indemnities and
employee benefit and pension expenses provided on behalf of, directors, officers, consultants or employees
of the Issuer, any Restricted Subsidiary of the Issuer or any Parent (whether directly or indirectly and
including through any Person owned or controlled by any of such directors, officers or employees);
(6)
(i) the Refinancing, (ii) the entry into and performance of obligations of the Issuer or any of its Restricted
Subsidiaries under the terms of any transaction pursuant to or contemplated by, and any payments pursuant
to or for purposes of funding, any agreement or instrument in effect as of or on the Issue Date, as described
in “Certain Relationships and Related Party Transactions,” in the Offering Memorandum, as these
agreements and instruments may be amended, modified, supplemented, extended, renewed, replaced or
refinanced from time to time in accordance with the other terms of this covenant or to the extent not more
disadvantageous to the Holders in any material respect, and (iii) the entry into and performance of any
registration rights or other listing agreement;
(7)
the execution, delivery and performance of any Tax Sharing Agreement or any arrangement pursuant to
which the Issuer or any of its Restricted Subsidiaries is required or permitted to file a consolidated tax
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return, or the formation and maintenance of any consolidated group for tax, accounting or cash pooling or
management purposes in the ordinary course of business; provided, that payments under such Tax Sharing
Agreement shall not exceed, and shall not be duplicative of, the amounts described under clause (7) of the
definition of the term “Parent Expenses” and that the related tax liabilities of the Issuer and its Restricted
Subsidiaries are relieved thereby;
(8)
transactions with customers, clients, suppliers or purchasers or sellers of goods or services, in each case in
the ordinary course of business, which are fair to the Issuer or the relevant Restricted Subsidiary in the
reasonable determination of the Board of Directors or an officer of the Issuer or the relevant Restricted
Subsidiary, or are on terms no less favorable than those that could reasonably have been obtained at such
time from an unaffiliated party;
(9)
any transaction in the ordinary course of business between or among the Issuer or any Restricted
Subsidiary and any Affiliate (other than an Unrestricted Subsidiary) of the Issuer or an Associate or similar
entity that would constitute an Affiliate Transaction solely because the Issuer or a Restricted Subsidiary or
any Affiliate of the Issuer or a Restricted Subsidiary or any Affiliate of any Permitted Holder owns an
equity interest in or otherwise controls such Affiliate, Associate or similar entity;
(10)
(a) issuances or sales of Capital Stock (other than Disqualified Stock or Designated Preference Shares) of
the Issuer or options, warrants or other rights to acquire such Capital Stock or Subordinated Shareholder
Funding; provided that the interest rate and other financial terms of such Subordinated Shareholder
Funding are approved by a majority of the members of the Board of Directors in their reasonable
determination and (b) any amendment, waiver or other transaction with respect to any Subordinated
Shareholder Funding in compliance with the other provisions of the Senior Secured Indenture, the
Intercreditor Agreement or any Additional Intercreditor Agreement, as applicable;
(11)
(a) payments by the Issuer or any Restricted Subsidiary to any Permitted Holder (whether directly or
indirectly, including through any Parent) of annual management, consulting, monitoring or advisory fees
and related expenses in an aggregate amount not to exceed SEK25.0 million per year and (b) customary
payments by the Issuer or any Restricted Subsidiary to any Permitted Holder (whether directly or
indirectly, including through any Parent) for financial advisory, financing, underwriting or placement
services or in respect of other investment banking activities, including in connection with loans, capital
market transactions, acquisitions or divestitures, which payments (or agreements providing for such
payments) in respect of this clause (11) are approved by a majority of the Board of Directors in good faith;
(12)
any transactions which the Issuer or a Restricted Subsidiary delivers a written opinion (in form and
substance reasonably satisfactory to the Trustee) to the Trustee from an Independent Financial Advisor
stating that such transaction is (i) fair to the Issuer or such Restricted Subsidiary from a financial point of
view or (ii) on terms not less favorable that might have been obtained in a comparable transaction at such
time on an arm’s length basis from a Person who is not an Affiliate;
(13)
investments by any of the Initial Investors in securities of any of the Issuer’s Restricted Subsidiaries so
long as (i) each such investment has been approved by a resolution of the majority of the disinterested
members of the Board of Directors of the Issuer resolving that such investment complies with clause (1) of
the preceding paragraph, (ii) the investment is being offered generally to other investors in a bona fide
capital markets offering on the same or more favorable terms and (iii) the investment constitutes less than
5% of the issue amount of such securities;
(14)
pledges of Capital Stock of Unrestricted Subsidiaries; and
(15)
any transaction effected as part of a Qualified Receivables Financing.
Reports
So long as any Senior Secured Notes are outstanding, the Issuer will furnish to the Trustee the following reports:
(1)
within 120 days after the end of the Issuer’s fiscal year beginning with the fiscal year ended December 31,
2013, annual reports containing: (i) information with a level and type of detail that is substantially
comparable in all material respects to information in the sections entitled “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” and “Business” in the Offering Memorandum;
(ii) pro forma income statement and balance sheet information of the Issuer, together with explanatory
footnotes, for any material acquisitions, dispositions or recapitalizations that have occurred since the
beginning of the most recently completed fiscal year as to which such annual report relates (unless such pro
forma information has been provided in a previous report pursuant to clause (2) or (3) below); provided
that such pro forma financial information will be provided only to the extent available without
unreasonable expense, in which case the Issuer will provide, in the case of a material acquisition, acquired
company financials; (iii) the audited consolidated balance sheet of the Issuer as at the end of the most
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recent two fiscal years and audited consolidated income statements and statements of cash flow of the
Issuer for the most recent three fiscal years, including appropriate footnotes to such financial statements,
for and as at the end of such fiscal years and the report of the independent auditors on the financial
statements; (iv) a description of the management and shareholders of the Issuer, all material affiliate
transactions and a description of all material debt instruments; (v) a description of material risk factors and
material subsequent events; and (vi) Consolidated EBITDA; provided that the information described in
clauses (iv), (v) and (vi) may be provided in the footnotes to the audited financial statements;
(2)
within 60 days (or, in the case of the fiscal quarter ending June 30, 2013, 90 days) following the end of
each of the first three fiscal quarters in each fiscal year of the Issuer, beginning with the quarter ended
June 30, 2013, quarterly financial statements containing the following information: (i) the Issuer’s
unaudited condensed consolidated balance sheet as at the end of such quarter and unaudited condensed
statements of income and cash flow for the most recent quarter year to date period ending on the unaudited
condensed balance sheet date and the comparable prior period, together with condensed footnote
disclosure; (ii) pro forma income statement and balance sheet information of the Issuer, together with
explanatory footnotes, for any material acquisitions, dispositions or recapitalizations that have occurred
since the beginning of the most recently completed fiscal year as to which such quarterly report relates,
provided that such pro forma financial information will be provided only to the extent available without
unreasonable expense, in which case the Issuer will provide, in the case of a material acquisition, acquired
company financials); (iii) an operating and financial review of the unaudited financial statements, including
a discussion of the consolidated financial condition, results of operations, Consolidated EBITDA and
material changes in liquidity and capital resources of the Issuer; (iv) a discussion of material changes in
material debt instruments since the most recent report; and (v) material subsequent events and any material
changes to the risk factors disclosed in the most recent annual report; provided that the information
described in clauses (iv) and (v) may be provided in the footnotes to the unaudited financial statements; and
(3)
promptly after the occurrence of a material event that the Issuer announces publicly or any acquisition,
disposition or restructuring, merger or similar transaction that is material to the Issuer and the Restricted
Subsidiaries, taken as a whole, or a senior executive officer or director changes at the Issuer or a change in
auditors of the Issuer, a report containing a description of such event.
In addition, the Issuer shall furnish to the Holders and to prospective investors, upon the request of such parties, any
information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act for so long as the Senior Secured Notes
are not freely transferable under the Exchange Act by persons who are not “affiliates” under the Securities Act.
The Issuer shall also make available to Holders and prospective holders of the Senior Secured Notes copies of all
reports furnished to the Trustee on the Issuer’s website.
All financial statement information shall be prepared in accordance with IFRS as in effect on the date of such report or
financial statement (or otherwise on the basis of IFRS as then in effect) and on a consistent basis for the periods presented, except
as may otherwise be described in such information; provided, however, that the reports set forth in clauses (1), (2) and (3) above
may, in the event of a change in IFRS, present earlier periods on a basis that applied to such periods. No report need include
separate financial statements for any Subsidiaries of the Issuer or any disclosure with respect to the results of operations or any
other financial or statistical disclosure not of a type included in the Offering Memorandum. In addition, the reports set forth above
will not be required to contain any reconciliation to U.S. generally accepted accounting principles.
For purposes of this covenant, an acquisition or disposition shall be deemed to be material if the entity or business
acquired or disposed of represents greater than 20% of the Issuer’s (a) total revenue or Consolidated EBITDA for the most recent
four quarters for which annual or quarterly financial reports have been delivered to the Trustee or (b) consolidated assets as of the
last day of the most recent quarter for which annual or quarterly financial reports have been delivered to the Trustee.
At any time that any of the Issuer’s subsidiaries are Unrestricted Subsidiaries and any such Unrestricted Subsidiary or a
group of Unrestricted Subsidiaries, taken as a whole, constitutes a Significant Subsidiary of the Issuer, then the quarterly and
annual financial information required by the first paragraph of this “Reports to Holders” covenant will include a reasonably
detailed presentation, either on the face of the financial statements or in the footnotes thereto, of the financial condition and results
of operations of the Issuer and its Restricted Subsidiaries separate from the financial condition and results of operations of the
Unrestricted Subsidiaries of the Issuer. For purposes of this covenant and any calculation to be made under the Senior Secured
Indenture, the Issuer may use financial statements of Bravida AB with respect to periods commencing prior to the Issue Date.
All reports provided pursuant to this “Reports” covenant shall be made in the English language.
In the event that (i) the Issuer becomes subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange
Act, or elects to comply with such provisions, for so long as it continues to file the reports required by Section 13(a) with the SEC
or (ii) the Issuer elects to provide to the Trustee reports which, if filed with the SEC, would satisfy (in the good faith judgment of
the Issuer) the reporting requirements of Section 13(a) or 15(d) of the Exchange Act (other than the provision of U.S. GAAP
information, certifications, exhibits or information as to internal controls and procedures), for so long as it elects, the Issuer will
make available to the Trustee such annual reports, information, documents and other reports that the Issuer is, or would be,
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required to file with the SEC pursuant to such Section 13(a) or 15(d). Upon complying with the foregoing requirement, the Issuer
will be deemed to have complied with the provisions contained in the preceding paragraphs.
Merger and Consolidation
The Issuer
The Issuer will not, directly or indirectly, consolidate with or merge with or into, or assign, convey, transfer, lease or
otherwise dispose all or substantially all its assets as an entirety or substantially as an entirety, in one transaction or a series of
related transactions to, any Person, unless:
(1)
either the Issuer is the surviving entity or the resulting, surviving or transferee Person (the “Successor
Company”) will be a Person organized and existing under the laws of any member state of the European
Union, any State of the United States of America or the District of Columbia, Canada or any province of
Canada, Norway or Switzerland and the Successor Company (if not the Issuer) will expressly assume,
(a) by supplemental indenture, executed and delivered to the Trustee, in form reasonably satisfactory to the
Trustee, all the obligations of the Issuer under the Senior Secured Notes and the Senior Secured Indenture
and (b) all obligations of the Issuer under the Intercreditor Agreement, any Additional Intercreditor
Agreement and the Security Documents, as applicable;
(2)
immediately after giving effect to such transaction (and treating any Indebtedness that becomes an
obligation of the Successor Company or any Subsidiary of the Successor Company as a result of such
transaction as having been Incurred by the Successor Company or such Subsidiary at the time of such
transaction), no Default or Event of Default shall have occurred and be continuing;
(3)
immediately after giving effect to such transaction, either (a) the Issuer or the Successor Company would
be able to Incur at least an additional SEK1.00 of Indebtedness pursuant to the first paragraph of the
covenant described under “—Limitation on Indebtedness” or (b) the Fixed Charge Coverage Ratio for the
Issuer or the Successor Company for the most recently ended four full fiscal quarters for which financial
statements are available immediately preceding the date on which the transaction is consummated would
not be less than it was immediately prior to giving effect to such transaction; and
(4)
the Issuer shall have delivered to the Trustee an Officer’s Certificate and an Opinion of Counsel, each to
the effect that such consolidation, merger or transfer and such supplemental indenture (if any) comply with
the Senior Secured Indenture and an Opinion of Counsel to the effect that such supplemental indenture (if
any) has been duly authorized, executed and delivered and is a legal, valid and binding agreement
enforceable against the Successor Company (in each case, in form and substance reasonably satisfactory to
the Trustee), provided that in giving an Opinion of Counsel, counsel may rely on an Officer’s Certificate as
to any matters of fact.
Any Indebtedness that becomes an obligation of the Issuer or any Restricted Subsidiary (or that is deemed to be
Incurred by any Restricted Subsidiary that becomes a Restricted Subsidiary) as a result of any such transaction undertaken in
compliance with this covenant, and any Refinancing Indebtedness with respect thereto, shall be deemed to have been Incurred in
compliance with the covenant described under “—Limitation on Indebtedness.”
For purposes of this covenant, the sale, lease, conveyance, assignment, transfer, or other disposition of all or
substantially all of the properties and assets of one or more Subsidiaries of the Issuer, which properties and assets, if held by the
Issuer instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Issuer on a
consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Issuer.
The Successor Company will succeed to, and be substituted for, and may exercise every right and power of, the Issuer
under the Senior Secured Indenture but in the case of a lease of all or substantially all its assets, the predecessor company will not
be released from its obligations under the Senior Secured Indenture or the Senior Secured Notes.
There is no precise established definition of the phrase “substantially all” under applicable law. Accordingly, in certain
circumstances there may be a degree of uncertainty as to whether a particular transaction would involve “all or substantially all”
of the property or assets of a Person.
The Guarantors
No Guarantor (other than a Guarantor whose Notes Guarantee is to be released in accordance with the terms of the
Senior Secured Indenture, the Intercreditor Agreement or any Additional Intercreditor Agreement) may:
(1)
consolidate with or merge with or into any Person (whether or not such Guarantor is the surviving
corporation);
(2)
sell, assign, convey, transfer, lease or otherwise dispose of, all or substantially all its assets as an entirety or
substantially as an entirety, in one transaction or a series of related transactions, to any Person; or
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(3)
permit any Person to merge with or into it unless:
A.
the other Person is the Issuer or any Restricted Subsidiary that is a Guarantor or becomes a
Guarantor substantially concurrently with such consolidation, merger, sale assignment,
conveyance, transfer, lease or other disposal;
B.
(1) either (x) a Guarantor is the continuing Person or (y) the resulting, surviving or transferee
Person expressly assumes all of the obligations of the Guarantor under its Notes Guarantee and
the Senior Secured Indenture (pursuant to a supplemental indenture executed and delivered in a
form reasonably satisfactory to the Trustee) and all obligations of the Guarantor under the
Intercreditor Agreement, any Additional Intercreditor Agreement and the Security Documents,
as applicable; and (2) immediately after giving effect to the transaction, no Default or Event of
Default shall have occurred and is continuing; or
C.
the transaction constitutes a sale or other disposition (including by way of consolidation or
merger) of a Guarantor or the sale or disposition of all or substantially all the assets of a
Guarantor (in each case other than to the Issuer or a Restricted Subsidiary) otherwise permitted
by the Senior Secured Indenture.
The provisions set forth in this “Merger and Consolidation” covenant shall not restrict (and shall not apply to): (i) any
Restricted Subsidiary that is not a Guarantor from consolidating with, merging or liquidating into or transferring all or
substantially all of its properties and assets to the Issuer, a Guarantor or any other Restricted Subsidiary that is not a Guarantor
(provided that a Restricted Subsidiary that is not a Guarantor and that has Incurred Indebtedness pursuant to clause (5) of the
second paragraph of the covenant described above under “—Limitation on Indebtedness” may only merge into or transfer all or
substantially all its properties and assets to another such Restricted Subsidiary); (ii) any Guarantor from merging or liquidating
into or transferring all or part of its properties and assets to the Issuer or another Guarantor; (iii) any consolidation or merger of
the Issuer into any Guarantor; provided that, if the Issuer is not the surviving entity of such merger or consolidation, the relevant
Guarantor will assume the obligations of the Issuer under the Senior Secured Notes, the Senior Secured Indenture, the
Intercreditor, any Additional Intercreditor Agreement and the Security Documents and clauses (1) and (4) under the heading “—
The Issuer” shall apply to such transaction; and (iii) the Issuer or any Guarantor consolidating into or merging or combining with
an Affiliate incorporated or organized for the purpose of changing the legal domicile of such entity, reincorporating such entity in
another jurisdiction, or changing the legal form of such entity; provided, however, that clauses (1), (2) and (4) under the heading
“—The Issuer” or clause (3) under the heading “—The Guarantors,” as the case may be, shall apply to any such transaction.
Limitation to Holding Company Activities
Notwithstanding any other provisions of the Senior Secured Indenture, the Issuer may not carry on any business or own
any assets other than:
(1)
the ownership of shares of Bravissima Acquisitions AB or, following Bravissima Acquisitions AB’s
merger with and into the Issuer, SIA AB, cash and Cash Equivalents and other properties and assets that
are de minimis in nature; provided that the Issuer may from time to time receive in a transaction otherwise
permitted under the Senior Secured Indenture properties and assets (including cash, Cash Equivalents,
shares of Capital Stock of another Person and/or Indebtedness and other obligations) for the purpose of
transferring such properties and assets to any Parent, any Subsidiary or any other Person, so long as in any
case such further transfer is made promptly by the Issuer and, after giving effect thereto, the Issuer is again
in compliance with this clause;
(2)
the provision of administrative services (excluding treasury services), legal, accounting and management
services to its Subsidiaries of a type customarily provided by a holding company to its Subsidiaries
(including as the head of a tax group) and the ownership of assets necessary to provide such services;
(3)
(a) Incurring Indebtedness (or other items that are specifically excluded from the definition of
Indebtedness) permitted under the Senior Secured Indenture for the purpose of paying, loaning, transferring
or contributing substantially all of the proceeds of such Indebtedness to a Parent or a Restricted Subsidiary
in compliance with the provisions of the Senior Secured Indenture; (b) conducting any activities reasonably
incidental to the Incurrence of such Indebtedness, including performance of the terms and conditions of
such Indebtedness (or other items that are specifically excluded from the definition of Indebtedness), to the
extent such activities are otherwise permissible under the Senior Secured Indenture; and (c) the granting of
Liens permitted under the covenant described above under the caption “—Limitation on Liens” to secure
such Indebtedness;
(4)
activities undertaken with the purpose of, and directly related to, fulfilling its obligations or exercising its
rights under the Senior Secured Indenture, the Revolving Credit Facility, the Intercreditor Agreement (or
any Additional Intercreditor Agreement), the Security Documents or other Indebtedness (or any item
specifically excluded from the definition of Indebtedness) permitted by the terms of the Senior Secured
Indenture (including clause (3) above) and any related finance documents or security documents;
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(5)
the ownership of (i) cash, Cash Equivalents, Temporary Cash Investments or Investment Grade Securities,
and (ii) other property to the extent such other property is promptly contributed to a Parent in compliance
with the covenant described above under the caption “—Limitations on Restricted Payments;”
(6)
conducting activities directly related or reasonably incidental to the establishment and/or maintenance of its
or its Subsidiaries’ corporate existence;
(7)
any activity reasonably relating to the servicing, purchase, redemption, amendment, exchange, refinancing
or retirement of the Senior Secured Notes or other Indebtedness (or other items that are specifically
excluded from the definition of Indebtedness) permitted under the Senior Secured Indenture; or
(8)
other activities not specifically enumerated above that are de minimis in nature.
Suspension of Covenants on Achievement of Investment Grade Status
If on any date following the Issue Date, the Senior Secured Notes have achieved Investment Grade Status and no
Default or Event of Default has occurred and is continuing (a “Suspension Event”), then, beginning on that day and continuing
until such time, if any, at which the Senior Secured Notes cease to have Investment Grade Status (the “Reversion Date”), the
provisions of the Senior Secured Indenture summarized under the following captions will not apply to the Senior Secured Notes:
(1)
“—Limitation on Restricted Payments”;
(2)
“—Limitation on Indebtedness”;
(3)
“—Limitation on Restrictions on Distributions from Restricted Subsidiaries”;
(4)
“—Limitation on Affiliate Transactions”;
(5)
“—Limitation on Sales of Assets and Subsidiary Stock”;
(6)
“—Additional Guarantees”; and
(7)
the provisions of clause (3) of the first paragraph of the covenant described under “—Merger and
Consolidation—The Issuer,”
and, in each case, any related default provision of the Senior Secured Indenture will cease to be effective and will not
be applicable to the Issuer and its Restricted Subsidiaries.
Such covenants and any related default provisions will again apply according to their terms from the first day on which
a Suspension Event ceases to be in effect. Such covenants will not, however, be of any effect with regard to actions of the Issuer
properly taken during the continuance of the Suspension Event, and no action taken prior to the Reversion Date will constitute a
Default or Event of Default. The “Limitation on Restricted Payments” covenant will be interpreted as if it has been in effect since
the date of the Senior Secured Indenture but not during the continuance of the Suspension Event. On the Reversion Date, all
Indebtedness Incurred during the continuance of the Suspension Event will be deemed to have been outstanding on the Issue Date,
so that it is classified as permitted under clause (4)(b) of the second paragraph of the covenant described under “—Limitation on
Indebtedness.” In addition, the Senior Secured Indenture will also permit, without causing a Default or Event of Default, the
Issuer or any of the Restricted Subsidiaries to honor any contractual commitments or take actions in the future after any date on
which the Senior Secured Notes cease to have an Investment Grade Status as long as the contractual commitments were entered
into during the Suspension Event and not in anticipation of the Senior Secured Notes no longer having an Investment Grade
Status. The Issuer shall notify the Trustee that the conditions set forth in the first paragraph under this caption has been satisfied,
provided that, no such notification shall be a condition for the suspension of the covenants described under this caption to be
effective. There can be no assurance that the Senior Secured Notes will ever achieve or maintain an Investment Grade Status.
Impairment of Security Interest
The Issuer shall not, and shall not permit any Restricted Subsidiary to, take or knowingly or negligently omit to take
any action that would have the result of materially impairing the Security Interest with respect to the Collateral (it being
understood, subject to the proviso below, that the Incurrence of Permitted Collateral Liens shall under no circumstances be
deemed to materially impair the Security Interest with respect to the Collateral) for the benefit of the Trustee and the Holders, and
the Issuer shall not, and shall not permit any Restricted Subsidiary to, grant to any Person other than the Security Agent, for the
benefit of the Trustee and the Holders and the other beneficiaries described in the Security Documents and the Intercreditor
Agreement or any Additional Intercreditor Agreement, any interest whatsoever in any of the Collateral, except that (i) the Issuer
and its Restricted Subsidiaries may Incur Permitted Collateral Liens and the Collateral may be discharged and released in
accordance with the Senior Secured Indenture, the applicable Security Documents or the Intercreditor Agreement or any
Additional Intercreditor Agreement and (ii) the applicable Security Documents may be amended from time to time to cure any
ambiguity, mistake, omission, defect, manifest error or inconsistency therein; provided, however, that in the case of clause
(i) above, except with respect to any discharge or release in accordance with the Senior Secured Indenture or the Intercreditor
Agreement or any Additional Intercreditor Agreement, the Security Documents may not be amended, extended, renewed, restated,
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supplemented, released or otherwise modified or replaced, unless contemporaneously with any such action, the Issuer delivers to
the Trustee, either (1) a solvency opinion, in form and substance reasonably satisfactory to the Trustee from an Independent
Financial Advisor confirming the solvency of the Issuer and its Subsidiaries, taken as a whole, after giving effect to any
transactions related to such amendment, extension, renewal, restatement, supplement, release, modification or replacement, (2) a
certificate from the Board of Directors of the relevant Person, in form and substance reasonably satisfactory to the Trustee, which
confirms the solvency of the person granting such Security Interest, after giving effect to any transactions related to such
amendment, extension, renewal, restatement, supplement, modification or replacement, or (3) an Opinion of Counsel, in form and
substance reasonably satisfactory to the Trustee, confirming that, after giving effect to any transactions related to such
amendment, extension, renewal, restatement, supplement, modification or replacement, the Lien or Liens created under the
Security Documents, so amended, extended, renewed, restated, supplemented, modified or replaced are valid Liens not otherwise
subject to any limitation, imperfection or new hardening period, in equity or at law, that such Lien or Liens were not otherwise
subject to immediately prior to such amendment, extension, renewal, restatement, supplement, modification or replacement. In the
event that the Issuer complies with the requirements of this covenant, the Trustee and the Security Agent shall (subject to each of
the Trustee and the Security Agent being indemnified and secured to its satisfaction, including by way of prefunding) consent to
such amendments without the need for instructions from the Holders.
Additional Guarantees
Notwithstanding anything to the contrary in this covenant, no Restricted Subsidiary shall Guarantee the Indebtedness
outstanding under the Revolving Credit Facility, any Credit Facility or any other Public Debt, in each case of the Issuer or a
Guarantor unless such Restricted Subsidiary is or becomes a Guarantor on the date on which the Notes Guarantee is Incurred and,
if applicable, executes and delivers to the Trustee a supplemental indenture in the form attached to the Senior Secured Indenture
pursuant to which such Restricted Subsidiary will provide a Notes Guarantee; provided, however, that such Restricted Subsidiary
shall not be obligated to become such a Guarantor to the extent and for so long as the Incurrence of such Notes Guarantee could
give rise to or result in: (1) any breach or violation of statutory limitations, corporate benefit, financial assistance, fraudulent
preference, thin capitalization rules, capital maintenance rules, guidance and coordination rules or the laws rules or regulations (or
analogous restriction) of any applicable jurisdiction; (2) any risk or liability for the officers, directors or (except in the case of a
Restricted Subsidiary that is a partnership) shareholders of such Restricted Subsidiary (or, in the case of a Restricted Subsidiary
that is a partnership, directors or shareholders of the partners of such partnership); or (3) any cost, expense, liability or obligation
(including with respect to any Taxes) other than reasonable out of pocket expenses. At the option of the Issuer, any Notes
Guarantee may contain limitations on Guarantor liability to the extent reasonably necessary to recognize certain defenses
generally available to guarantors (including those that relate to fraudulent conveyance or transfer, voidable preference, financial
assistance, corporate purpose, capital maintenance or similar laws, regulations or defenses affecting the rights of creditors
generally) or other considerations under applicable law.
Future Notes Guarantees granted pursuant to this provision shall be released as set forth under “—Releases of the Note
Guarantees.” A Notes Guarantee of a future Guarantor may also be released at the option of the Issuer if at the date of such
release there is no Indebtedness of such Guarantor outstanding which was Incurred after the Issue Date and which could not have
been Incurred in compliance with the Senior Secured Indenture if such Guarantor had not been designated as a Guarantor. The
Trustee and the Security Agent shall each take all necessary actions, including the granting of releases or waivers under the
Intercreditor Agreement or any Additional Intercreditor Agreement, to effectuate any release of a Notes Guarantee in accordance
with these provisions, subject to each of the Trustee and the Security Agent being indemnified and secured to its satisfaction,
including by way of prefunding.
The validity and enforceability of the Senior Secured Notes Guarantees and the Security Interests and the liability of
each Guarantor will be subject to the limitations as described and set out in “Risk Factors.”
Additional Intercreditor Agreements
The Senior Secured Indenture provides that, at the request of the Issuer, in connection with the Incurrence by the Issuer
or its Restricted Subsidiaries of any (1) Indebtedness permitted pursuant to the first paragraph of the covenant described under “—
Limitation on Indebtedness” or clause (1), (4), (5), (6), (7) (other than with respect to Capitalized Lease Obligations), (11) or
(13) of the second paragraph of the covenant described under “—Limitation on Indebtedness” and (2) any Refinancing
Indebtedness in respect of Indebtedness referred to in the foregoing clause (1), the Issuer, the relevant Restricted Subsidiaries, the
Trustee and the Security Agent shall enter into with the holders of such Indebtedness (or their duly authorized Representatives) an
intercreditor agreement (an “Additional Intercreditor Agreement”) or a restatement, amendment or other modification of the
existing Intercreditor Agreement on substantially the same terms as the Intercreditor Agreement (or terms not materially less
favorable to the Holders), including containing substantially the same terms with respect to release of Guarantees and priority and
release of the Security Interests; provided that such Additional Intercreditor Agreement will not impose any personal obligations
on the Trustee or Security Agent or, in the opinion of the Trustee or Security Agent, as applicable, adversely affect the rights,
duties, liabilities or immunities of the Trustee or Security Agent under the Senior Secured Indenture or the Intercreditor
Agreement.
The Senior Secured Indenture also provides that, at the direction of the Issuer and without the consent of Holders, the
Trustee and the Security Agent shall from time to time enter into one or more amendments to any Intercreditor Agreement to:
(1) cure any ambiguity, omission, defect, manifest error or inconsistency of any such agreement, (2) increase the amount or types
of Indebtedness covered by any such agreement that may be Incurred by the Issuer or any Restricted Subsidiary that is subject to
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any such agreement (including with respect to any Intercreditor Agreement or Additional Intercreditor Agreement, the addition of
provisions relating to new Indebtedness ranking junior in right of payment to the Senior Secured Notes), (3) add Restricted
Subsidiaries to the Intercreditor Agreement or an Additional Intercreditor Agreement, (4) further secure the Senior Secured Notes
(including Additional Senior Secured Notes), (5) make provision for equal and ratable pledges of the Collateral to secure
Additional Senior Secured Notes, (6) implement any Permitted Collateral Liens, (7) amend the Intercreditor Agreement or any
Additional Intercreditor Agreement in accordance with the terms thereof or (8) make any other change to any such agreement that
does not adversely affect the Holders in any material respect. In formulating its opinion on such matters, the Trustee shall be
entitled to request and rely absolutely on such evidence as it deems appropriate, including an Officer’s Certificate and an Opinion
of Counsel. The Issuer shall not otherwise direct the Trustee or the Security Agent to enter into any amendment to any
Intercreditor Agreement without the consent of the Holders of the majority in aggregate principal amount of the Senior Secured
Notes then outstanding, except as otherwise permitted below under “—Amendments and Waivers,” and the Issuer may only direct
the Trustee and the Security Agent to enter into any amendment to the extent such amendment does not impose any personal
obligations on the Trustee or Security Agent or, in the opinion of the Trustee or Security Agent, adversely affect their respective
rights, duties, liabilities or immunities under the Senior Secured Indenture or the Intercreditor Agreement or any Additional
Intercreditor Agreement.
The Senior Secured Indenture also provides that, in relation to any Intercreditor Agreement or Additional Intercreditor
Agreement, the Trustee (and Security Agent, if applicable) shall consent on behalf of the Holders to the payment, repayment,
purchase, repurchase, defeasance, acquisition, retirement or redemption of any obligations subordinated to the Senior Secured
Notes thereby; provided, however, that such transaction would comply with the covenant described under “—Limitation on
Restricted Payments.”
The Senior Secured Indenture also provides that each Holder, by accepting a Note, shall be deemed to have agreed to
and accepted the terms and conditions of the Intercreditor Agreement or any Additional Intercreditor Agreement, (whether then
entered into or entered into in the future pursuant to the provisions described herein) and to have directed the Trustee and the
Security Agent to enter into any such Additional Intercreditor Agreement. A copy of the Intercreditor Agreement or any
Additional Intercreditor Agreement shall be made available for inspection during normal business hours on any Business Day
upon prior written request at our offices.
Events of Default
Each of the following is an “Event of Default” under the Senior Secured Indenture:
(1)
default in any payment of interest on any Senior Secured Note issued under the Senior Secured Indenture
when due and payable, continued for 30 days;
(2)
default in the payment of the principal amount of or premium, if any, on any Senior Secured Note issued
under the Senior Secured Indenture when due at its Stated Maturity, upon optional redemption, upon
required repurchase, upon declaration or otherwise;
(3)
failure by the Issuer or any of its Restricted Subsidiaries to comply for 60 days after notice by the Trustee
or the Holders of at least 25% in principal amount of the outstanding Notes with its other agreements
contained in the Senior Secured Indenture;
(4)
default under any mortgage, indenture or instrument under which there may be issued or by which there
may be secured or evidenced any Indebtedness for money borrowed by the Issuer or any of its Restricted
Subsidiaries (or the payment of which is Guaranteed by the Issuer or any of its Restricted Subsidiaries)
other than Indebtedness owed to the Issuer or a Restricted Subsidiary whether such Indebtedness or
Guarantee now exists, or is created after the Issue Date, which default:
(a)
is caused by a failure to pay principal at stated maturity on such Indebtedness, immediately
upon the expiration of the grace period provided in such Indebtedness (“payment default”); or
(b)
results in the acceleration of such Indebtedness prior to its maturity (the “cross acceleration
provision”),
and, in each case, either (i) the principal amount of any such Indebtedness, together with the principal
amount of any other such Indebtedness under which there has been a payment default or the maturity of
which has been so accelerated, aggregates SEK200.0 million or more or (ii) such Indebtedness is secured
by a Permitted Collateral Lien and Incurred pursuant to clause (1) or (6) of the second paragraph of the
covenant described under “—Certain Covenants—Limitation on Indebtedness” secured by Collateral that is
accorded super senior priority status with respect to proceeds of enforcement of Collateral under the
Intercreditor Agreement, and (A) the 30 day consultation period under the Intercreditor Agreement with
respect to the enforcement of such Indebtedness has expired, (B) certain insolvency events have occurred
or (C) the consultation period under the Intercreditor Agreement does not apply because the Senior Secured
Creditors (as defined therein) have determined in good faith that to enter into consultation could reasonably
be expected to have a material adverse effect on the Security Agent’s ability to enforce any of the
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Collateral or the realization of proceeds thereof and have instructed the Security Agent as to the
enforcement of the Collateral;
(5)
certain events of bankruptcy, insolvency or court protection of the Issuer or a Significant Subsidiary or
group of Restricted Subsidiaries that, taken together (as of the latest audited consolidated financial
statements for the Issuer and its Restricted Subsidiaries), would constitute a Significant Subsidiary (the
“bankruptcy provisions”);
(6)
failure by the Issuer or any Significant Subsidiary or group of Restricted Subsidiaries that, taken together
(as of the latest audited consolidated financial statements for the Issuer and its Restricted Subsidiaries),
would constitute a Significant Subsidiary to pay final judgments aggregating in excess of
SEK100.0 million (exclusive of any amounts that a solvent insurance company has acknowledged liability
for), which judgments are not paid, discharged or stayed for a period of 60 days after the judgment
becomes final (the “judgment default provision”);
(7)
any security interest under the Security Documents shall, at any time, cease to be in full force and effect
(other than in accordance with the terms of the relevant Security Document, the Intercreditor Agreement,
any Additional Intercreditor Agreement and the Senior Secured Indenture) with respect to Collateral having
a fair market value in excess of SEK50.0 million for any reason other than the satisfaction in full of all
obligations under the Senior Secured Indenture or the release of any such security interest in accordance
with the terms of the Senior Secured Indenture, the Intercreditor Agreement, any Additional Intercreditor
Agreement or the Security Documents or any such security interest created thereunder shall be declared
invalid or unenforceable or the Issuer or any Restricted Subsidiary shall assert in writing that any such
security interest is invalid or unenforceable and any such Default continues for 10 days; and
(8)
any Notes Guarantee of a Significant Subsidiary ceases to be in full force and effect (other than in
accordance with the terms of such Guarantee or the Senior Secured Indenture) or is declared invalid or
unenforceable in a judicial proceeding or any Guarantor denies or disaffirms in writing its obligations
under its Notes Guarantee and any such Default continues for 10 days.
If an Event of Default (other than an Event of Default described in clause (5) above) occurs and is continuing, the
Trustee by notice to the Issuer or the Holders of at least 25% in principal amount of the outstanding Notes under the Senior
Secured Indenture by written notice to the Issuer and the Trustee, may, and the Trustee at the request of such Holders shall,
declare the principal of, premium, if any, and accrued and unpaid interest on all the Senior Secured Notes under the Senior
Secured Indenture to be due and payable. Upon such a declaration, such principal, premium and accrued and unpaid interest will
be due and payable immediately. In the event of a declaration of acceleration of the Senior Secured Notes because an Event of
Default described in clause (4) under the definition of “—Events of Default” has occurred and is continuing, the declaration of
acceleration of the Senior Secured Notes shall be automatically annulled if the event of default or payment default triggering such
Event of Default pursuant to clause (4) shall be remedied or cured, or waived by the holders of the Indebtedness, or the
Indebtedness that gave rise to such Event of Default shall have been discharged in full, within 30 days after the declaration of
acceleration with respect thereto and if (1) the annulment of the acceleration of the Senior Secured Notes would not conflict with
any judgment or decree of a court of competent jurisdiction and (2) all existing Events of Default, except nonpayment of principal,
premium or interest on the Senior Secured Notes that became due solely because of the acceleration of the Senior Secured Notes,
have been cured or waived.
If an Event of Default described in clause (5) above occurs and is continuing, the principal of, premium, if any, and
accrued and unpaid interest on all the Senior Secured Notes will become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders.
Holders of the Senior Secured Notes may not enforce the Senior Secured Indenture or the Senior Secured Notes except
as provided in the Senior Secured Indenture and may not enforce the Security Documents except as provided in such Security
Documents and the Intercreditor Agreement or any Additional Intercreditor Agreement.
The Holders of a majority in principal amount of the outstanding Notes under the Senior Secured Indenture by notice to
the Trustee may, on behalf of all Holders, waive all past or existing Defaults or Events of Default (except with respect to
nonpayment of principal, premium, interest or Additional Amounts, if any) and rescind any such acceleration with respect to such
Notes and its consequences if rescission would not conflict with any judgment or decree of a court of competent jurisdiction.
Subject to the provisions of the Senior Secured Indenture relating to the duties of the Trustee, if an Event of Default
occurs and is continuing, the Trustee will be under no obligation to exercise any of the rights or powers under the Senior Secured
Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee indemnity or security
(including by way of prefunding) satisfactory to the Trustee against any loss, liability or expense. Except to enforce the right to
receive payment of principal or interest when due, no Holder may pursue any remedy with respect to the Senior Secured Indenture
or the Senior Secured Notes unless:
(1)
such Holder has previously given the Trustee notice that an Event of Default is continuing;
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(2)
Holders of at least 25% in principal amount of the outstanding Notes have requested the Trustee to pursue
the remedy;
(3)
such Holders have offered the Trustee security or indemnity satisfactory to it against any loss, liability or
expense;
(4)
the Trustee has not complied with such request within 60 days after the receipt of the request and the offer
of such security or indemnity; and
(5)
the Holders of a majority in principal amount of the outstanding Notes have not given the Trustee a
direction that, in the opinion of the Trustee, is inconsistent with such request within such 60-day period.
Subject to certain restrictions, the Holders of a majority in principal amount of the outstanding Notes are given the right
to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any
trust or power conferred on the Trustee.
The Senior Secured Indenture provides that, in the event an Event of Default has occurred and is continuing, the
Trustee will be required in the exercise of its powers to use the degree of care that a prudent person would use in the conduct of its
own affairs. The Trustee, however, may refuse to follow any direction that conflicts with law or the Senior Secured Indenture or
that the Trustee determines is unduly prejudicial to the rights of any other Holder or that would involve the Trustee in personal
liability. Prior to taking any action under the Senior Secured Indenture, the Trustee will be entitled to indemnification or security
(including by way of prefunding) satisfactory to it in its sole discretion against all losses and expenses caused by taking or not
taking such action. Prior to the occurrence of an Event of Default, the Trustee will have no obligation to monitor compliance by
the Issuer with the Senior Secured Indenture. The Senior Secured Indenture will provide that if a Default occurs and is continuing
and the Trustee is informed of such occurrence by the Issuer, the Trustee must give notice of the Default to the Holders within 60
days after being notified by the Issuer. Except in the case of a Default in the payment of principal of, or premium, if any, or
interest on any Senior Secured Note, the Trustee may withhold notice if and so long as the Trustee determines that withholding
notice is in the interests of the Holders. The Issuer is required to deliver to the Trustee, within 120 days after the end of each fiscal
year, an Officer’s Certificate indicating whether the signers thereof know of any Default or Event of Default that occurred during
the previous year. The Issuer is required to deliver to the Trustee, within 30 days after the occurrence thereof, written notice of
any events of which it is aware which would constitute certain Defaults, their status and what action the Issuer is taking or
proposes to take in respect thereof.
The Senior Secured Indenture provides that (i) if a Default occurs for a failure to deliver a required certificate in
connection with another default (an “Initial Default”) then at the time such Initial Default is cured, such Default for a failure to
report or deliver a required certificate in connection with the Initial Default will also be cured without any further action and
(ii) any Default or Event of Default for the failure to comply with the time periods prescribed in the covenant entitled “—Certain
Covenants—Reports” or otherwise to deliver any notice or certificate pursuant to any other provision of this Senior Secured
Indenture shall be deemed to be cured upon the delivery of any such report required by such covenant or notice or certificate, as
applicable, even though such delivery is not within the prescribed period specified in the Senior Secured Indenture.
The Senior Secured Indenture provides for the Trustee to take action on behalf of the Holders in certain circumstances,
but only if the Trustee is indemnified or secured to its satisfaction (including by way of prefunding). It may not be possible for the
Trustee to take certain actions in relation to the Senior Secured Notes and, accordingly, in such circumstances the Trustee will be
unable to take action, notwithstanding the provision of an indemnity to it, and it will be for Holders to take action directly.
Amendments and Waivers
Subject to certain exceptions, the Senior Secured Notes Documents may be amended, supplemented or otherwise
modified with the consent of Holders of at least a majority in principal amount of the Senior Secured Notes then outstanding
(including consents obtained in connection with a purchase of, or tender offer or exchange offer for, Senior Secured Notes) and,
subject to certain exceptions, any default or compliance with any provisions thereof may be waived with the consent of the
Holders of at least a majority in principal amount of the Senior Secured Notes then outstanding (including consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Senior Secured Notes). However, without the consent of
Holders holding not less than 90% (or, in the case of clause (8), 75%) of the then outstanding principal amount of the Senior
Secured Notes affected, then outstanding, an amendment or waiver may not, with respect to any Senior Secured Notes held by a
non-consenting Holder:
(1)
reduce the principal amount of Senior Secured Notes whose Holders must consent to an amendment,
waiver or modification;
(2)
reduce the stated rate of or extend the stated time for payment of interest on any Senior Secured Note;
(3)
reduce the principal of or extend the Stated Maturity of any Senior Secured Note;
(4)
reduce the premium payable upon the redemption of any Senior Secured Note or change the time at which
any Senior Secured Note may be redeemed, in each case as described under “—Optional Redemption”;
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(5)
make any Senior Secured Note payable in money other than that stated in the Senior Secured Note;
(6)
impair the right of any Holder to receive payment of principal of and interest or Additional Amounts, if
any, on such Holder’s Senior Secured Notes on or after the due dates therefor or to institute suit for the
enforcement of any such payment on or with respect to such Holder’s Senior Secured Notes;
(7)
make any change in the provision of the Senior Secured Indenture described under “—Withholding Taxes”
that adversely affects the right of any Holder of such Senior Secured Notes in any material respect or
amends the terms of such Senior Secured Notes in a way that would result in a loss of an exemption from
any of the Taxes described thereunder or an exemption from any obligation to withhold or deduct Taxes so
described thereunder unless the Issuer agrees to pay Additional Amounts, if any, in respect thereof;
(8)
release any security interests granted for the benefit of the Holders in the Collateral other than in
accordance with the terms of the Notes Security Documents, the Intercreditor Agreement, any applicable
Additional Intercreditor Agreement or the Senior Secured Indenture;
(9)
waive a Default or Event of Default with respect to the nonpayment of principal, premium or interest or
Additional Amounts, if any, on the Senior Secured Notes (except pursuant to a rescission of acceleration of
the Senior Secured Notes by the Holders of at least a majority in aggregate principal amount of such Senior
Secured Notes and a waiver of the payment default that resulted from such acceleration);
(10)
release any Guarantor from any of its obligations under its Notes Guarantee or the Senior Secured
Indenture, except in accordance with the terms of the Senior Secured Indenture and the Intercreditor
agreement; or
(11)
make any change in the amendment or waiver provisions which require the Holders’ consent described in
this sentence,
provided, however, that if such amendment of waiver described in clauses (2), (3) and (4) above only affects or would
only affect Holders of one or more series of Senior Secured Notes, and does not or would not affect Holders of the Senior Secured
Notes generally, only the consent of the Holders of not less than 90% of the then outstanding principal amount of the relevant
series of Senior Secured Notes shall be required.
Notwithstanding the foregoing, without the consent of any Holder, the Issuer, the Trustee, the Security Agent and the
other parties thereto, as applicable, may amend or supplement any Senior Secured Notes Documents to:
(1)
cure any ambiguity, omission, defect, manifest error or inconsistency;
(2)
provide for the assumption by a successor Person of the obligations of the Issuer or any Restricted
Subsidiary under any Senior Secured Notes Document;
(3)
add to the covenants or provide for a Notes Guarantee for the benefit of the Holders or surrender any right
or power conferred upon the Issuer or any Restricted Subsidiary;
(4)
make any change that would provide additional rights or benefits to the Trustee or the Holders or that does
not adversely affect the rights or benefits to the Trustee or any of the Holders in any material respect under
the Senior Secured Notes Documents;
(5)
make such provisions as necessary (as determined in good faith by the Board of Directors or a member of
Senior Management of the Issuer) for the issuance of Additional Senior Secured Notes;
(6)
to provide for any Restricted Subsidiary to provide a Notes Guarantee in accordance with the covenant
described under “—Certain Covenants—Limitation on Indebtedness” or “—Additional Guarantees,” to add
Guarantees with respect to the Senior Secured Notes, to add security to or for the benefit of the Senior
Secured Notes, or to confirm and evidence the release, termination, discharge or retaking of any Notes
Guarantee or Lien (including the Collateral and the Security Documents) or any amendment in respect
thereof with respect to or securing the Senior Secured Notes when such release, termination, discharge or
retaking or amendment is provided for under the Senior Secured Indenture, the Security Documents, the
Intercreditor Agreement or any Additional Intercreditor Agreement;
(7)
to conform the text of the Senior Secured Indenture, the Security Documents or the Senior Secured Notes
to any provision of this “Description of the Senior Secured Notes” to the extent that such provision in this
“Description of the Senior Secured Notes” was intended to be a verbatim recitation of a provision of the
Senior Secured Indenture, the Security Documents or the Senior Secured Notes;
(8)
to evidence and provide for the acceptance and appointment under the Senior Secured Indenture or the
Intercreditor Agreement or any Additional Intercreditor Agreement of a successor Trustee or Security
Agent pursuant to the requirements thereof or to provide for the accession by the Trustee or Security Agent
to any Senior Secured Notes Document;
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(9)
in the case of the Security Documents, to mortgage, pledge, hypothecate or grant a security interest in favor
of the Security Agent for the benefit of the Holders or parties to the Revolving Credit Facility, in any
property which is required by the Security Documents or the Revolving Credit Facility (as in effect on the
Issue Date) to be mortgaged, pledged or hypothecated, or in which a security interest is required to be
granted to the Security Agent, or to the extent necessary to grant a security interest in the Collateral for the
benefit of any Person; provided that the granting of such security interest is not prohibited by the Senior
Secured Indenture or the Intercreditor Agreement or any Additional Intercreditor Agreement and the
covenant described under “—Certain Covenants—Impairment of Security Interest” is complied with; or
(10)
as provided in “—Certain Covenants—Additional Intercreditor Agreements.”
In formulating its decision on such matters, the Trustee shall be entitled to require and rely absolutely on such evidence
as it deems necessary, including Officer’s Certificates and Opinions of Counsel.
The consent of the Holders is not necessary under the Senior Secured Indenture to approve the particular form of any
proposed amendment of any Senior Secured Notes Document. It is sufficient if such consent approves the substance of the
proposed amendment. A consent to any amendment or waiver under the Senior Secured Indenture by any Holder of Notes given
in connection with a tender of such Holder’s Notes will not be rendered invalid by such tender.
Acts by Holders
In determining whether the Holders of the required principal amount of the Senior Secured Notes have concurred in any
direction, waiver or consent, the Senior Secured Notes owned by the Issuer or by any Person directly or indirectly controlled, or
controlled by, or under direct or indirect common control with, the Issuer will be disregarded and deemed not to be outstanding.
Defeasance
The Issuer at any time may terminate all obligations of the Issuer and each Guarantor under the Senior Secured Notes
and the Senior Secured Indenture (“legal defeasance”) and cure all then existing Defaults and Events of Default, except for certain
obligations, including those respecting the defeasance trust, the rights, powers, trusts, duties, immunities and indemnities of the
Trustee and the obligations of the Issuer in connection therewith and obligations concerning issuing temporary Senior Secured
Notes, registration of Senior Secured Notes, mutilated, destroyed, lost or stolen Senior Secured Notes and the maintenance of an
office or agency for payment and money for security payments held in trust. Subject to the foregoing, if the Issuer exercises its
legal defeasance option, the Notes Security Documents and the rights of the Trustee and the Holders under the Intercreditor
Agreement or any Additional Intercreditor Agreement in effect at such time will terminate (other than with respect to the
defeasance trust).
The Issuer at any time may terminate its and the Guarantors’ obligations under the covenants described under “Certain
Covenants” (other than clauses (1) and (2) under each of “—Certain Covenants—Merger and Consolidation—The Issuer”) and
“Change of Control” and the default provisions relating to such covenants described under “Events of Default” above, the
operation of the cross-default upon a payment default, the cross acceleration provisions, the bankruptcy provisions with respect to
the Issuer and the Significant Subsidiaries, the judgment default provision, the guarantee provision and the security default
provision described under “—Events of Default” (“covenant defeasance”).
The Issuer at its option at any time may exercise its legal defeasance option notwithstanding its prior exercise of its
covenant defeasance option. If the Issuer exercises its legal defeasance option, payment of the Senior Secured Notes may not be
accelerated because of an Event of Default with respect to such Senior Secured Notes. If the Issuer exercises its covenant
defeasance option with respect to the Senior Secured Notes, payment of the Senior Secured Notes may not be accelerated because
of an Event of Default specified in clause (3) (other than with respect to clauses (1) and (2) of the covenants described under “—
Certain Covenants—Merger and Consolidation—The Issuer”, (4), (5) (with respect only to the Significant Subsidiaries), (6),
(7) or (8) under “—Events of Default.”
In order to exercise either defeasance option, the Issuer must irrevocably deposit in trust (the “defeasance trust”) with
the Trustee (or another entity designated by the Trustee for this purpose) cash in euros or euro-denominated European
Government Obligations or a combination thereof sufficient for the payment of principal, premium, if any, and interest on the
Senior Secured Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including
delivery to the Trustee of:
(1)
an Opinion of Counsel in the United States to the effect that Holders of the relevant Senior Secured Notes
will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and
defeasance and will be subject to U.S. federal income tax on the same amount and in the same manner and
at the same times as would have been the case if such deposit and defeasance had not occurred (and in the
case of legal defeasance only, such Opinion of Counsel in the United States must be based on a ruling
received by the Issuer from, or published by, the U.S. Internal Revenue Service or other change in
applicable U.S. federal income tax law);
(2)
an Officer’s Certificate stating that the deposit was not made by the Issuer with the intent of defeating,
hindering, delaying, defrauding or preferring any creditors of the Issuer;
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(3)
an Officer’s Certificate and an Opinion of Counsel (which opinion of counsel may be subject to customary
assumptions and exclusions), each stating that all conditions precedent provided for or relating to legal
defeasance or covenant defeasance, as the case may be, have been complied with;
(4)
an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the U.S. Investment Company Act of 1940; and
(5)
the Issuer delivers to the Trustee all other documents or other information that the Trustee may reasonably
require in connection with either defeasance option.
Satisfaction and Discharge
The Senior Secured Indenture, and the rights of the Trustee and the Holders under the Intercreditor Agreement and any
Additional Intercreditor Agreement and the Security Documents will be discharged and cease to be of further effect (except as to
surviving rights of conversion or transfer or exchange of the Senior Secured Notes, as expressly provided for in the Senior
Secured Indenture) as to all outstanding Senior Secured Notes when (1) either (a) all the Senior Secured Notes previously
authenticated and delivered (other than certain lost, stolen or destroyed Senior Secured Notes, and certain Senior Secured Notes
for which provision for payment was previously made and thereafter the funds have been released to the Issuer) have been
delivered to the Principal Paying Agent for cancellation; or (b) all Senior Secured Notes not previously delivered to the Principal
Paying Agent for cancellation (i) have become due and payable, (ii) will become due and payable at their Stated Maturity within
one year or (iii) are to be called for redemption within one year under arrangements reasonably satisfactory to the Trustee for the
giving of notice of redemption by the Principal Paying Agent in the name, and at the expense, of the Issuer; (2) the Issuer has
deposited or caused to be deposited with the Trustee (or another entity designated by the Trustee for this purpose), money or eurodenominated European Government Obligations, or a combination thereof, as applicable, in an amount sufficient to pay and
discharge the entire Indebtedness on the Senior Secured Notes not previously delivered to the Principal Paying Agent for
cancellation, for principal, premium, if any, and interest to the date of deposit (in the case of Senior Secured Notes that have
become due and payable), or to the Stated Maturity or redemption date, as the case may be; (3) the Issuer has paid or caused to be
paid all other sums payable under the Senior Secured Indenture; and (4) the Issuer has delivered to the Trustee an Officer’s
Certificate and an Opinion of Counsel each to the effect that all conditions precedent under the “Satisfaction and Discharge”
section of the Senior Secured Indenture relating to the satisfaction and discharge of the Senior Secured Indenture have been
complied with, provided that any such counsel may rely on any Officer’s Certificate as to matters of fact (including as to
compliance with the foregoing clauses (1), (2) and (3)).
No Personal Liability of Directors, Officers, Employees and Shareholders
No director, officer, employee, incorporator or shareholder of the Issuer or any of its Subsidiaries or Affiliates, as such,
shall have any liability for any obligations of the Issuer, Issuer or any Guarantor under the Senior Secured Notes Documents or for
any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting a Senior Secured
Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Senior Secured
Notes. Such waiver may not be effective to waive liabilities under the U.S. federal securities laws and it is the view of the SEC
that such a waiver is against public policy.
Concerning the Trustee and Certain Agents
Deutsche Trustee Company Limited is appointed as Trustee under the Senior Secured Indenture. The Senior Secured
Indenture provides that, except during the continuance of an Event of Default, the Trustee will perform only such duties as are set
forth specifically in the Senior Secured Indenture. During the existence of an Event of Default, the Trustee will exercise such of
the rights and powers vested in it under the Senior Secured Indenture and use the same degree of care that a prudent Person would
use in conducting its own affairs. The permissive rights of the Trustee to take or refrain from taking any action enumerated in the
Senior Secured Indenture will not be construed as an obligation or duty.
The Senior Secured Indenture imposes certain limitations on the rights of the Trustee, should it become a creditor of the
Issuer, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as
security or otherwise. The Trustee or any Agent will be permitted to engage in other transactions with the Issuer and its Affiliates
and Subsidiaries. If the Trustee or any Agent becomes the Holder, beneficial owner or pledgee of any Notes, it may deal with the
Issuer with the same rights it would have if it were not the Trustee, Paying Agent or any other such Agent.
The Senior Secured Indenture sets out the terms under which the Trustee may retire or be removed, and replaced. Such
terms will include, among others, (1) that the Trustee may be removed at any time by the Holders of a majority in principal
amount of the then outstanding Notes, or may resign at any time by giving written notice to the Issuer and (2) that if the Trustee at
any time (a) has or acquires a conflict of interest that is not eliminated, or (b) becomes incapable of acting as Trustee or becomes
insolvent or bankrupt, then the Issuer may remove the Trustee, or any Holder who has been a bona fide Holder for not less than
six months may petition any court for removal of the Trustee and appointment of a successor Trustee.
Any removal or resignation of the Trustee shall not become effective until the acceptance of appointment by the
successor Trustee.
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The Senior Secured Indenture contains provisions for the indemnification of the Trustee for any loss, liability, Taxes or
expenses Incurred without gross negligence, willful misconduct or fraud on its part, arising out of or in connection with the
acceptance or administration of the Senior Secured Indenture.
Prescription
Claims against the Issuer and the Guarantors for the payment of principal, or premium, if any, on the Senior Secured
Notes will be prescribed ten years after the applicable due date for payment thereof. Claims against the Issuer and the Guarantors
for the payment of interest on the Senior Secured Notes will be prescribed six years after the applicable due date for payment of
interest.
Currency Indemnity and Calculation of SEK-Denominated Restrictions
The euro and SEK are the sole currencies of account and payment for all sums payable by the Issuer and the
Guarantors, if any, under or in connection with the Senior Secured Notes and the Notes Guarantees including damages. Any
amount received or recovered in a currency other than euro (in the case of the EUR Senior Secured Floating Rate Notes) or SEK
(in the case of the SEK Senior Secured Floating Rate Notes), whether as a result of, or the enforcement of, a judgment or order of
a court of any jurisdiction, in the winding-up or dissolution of the Issuer, any Guarantor or otherwise by any Holder or by the
Trustee, in respect of any sum expressed to be due to it from the Issuer or a Guarantor will only constitute a discharge to the Issuer
or such Guarantor, as applicable, to the extent of the euro amount or the SEK amount (as applicable) which the recipient is able to
purchase with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not
practicable to make that purchase on that date, on the first date on which it is practicable to do so).
If that euro or SEK amount is less than the euro or SEK amount expressed to be due to the recipient or the Trustee
under any Senior Secured Note (as applicable), the Issuer and the Guarantors will indemnify them against any loss sustained by
such recipient or the Trustee as a result. In any event, the Issuer and the Guarantors will indemnify the recipient or the Trustee on
a joint or several basis against the cost of making any such purchase. For the purposes of this currency indemnity provision, it will
be prima facie evidence of the matter stated therein for the Holder of a Senior Secured Note or the Trustee to certify in a manner
reasonably satisfactory to the Issuer (indicating the sources of information used) the loss it Incurred in making any such purchase.
These indemnities constitute a separate and independent obligation from the Issuer’s and the Guarantors’ other obligations, will
give rise to a separate and independent cause of action, will apply irrespective of any waiver granted by any Holder of a Senior
Secured Note or the Trustee (other than a waiver of the indemnities set out herein) and will continue in full force and effect
despite any other judgment, order, claim or proof for a liquidated amount in respect of any sum due under any Senior Secured
Note or any Note Guarantee, or to the Trustee.
Except as otherwise specifically set forth herein, for purposes of determining compliance with any SEK-denominated
restriction herein, the SEK Equivalent amount for purposes hereof that is denominated in a currency other than SEK shall be
calculated based on the relevant currency exchange rate in effect on the date such non-SEK amount is Incurred or made, as the
case may be.
Listing
Following the Issue Date, we intend to make an application to also list the SEK Senior Secured Floating Rate Notes on
NASDAQ OMX Stockholm. Application has also been made to list the Notes on the Official List of the Irish Stock Exchange and
for the Notes to be admitted to trading on the Global Exchange Market thereof and trading has commenced on October 22, 2013.
Accordingly, the SEK Senior Secured Floating Rate Notes will be listed both on the Irish Stock Exchange and on NASDAQ
OMX Stockholm, subject to acceptance of the application to list the SEK Senior Secured Floating Rate Notes on NASDAQ OMX
Stockholm for which there can be no assurance.
Consent to Jurisdiction and Service
In relation to any legal action or proceedings arising out of or in connection with the Senior Secured Indenture and the
Senior Secured Notes, the Issuer and the Guarantors will in the Senior Secured Indenture irrevocably submit to the jurisdiction of
the federal and state courts in the Borough of Manhattan in the City of New York, County and State of New York, United States.
The Senior Secured Indenture provides that the Issuer and each Guarantor, will appoint CT Corporation System, as their agent for
service of process in any suit, action or proceeding with respect to the Indenture, the Notes and the Notes Guarantees brought in
any U.S. federal or New York state court located in the City of New York.
Governing Law
The Senior Secured Indenture and the Senior Secured Notes, and the rights and duties of the parties thereunder, are
governed by and construed in accordance with the laws of the State of New York. The Intercreditor Agreement and the rights and
duties of the parties thereunder are governed by and construed in accordance with the laws of England and Wales.
Certain Definitions
“Acquired Indebtedness” means Indebtedness (1) of a Person or any of its Subsidiaries existing at the time such Person
becomes a Restricted Subsidiary, or (2) assumed in connection with the acquisition of assets from such Person, in each case
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whether or not Incurred by such Person in connection with such Person becoming a Restricted Subsidiary of the Issuer or such
acquisition or (3) of a Person at the time such Person merges with or into or consolidates or otherwise combines with the Issuer or
any Restricted Subsidiary. Acquired Indebtedness shall be deemed to have been Incurred, with respect to clause (1) of the
preceding sentence, on the date such Person becomes a Restricted Subsidiary and, with respect to clause (2) of the preceding
sentence, on the date of consummation of such acquisition of assets and, with respect to clause (3) of the preceding sentence, on
the date of the relevant merger, consolidation or other combination.
“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under
direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with
respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings
correlative to the foregoing.
“Asset Disposition” means any direct or indirect sale, lease (other than an operating lease entered into in the ordinary
course of business), transfer, issuance or other disposition, or a series of related sales, leases (other than operating leases entered
into in the ordinary course of business), transfers, issuances or dispositions that are part of a common plan, of shares of Capital
Stock of a Subsidiary (other than directors’ qualifying shares), property or other assets (each referred to for the purposes of this
definition as a “disposition”) by the Issuer or any of its Restricted Subsidiaries, including any disposition by means of a merger,
consolidation or similar transaction. Notwithstanding the preceding provisions of this definition, the following items shall not be
deemed to be Asset Dispositions:
(1)
a disposition by a Restricted Subsidiary to the Issuer or by the Issuer or a Restricted Subsidiary to a
Restricted Subsidiary; provided that a disposition of assets constituting Collateral by the Issuer or a
Restricted Subsidiary to a Restricted Subsidiary that is not a Guarantor and that has Incurred Indebtedness
pursuant to, and that is outstanding under, clause (5) of the second paragraph of the covenant described
under “—Certain Covenants—Limitation on Indebtedness” (other than Acquired Indebtedness described in
sub-clause (i) of such clause (5)) shall be deemed to be an Asset Disposition unless such disposition is
permitted under another exemption from the definition of Asset Disposition;
(2)
a disposition of cash, Cash Equivalents, Temporary Cash Investments or Investment Grade Securities;
(3)
a disposition of inventory, trading stock, security equipment or other equipment or assets in the ordinary
course of business;
(4)
a disposition of obsolete, damaged, retired, surplus or worn out equipment or assets or equipment, facilities
or other assets that are no longer useful in the conduct of the business of the Issuer and its Restricted
Subsidiaries and any transfer, termination, unwinding or other disposition of hedging instruments or
arrangements not for speculative purposes;
(5)
transactions permitted under “—Certain Covenants—Merger and Consolidation” or a transaction that
constitutes a Change of Control;
(6)
an issuance of Capital Stock by a Restricted Subsidiary to the Issuer or to another Restricted Subsidiary or
as part of or pursuant to an equity incentive or compensation plan approved by the Board of Directors or
the issuance of directors’ qualifying shares and shares issued to individuals as required by applicable law;
(7)
any dispositions of Capital Stock, properties or assets in a single transaction or series of related transactions
with a fair market value (as determined in good faith by the Board of Directors or a member of Senior
Management of the Issuer) of less than the greater of 0.5% of Total Assets and SEK50.0 million;
(8)
any Restricted Payment that is permitted to be made, and is made, under the covenant described above
under “—Certain Covenants—Limitation on Restricted Payments” and the making of any Permitted
Payment or Permitted Investment;
(9)
the granting of Liens not prohibited by the covenant described above under the caption “—
Certain Covenants—Limitation on Liens”;
(10)
dispositions of receivables in connection with the compromise, settlement or collection thereof in the
ordinary course of business or in bankruptcy or similar proceedings and exclusive of factoring or similar
arrangements or any sale of assets received by the Issuer or a Restricted Subsidiary upon the foreclosure of
a Lien granted in favor of the Issuer or any Restricted Subsidiary;
(11)
the licensing or sub-licensing of intellectual property or other general intangibles and licenses, sub-licenses,
leases or subleases of other property, in each case, in the ordinary course of business;
(12)
foreclosure, condemnation, taking by eminent domain or any similar action with respect to any property or
other assets;
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(13)
the sale or discount (with or without recourse, and on customary or commercially reasonable terms) of
accounts receivable or notes receivable arising in the ordinary course of business, or the conversion or
exchange of accounts receivable for notes receivable;
(14)
sales or dispositions of receivables in connection with any Qualified Receivables Financing or any
factoring transaction or in the ordinary course of business;
(15)
any issuance, sale or disposition of Capital Stock, Indebtedness or other securities of an Unrestricted
Subsidiary;
(16)
any disposition of Capital Stock of a Restricted Subsidiary pursuant to an agreement or other obligation
with or to a Person (other than the Issuer or a Restricted Subsidiary) from whom such Restricted Subsidiary
was acquired, or from whom such Restricted Subsidiary acquired its business and assets (having been
newly formed in connection with such acquisition), made as part of such acquisition and in each case
comprising all or a portion of the consideration in respect of such sale or acquisition;
(17)
any surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other
claims of any kind;
(18)
any disposition of assets to a Person who is providing services related to such assets, the provision of which
have been or are to be outsourced by the Issuer or any Restricted Subsidiary to such Person; provided,
however, that the Board of Directors shall certify that in the opinion of the Board of Directors, the
outsourcing transaction will be economically beneficial to the Issuer and its Restricted Subsidiaries
(considered as a whole); provided, further, that the fair market value of the assets disposed of, when taken
together with all other dispositions made pursuant to this clause (18), does not exceed SEK100.0 million;
(19)
an issuance of Capital Stock by a Restricted Subsidiary to the Issuer or to another Restricted Subsidiary, an
issuance or sale by a Restricted Subsidiary of Preferred Stock or Redeemable Capital Stock that is
permitted by the covenant described above under “—Certain Covenants—Limitation on Indebtedness” or
an issuance of Capital Stock by the Issuer pursuant to an equity incentive or compensation plan approved
by the Board of Directors;
(20)
sales, transfers or other dispositions of Investments in joint ventures to the extent required by, or made
pursuant to, customary buy/sell arrangements between the joint venture parties set forth in joint venture
arrangements and similar binding agreements; provided that any cash or Cash Equivalents received in such
sale, transfer or disposition is applied in accordance with the “—Certain Covenants—Limitation on Sales of
Assets and Subsidiary Stock” covenant; and
(21)
any disposition with respect to property built, owned or otherwise acquired by the Issuer or any Restricted
Subsidiary pursuant to customary sale and lease-back transactions, asset securitizations and other similar
financings permitted by the Senior Secured Indenture.
“Associate” means (i) any Person engaged in a Similar Business of which the Issuer or its Restricted Subsidiaries are
the legal and beneficial owners of between 20% and 50% of all outstanding Voting Stock and (ii) any joint venture entered into by
the Issuer or any Restricted Subsidiary of the Issuer.
“Board of Directors” means (1) with respect to the Issuer or any corporation, the board of directors or managers, as
applicable, of the corporation, or any duly authorized committee thereof; (2) with respect to any partnership, the board of directors
or other governing body of the general partner of the partnership or any duly authorized committee thereof; and (3) with respect to
any other Person, the board or any duly authorized committee of such Person serving a similar function. Whenever any provision
of the Senior Secured Indenture requires any action or determination to be made by, or any approval of, a Board of Directors, such
action, determination or approval shall be deemed to have been taken or made if approved by a majority of the directors
(excluding employee representatives, if any) on any such Board of Directors (whether or not such action or approval is taken as
part of a formal board meeting or as a formal board approval).
“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in
Stockholm, Sweden, Luxembourg or London, United Kingdom are authorized or required by law to close.
“Capital Stock” of any Person means any and all shares of, rights to purchase, warrants or options for, or other
equivalents of or partnership or other interests in (however designated), equity of such Person, including any Preferred Stock, but
excluding any debt securities convertible into such equity.
“Capitalized Lease Obligations” means an obligation that is required to be classified and accounted for as a capitalized
lease for financial reporting purposes on the basis of IFRS (as in effect on the Issue Date for purposes of determining whether a
lease is a capitalized lease). The amount of Indebtedness will be, at the time any determination is to be made, the amount of such
obligation required to be capitalized on a balance sheet (excluding any notes thereto) prepared in accordance with IFRS, and the
stated maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date
such lease may be terminated without penalty.
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“Cash Equivalents” means:
(1)
securities issued or directly and fully Guaranteed or insured by the United States or Canadian governments,
a member state of the European Union, Switzerland or Norway or, in each case, any agency or
instrumentality of thereof (provided that the full faith and credit of such country or such member state is
pledged in support thereof), having maturities of not more than two years from the date of acquisition;
(2)
certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers’
acceptances having maturities of not more than one year from the date of acquisition thereof issued by any
lender party to the Revolving Credit Facility or by any bank or trust company (a) whose commercial paper
is rated at least “A-1” or the equivalent thereof by S&P or at least “P-1” or the equivalent thereof by
Moody’s (or if at the time neither is issuing comparable ratings, then a comparable rating of another
Nationally Recognized Statistical Rating Organization) or (b) (in the event that the bank or trust company
does not have commercial paper which is rated) having combined capital and surplus in excess of
€250 million;
(3)
repurchase obligations with a term of not more than 30 days for underlying securities of the types described
in clauses (1) and (2) entered into with any bank meeting the qualifications specified in clause (2) above;
(4)
commercial paper rated at the time of acquisition thereof at least “A-2” or the equivalent thereof by S&P or
“P-2” or the equivalent thereof by Moody’s or carrying an equivalent rating by a Nationally Recognized
Statistical Rating Organization, if both of the two named rating agencies cease publishing ratings of
investments or, if no rating is available in respect of the commercial paper, the issuer of which has an
equivalent rating in respect of its long-term debt, and in any case maturing within one year after the date of
acquisition thereof;
(5)
readily marketable direct obligations issued by any state of the United States of America, any province of
Canada, any member of the European Union, Switzerland or Norway or any political subdivision thereof,
in each case, having one of the two highest rating categories obtainable from either Moody’s or S&P (or, if
at the time, neither is issuing comparable ratings, then a comparable rating of another Nationally
Recognized Statistical Rating Organization) with maturities of not more than two years from the date of
acquisition;
(6)
Indebtedness or preferred stock issued by Persons with a rating of “BBB-” or higher from S&P or “Baa3”
or higher from Moody’s (or, if at the time, neither is issuing comparable ratings, then a comparable rating
of another Nationally Recognized Statistical Rating Organization) with maturities of 12 months or less
from the date of acquisition;
(7)
bills of exchange issued in the United States, Canada, a member state of the European Union, Switzerland,
Norway or Japan eligible for rediscount at the relevant central bank and accepted by a bank (or any
dematerialized equivalent);
(8)
interests in any investment company, money market or enhanced high yield fund which invests 95% or
more of its assets in instruments of the type specified in clauses (1) through (7) above; and
(9)
for purposes of clause (2) of the definition of “Asset Disposition,” the marketable securities portfolio
owned by the Issuer and its Subsidiaries on the Issue Date, carried under the “Short Term Investments and
Restricted Funds” line item of the Issuer’s consolidated balance sheet.
“Change of Control” means the occurrence of any of the following:
(1)
the Issuer becoming aware of (by way of a report or any other filing pursuant to Section 13(d) of the
Exchange Act, proxy, vote, written notice or otherwise) any “person” or “group” of related persons (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act as in effect on the Issue Date), other
than one or more Permitted Holders, is or becomes the “beneficial owner” (as defined in Rules 13d-3 and
13d-5 under the Exchange Act as in effect on the Issue Date), directly or indirectly, of more than 50% of
the total voting power of the Voting Stock of the Issuer;
(2)
the sale, lease, transfer, conveyance or other disposition (other than by way of merger, consolidation or
other business combination transaction), in one or a series of related transactions, of all or substantially all
of the assets of the Issuer and its Restricted Subsidiaries taken as a whole to a Person, other than a
Restricted Subsidiary or one or more Permitted Holders,
provided that, in each case, a Change of Control shall not be deemed to have occurred if such a Change of Control is
also a Specified Change of Control Event.
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“Clearstream” means Clearstream Banking, société anonyme, as currently in effect or any successor securities clearing
agency.
“Collateral ” means any and all assets from time to time in which a security interest has been or will be granted on the
Issue Date or thereafter pursuant to any Security Document to secure the obligations under the Senior Secured Indenture, the
Senior Secured Notes and/or any Notes Guarantee of the Senior Secured Notes.
“Commodity Hedging Agreements” means, in respect of a Person, any commodity purchase contract, commodity
futures or forward contract, commodities option contract or other similar contract (including commodities derivative agreements
or arrangements), to which such Person is a party or a beneficiary.
“Consolidated EBITDA” for any period means, without duplication, the Consolidated Net Income for such period, plus
the following to the extent deducted in calculating such Consolidated Net Income:
(1)
Consolidated Interest Expense;
(2)
Consolidated Income Taxes;
(3)
consolidated depreciation expense;
(4)
consolidated amortization (excluding amortization of a prepaid cash charge or expense that was paid in a
prior period) or impairment expense;
(5)
any expenses, charges or other costs related to any issuance of Capital Stock, listing of Capital Stock,
Investment, acquisition (including amounts paid in connection with the acquisition or retention of one or
more individuals comprising part of a management team retained to manage the acquired business and any
expenses, charges or other costs related to deferred or contingent payments), disposition, recapitalization or
the Incurrence of any Indebtedness permitted by the Senior Secured Indenture (whether or not successful)
(including any such fees, expenses or charges related to the Refinancing (including any expenses in
connection with related due diligence activities)), in each case, as determined in good faith by the Board of
Directors or a member of Senior Management of the Issuer;
(6)
any minority interest expense (whether paid or not) consisting of income attributable to minority equity
interests of third parties in such period or any prior period or any net earnings, income or share of profit of
any Associates, except to the extent of dividends declared or paid on, or other cash payments in respect of,
equity interests held by such third parties;
(7)
the amount of management, monitoring, consulting and advisory fees and related expenses paid in such
period to the Permitted Holders to the extent permitted by the covenant described under “—Certain
Covenants—Limitation on Affiliate Transactions”;
(8)
other non-cash charges, write-downs or items reducing Consolidated Net Income (excluding any such noncash charge, write-down or item to the extent it represents an accrual of or reserve for cash charges
expected to be paid in any future period) or other items classified by the Issuer as special, extraordinary,
exceptional, unusual or nonrecurring items less other non-cash items of income increasing Consolidated
Net Income (excluding any such non-cash item of income to the extent it represents a receipt of cash
expected to be paid in any future period);
(9)
the proceeds of any business interruption insurance received or that become receivable during such period
to the extent the associated losses arising out of the event that resulted in the payment of such business
interruption insurance proceeds were included in computing Consolidated Net Income;
(10)
payments received or that become receivable with respect to, expenses that are covered by the
indemnification provisions in any agreement entered into by such Person in connection with an acquisition
to the extent such expenses were included in computing Consolidated Net Income; and
(11)
any Receivables Fees and discounts on the sale of accounts receivables in connection with any Qualified
Receivables Financing representing, in the Issuer’s reasonable determination, the implied interest
component of such discount for such period.
“Consolidated Income Taxes” means Taxes or other payments, including deferred taxes, based on income, profits or
capital of any of the Issuer and its Restricted Subsidiaries whether or not paid, estimated, accrued or required to be remitted to any
governmental authority.
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“Consolidated Interest Expense” means, for any period (in each case, determined on the basis of IFRS), the
consolidated net interest income/expense of the Issuer and its Restricted Subsidiaries, whether paid or accrued, plus or including
(without duplication) any interest, costs and charges consisting of:
(1)
interest expense attributable to Capitalized Lease Obligations;
(2)
amortization of original issue discount (but not including deferred financing fees, debt issuance costs,
commissions, fees and expenses);
(3)
non-cash interest expense;
(4)
costs associated with Hedging Obligations (excluding amortization of fees or any non-cash interest expense
attributable to the movement in mark-to-market valuation of such obligations);
(5)
the product of (a) all dividends or other distributions in respect of all Disqualified Stock of the Issuer and
all Preferred Stock of any Restricted Subsidiary, to the extent held by Persons other than the Issuer or a
subsidiary of the Issuer, multiplied by (b) a fraction, the numerator of which is one and the denominator of
which is one minus the then current combined national, state and local statutory tax rate of such Person,
expressed as a decimal, as estimated in good faith by a responsible accounting or financial officer of the
Issuer;
(6)
the consolidated interest expense that was capitalized during such period; and
(7)
interest actually paid by the Issuer or any Restricted Subsidiary under any Notes Guarantee of Indebtedness
or other obligation of any other Person,
minus (i) accretion or accrual of discounted liabilities other than Indebtedness, (ii) any expense resulting from the
discounting of any Indebtedness in connection with the application of purchase accounting in connection with any
acquisition, and (iii) interest with respect to Indebtedness of any Holding Company of such Person appearing upon the
balance sheet of such Person solely by reason of push-down accounting under IFRS.
“Consolidated Leverage” means the sum of the aggregate outstanding Indebtedness of the Issuer and its Restricted
Subsidiaries (excluding Hedging Obligations entered into for bona fide hedging purposes and not for speculative purposes (as
determined in good faith by the Issuer))).
“Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (x) Consolidated Leverage at such
date to (y) the aggregate amount of Consolidated EBITDA for the period of the four most recent fiscal quarters ending prior to the
date of such determination for which internal consolidated financial statements of the Issuer are available. In the event that the
Issuer or any of its Restricted Subsidiaries Incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise
discharges any Indebtedness subsequent to the commencement of the period for which the Consolidated Leverage Ratio is being
calculated and on or prior to the date on which the event for which the calculation of the Consolidated Leverage Ratio is made
(the “Calculation Date”), then the Consolidated Leverage Ratio will be calculated giving pro forma effect (as determined in good
faith by a responsible accounting or financial officer of the Issuer) to such Incurrence, assumption, guarantee, repayment,
repurchase, redemption, defeasance or other discharge of Indebtedness, and the use of the proceeds therefrom, as if the same had
occurred at the beginning of the applicable reference period; provided, however, that the pro forma calculation shall not give
effect to (i) any Indebtedness Incurred on the Calculation Date pursuant to the provisions described in the second paragraph under
“—Certain Covenants—Limitation on Indebtedness,” or (ii) the discharge on the Calculation Date of any Indebtedness to the
extent that such discharge results from the proceeds Incurred pursuant to the provisions described in the second paragraph under
“—Certain Covenants—Limitation on Indebtedness.”
In addition, for purposes of calculating the Consolidated Leverage Ratio:
(1)
acquisitions and Investments that have been made by the Issuer or any of its Restricted Subsidiaries,
including through mergers or consolidations, or any Person or any of its Subsidiaries which are Restricted
Subsidiaries acquired by the Issuer or any of its Restricted Subsidiaries, and including all related financing
transactions and including increases in ownership of Subsidiaries which are Restricted Subsidiaries, during
the reference period or subsequent to such reference period and on or prior to the Calculation Date, or that
are to be made on the Calculation Date, will be given pro forma effect (as determined in good faith by a
responsible accounting or financial officer of the Issuer and may include anticipated expense and cost
reduction synergies) as if they had occurred on the first day of the reference period;
(2)
the Consolidated EBITDA (whether positive or negative) attributable to discontinued operations, as
determined in accordance with IFRS, and operations, businesses or group of assets constituting a business
or operating unit (and ownership interests therein) disposed of prior to the Calculation Date, will be
excluded on a pro forma basis as if such disposition occurred on the first day of such period;
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(3)
the Consolidated Interest Expense attributable to discontinued operations, as determined in accordance with
IFRS, and operations, businesses or group of assets constituting a business or operating unit (and
ownership interests therein) disposed of prior to the Calculation Date, will be excluded on a pro forma
basis as if such disposition occurred on the first day of such period, but only to the extent that the
obligations giving rise to such Consolidated Interest Expense will not be obligations of the Issuer or any of
its Restricted Subsidiaries following the Calculation Date;
(4)
any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted
Subsidiary at all times during such reference period;
(5)
any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a
Restricted Subsidiary at any time during such reference period; and
(6)
if any Indebtedness bears a floating rate of interest, the interest expense on such Indebtedness will be
calculated as if the rate in effect on the Calculation Date had been the applicable rate for the entire period
(taking into account any Interest Rate Agreement applicable to such Indebtedness, and if any Indebtedness
is not denominated in the Issuer’s functional currency, that Indebtedness for purposes of the calculation of
Consolidated Leverage shall be treated in accordance with IFRS.
“Consolidated Net Income” means, for any period, the net income (loss) of the Issuer and its Restricted Subsidiaries
determined on a consolidated basis on the basis of IFRS; provided, however, that there will not be included in such Consolidated
Net Income:
(1)
subject to the limitations contained in clause (3) below, any net income (loss) of any Person if such Person
is not a Restricted Subsidiary, except that the Issuer’s equity in the net income of any such Person for such
period will be included in such Consolidated Net Income up to the aggregate amount of cash or Cash
Equivalents actually distributed by such Person during such period to the Issuer or a Restricted Subsidiary
as a dividend or other distribution or return on investment (subject, in the case of a dividend or other
distribution or return on investment to a Restricted Subsidiary, to the limitations contained in
clause (2) below);
(2)
solely for the purpose of determining the amount available for Restricted Payments under clause (c)(i) of
the first paragraph of the covenant described under “—Certain Covenants—Limitation on Restricted
Payments,” any net income (loss) of any Restricted Subsidiary (other than a Guarantor) if such Subsidiary
is subject to restrictions on the payment of dividends or the making of distributions by such Restricted
Subsidiary to the Issuer by operation of the terms of such Restricted Subsidiary’s charter or any agreement,
instrument, judgment, decree, order, statute or governmental rule or regulation applicable to such
Restricted Subsidiary or its shareholders (other than (a) restrictions that have been waived or otherwise
released, (b) restrictions pursuant to the Senior Secured Notes and the Senior Secured Indenture,
(c) contractual restrictions in effect on the Issue Date with respect to a Restricted Subsidiary (including
pursuant to the Revolving Credit Facility and the Intercreditor Agreement), and other restrictions with
respect to such Restricted Subsidiary that, taken as a whole, are not materially less favorable to the Holders
than such restrictions in effect on the Issue Date, and (d) restrictions specified in clause (11) of the second
paragraph of the covenant described under “—Certain Covenants—Limitation on Restrictions on
Distributions from Restricted Subsidiaries,” except that the Issuer’s equity in the net income of any such
Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate
amount of cash or Cash Equivalents actually distributed or that could have been distributed by such
Restricted Subsidiary during such period to the Issuer or another Restricted Subsidiary as a dividend or
other distribution (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation
contained in this clause);
(3)
any net gain (or loss) realized upon the sale or other disposition of any asset or disposed operations of the
Issuer or any Restricted Subsidiaries (including pursuant to any sale/leaseback transaction) which is not
sold or otherwise disposed of in the ordinary course of business (as determined in good faith by an Officer
or the Board of Directors of the Issuer);
(4)
any extraordinary, one-off, non-recurring, exceptional or unusual gain, loss, expense or charge, including
any charges or reserves in respect of any restructuring, redundancy, relocation, refinancing, integration or
severance or other post-employment arrangements, signing, retention or completion bonuses, transaction
costs (including costs related to the Refinancing or any investments), acquisition costs, business
optimization, system establishment, software or information technology implementation or development,
costs related to governmental investigations and curtailments or modifications to pension or post-retirement
benefits schemes, litigation or any asset impairment charges or the financial impacts of natural disasters
(including fire, flood and storm and related events);
(5)
the cumulative effect of a change in accounting principles;
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(6)
any non-cash compensation charge or expense arising from any grant of stock, stock options or other equity
based awards, any non-cash deemed finance charges in respect of any pension liabilities or other
provisions, any non-cash net after tax gains or losses attributable to the termination or modification of any
employee pension benefit plan and any charge or expense relating to any payment made to holders of
equity based securities or rights in respect of any dividend sharing provisions of such securities or rights to
the extent such payment was made pursuant to the covenant described under “—Certain Covenants—
Limitation on Restricted Payments”;
(7)
all deferred financing costs written off and premiums paid or other expenses Incurred directly in connection
with any early extinguishment of Indebtedness or Hedging Obligations and any net gain (loss) from any
write-off or forgiveness of Indebtedness;
(8)
any unrealized gains or losses in respect of Hedging Obligations or other financial instruments or any
ineffectiveness recognized in earnings related to qualifying hedge transactions or the fair value or changes
therein recognized in earnings for derivatives that do not qualify as hedge transactions, in each case, in
respect of Hedging Obligations;
(9)
any unrealized foreign currency transaction gains or losses in respect of Indebtedness or other obligations
of the Issuer or any Restricted Subsidiary denominated in a currency other than the functional currency of
such Person and any unrealized foreign exchange gains or losses resulting from remeasuring assets and
liabilities denominated in foreign currencies;
(10)
any unrealized foreign currency translation or transaction gains or losses in respect of Indebtedness or other
obligations of the Issuer or any Restricted Subsidiary owing to the Issuer or any Restricted Subsidiary;
(11)
any one-time non-cash charges or any amortization or depreciation, in each case to the extent related to the
Refinancing or any acquisition of another Person or business or resulting from any reorganization or
restructuring involving the Issuer or its Subsidiaries;
(12)
any goodwill or other intangible asset impairment charge or write-off or write-down; and
(13)
the impact of capitalized, accrued or accreting or pay-in-kind interest or principal on Subordinated
Shareholder Funding.
“Consolidated Senior Secured Leverage” means the sum of the aggregate outstanding Senior Secured Indebtedness of
the Issuer and its Restricted Subsidiaries (excluding Hedging Obligations entered into for bona fide hedging purposes and not for
speculative purposes (as determined in good faith by the Issuer)).
“Consolidated Senior Secured Leverage Ratio” means, as of any date of determination, the ratio of (x) the Consolidated
Senior Secured Leverage at such date to (y) the aggregate amount of Consolidated EBITDA for the period of the four most recent
fiscal quarters ending prior to the date of such determination for which internal consolidated financial statements of the Issuer are
available, in each case calculated with such pro forma and other adjustments as are consistent with the pro forma provisions set
forth in the definition of Consolidated Leverage Ratio; provided that, solely in connection with calculation of the Consolidated
Senior Secured Leverage Ratio for purposes of clause (19) of the definition of Permitted Payments, the Consolidated Senior
Secured Leverage shall be calculated by deducting the amount of cash and Cash Equivalents (other than cash or Cash Equivalents
received upon the incurrence of Indebtedness by the Issuer or any of its Restricted Subsidiaries and not immediately or
subsequently applied or used for any purpose not prohibited by the Senior Secured Indenture) that would be stated on the
consolidated balance sheet of the Issuer as of such date in accordance with IFRS.
“Contingent Obligations” means, with respect to any Person, any obligation of such Person guaranteeing in any
manner, whether directly or indirectly, any operating lease, dividend or other obligation that does not constitute Indebtedness
(“primary obligations”) of any other Person (the “primary obligor”), including any obligation of such Person, whether or not
contingent:
(1)
to purchase any such primary obligation or any property constituting direct or indirect security therefor;
to advance or supply funds:
(a)
for the purchase or payment of any such primary obligation; or
(b)
to maintain the working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor; or
to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary obligation against loss in respect
thereof.
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“Credit Facility” means, with respect to the Issuer or any of its Subsidiaries, one or more debt facilities, arrangements,
instruments or indentures (including the Revolving Credit Facility or commercial paper facilities and overdraft facilities) with
banks, institutions or investors providing for revolving credit loans, term loans, receivables financing (including through the sale
of receivables to such institutions or to special purpose entities formed to borrow from such institutions against such receivables),
notes, letters of credit or other Indebtedness, in each case, as amended, restated, modified, renewed, refunded, replaced,
restructured, refinanced, repaid, increased or extended in whole or in part from time to time (and whether in whole or in part and
whether or not with the original administrative agent and lenders or another administrative agent or agents or other banks,
institutions or investors and whether provided under the original Revolving Credit Facility or one or more other credit or other
agreements, indentures, financing agreements or otherwise) and in each case including all agreements, instruments and documents
executed and delivered pursuant to or in connection with the foregoing (including any notes and letters of credit issued pursuant
thereto and any Notes Guarantee and collateral agreement, patent and trademark security agreement, mortgages or letter of credit
applications and other Guarantees, pledges, agreements, security agreements and collateral documents). Without limiting the
generality of the foregoing, the term “Credit Facility” shall include any agreement or instrument (1) changing the maturity of any
Indebtedness Incurred thereunder or contemplated thereby, (2) adding Subsidiaries of the Issuer as additional borrowers or
guarantors thereunder, (3) increasing the amount of Indebtedness Incurred thereunder or available to be borrowed thereunder or
(4) otherwise altering the terms and conditions thereof.
“Currency Agreement” means, in respect of a Person, any foreign exchange contract, currency swap agreement,
currency futures contract, currency option contract, currency derivative or other similar agreement to which such Person is a party
or beneficiary.
“Default ” means any event which is, or after notice or passage of time or both would be, an Event of Default.
“Designated Non-Cash Consideration” means the fair market value (as determined in good faith by the Board of
Directors or a member of Senior Management of the Issuer) of non-cash consideration received by the Issuer or one of its
Restricted Subsidiaries in connection with an Asset Disposition that is so designated as Designated Non-Cash Consideration
pursuant to an Officer’s Certificate, setting forth the basis of such valuation, less the amount of cash, Cash Equivalents or
Temporary Cash Investments received in connection with a subsequent payment, redemption, retirement, sale or other disposition
of such Designated Non-Cash Consideration. A particular item of Designated Non-Cash Consideration will no longer be
considered to be outstanding when and to the extent it has been paid, redeemed or otherwise retired or sold or otherwise disposed
of in compliance with the covenant described under “—Certain Covenants—Limitation on Sales of Assets and Subsidiary Stock.”
“Designated Preference Shares” means, with respect to the Issuer or any Parent, Preferred Stock (other than
Disqualified Stock) (a) that is issued for cash (other than to the Issuer or a Subsidiary of the Issuer or an employee stock
ownership plan or trust established by the Issuer or any such Subsidiary for the benefit of their employees to the extent funded by
the Issuer or such Subsidiary) and (b) that is designated as “Designated Preference Shares” pursuant to an Officer’s Certificate of
the Issuer at or prior to the issuance thereof, the Net Cash Proceeds of which are excluded from the calculation set forth in clause
(c)(ii) of the second paragraph of the covenant described under “—Certain Covenants—Limitation on Restricted Payments.”
“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the
option of the holder of the Capital Stock, in whole or in part, in each case on or prior to the date that is 90 days after the earlier of
(a) the Stated Maturity of the Senior Secured Notes or (b) the date on which there are no Senior Secured Notes outstanding.
Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of
the Capital Stock have the right to require the issuer thereof to repurchase such Capital Stock upon the occurrence of a Change of
Control or an Asset Disposition will not constitute Disqualified Stock if the terms of such Capital Stock provide that the issuer
thereof may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption
complies with the covenant described under the caption “—Certain Covenants—Restricted Payments.” For purposes hereof, the
amount of Disqualified Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of
such Disqualified Stock as if such Disqualified Stock were purchased on any date on which Indebtedness shall be required to be
determined pursuant to the Senior Secured Indenture, and if such price is based upon, or measured by, the fair market value of
such Disqualified Stock, such fair market value to be determined as set forth herein. Only the portion of Capital Stock which so
matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof
prior to such date will be deemed to be Disqualified Stock.
“Equity Offering” means (x) a sale of Capital Stock of the Issuer (other than Disqualified Stock and other than offerings
registered on Form S-8 (or any successor form) under the Securities Act or any similar offering in other jurisdictions), or (y) the
sale of Capital Stock or other securities by any Person, the proceeds of which are contributed as Subordinated Shareholder
Funding or to the equity (other than through the issuance of Disqualified Stock or Designated Preference Shares or through
Excluded Contributions) of the Issuer or any of its Restricted Subsidiaries.
“Escrowed Proceeds” means the proceeds from the offering of any debt securities or other Indebtedness paid into
escrow accounts with an independent escrow agent on the date of the applicable offering or incurrence pursuant to escrow
arrangements that permit the release of amounts on deposit in such escrow accounts upon satisfaction of certain conditions or the
occurrence of certain events. The term “Escrowed Proceeds” shall include any interest earned on the amounts held in escrow.
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“Euroclear ” means Euroclear Bank SA/NV or any successor securities clearing agency.
“European Government Obligations” means any security that is (1) a direct obligation of any country that is a member
of the European Monetary Union and whose long-term debt is rated “A-1” or higher by Moody’s or “A+” or higher by S&P or the
equivalent rating category of another internationally recognized rating agency on the date of the Senior Secured Indenture, for the
payment of which the full faith and credit of such country is pledged or (2) an obligation of a person controlled or supervised by
and acting as an agency or instrumentality of any such country the payment of which is unconditionally Guaranteed as a full faith
and credit obligation by such country, which, in either case under the preceding clause (1) or (2), is not callable or redeemable at
the option of the issuer thereof.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC
promulgated thereunder, as amended.
“Excluded Contribution” means Net Cash Proceeds or property or assets received by the Issuer as capital contributions
to the equity (other than through the issuance of Disqualified Stock or Designated Preference Shares) of the Issuer after the Issue
Date or from the issuance or sale (other than to a Restricted Subsidiary or an employee stock ownership plan or trust established
by the Issuer or any Subsidiary of the Issuer for the benefit of its employees to the extent funded by the Issuer or any Restricted
Subsidiary) of Capital Stock (other than Disqualified Stock or Designated Preference Shares) or Subordinated Shareholder
Funding of the Issuer, in each case, to the extent designated as an Excluded Contribution pursuant to an Officer’s Certificate of the
Issuer.
“fair market value” wherever such term is used in this “Description of the Senior Secured Notes” or the Senior Secured
Indenture (except in relation to an enforcement action pursuant to the Intercreditor Agreement and except as otherwise specifically
provided in this “Description of the Senior Secured Notes” or the Senior Secured Indenture), may be conclusively established by
means of an Officer’s Certificate or a resolution of the Board of Directors of the Issuer setting out such fair market value as
determined by such Officer or such Board of Directors in good faith.
“Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio of (x) the aggregate amount of
Consolidated EBITDA of such Person for the period of the four most recent fiscal quarters prior to the date of such determination
for which internal consolidated financial statements are available to (y) the Fixed Charges of such Person for such four fiscal
quarters.
In the event that the specified Person or any of its Restricted Subsidiaries Incurs, assumes, guarantees, repays,
repurchases, redeems, defeases, retires, extinguishes or otherwise discharges any Indebtedness (other than Indebtedness Incurred
under any revolving credit facility unless such Indebtedness has been permanently repaid and has not been replaced) or issues,
repurchases or redeems Disqualified Stock or Preferred Stock subsequent to the commencement of the period for which the Fixed
Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed
Charge Coverage Ratio is made (the “Calculation Date”), then the Fixed Charge Coverage Ratio will be calculated giving pro
forma effect (as determined in good faith by a responsible accounting or financial officer of such Person), including in respect of
anticipated expense and cost reductions and synergies, to such Incurrence, assumption, guarantee, repayment, repurchase,
redemption, defeasance, retirement, extinguishment or other discharge of Indebtedness, or such issuance, repurchase or
redemption of Disqualified Stock or Preferred Stock, and the use of the proceeds therefrom, as if the same had occurred at the
beginning of the applicable four-quarter reference period; provided, however, that the pro forma calculation of Fixed Charges
shall not give effect to (i) any Indebtedness Incurred on the Calculation Date pursuant to the provisions described in the second
paragraph of the covenant described under “—Certain Covenants—Limitation on Indebtedness” (other than for the purposes of the
calculation of the Fixed Charge Coverage Ratio under clause (5) thereunder) or (ii) the discharge on the Calculation Date of any
Indebtedness to the extent that such discharge results from the proceeds Incurred pursuant to the provisions described in the
second paragraph of the covenant described under “—Certain Covenants—Limitation on Indebtedness.”
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1)
acquisitions or Investments that have been made by the specified Person or any of its Restricted
Subsidiaries, including through mergers or consolidations, or by any Person or any of its Restricted
Subsidiaries acquired by the specified Person or any of its Subsidiaries which are Restricted Subsidiaries,
and including all related financing transactions and including increases in ownership of Restricted
Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date, or that are to be made on the Calculation Date, will be given pro forma effect
(as determined in good faith by a responsible accounting or financial officer of such Person), including in
respect of anticipated expense and cost reductions and synergies, as if they had occurred on the first day of
the four-quarter reference period;
(2)
the Consolidated EBITDA attributable to discontinued operations, as determined in accordance with IFRS,
and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date,
will be excluded;
(3)
the Fixed Charges attributable to discontinued operations, as determined in accordance with IFRS, and
operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be
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excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be
obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;
(4)
any Person that is a Restricted Subsidiary on the Calculation Date will be deemed to have been a Restricted
Subsidiary at all times during such four-quarter period;
(5)
any Person that is not a Restricted Subsidiary on the Calculation Date will be deemed not to have been a
Restricted Subsidiary at any time during such four-quarter period;
(6)
if any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense
on such Indebtedness will be calculated as if the rate in effect on the Calculation Date had been the
applicable rate for the entire period (taking into account any Hedging Obligation applicable to such
Indebtedness if such Hedging Obligation has a remaining term as at the Calculation Date in excess of
12 months, or, if shorter, at least equal to the remaining term of such Indebtedness); and
(7)
Interest on a Capitalized Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by a responsible financial or accounting officer of the Issuer to be the rate of interest implicit in
such Capitalized Lease Obligation in accordance with IFRS.
“Fixed Charges” means, with respect to any specified Person for any period, the sum, without duplication, of:
(1)
the Consolidated Interest Expense of such Person for such period; plus
(2)
all dividends, whether paid or accrued and whether or not in cash, on or in respect of all Disqualified Stock
of the Issuer or any series of Preferred Stock of any Restricted Subsidiary, other than dividends on Equity
Interests payable to the Issuer or a Restricted Subsidiary.
“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any
Indebtedness of any other Person, including any such obligation, direct or indirect, contingent or otherwise, of such Person:
(1)
to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such
other Person (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or services, to take-or-pay or to maintain financial statement conditions
or otherwise); or
(2)
entered into primarily for purposes of assuring in any other manner the obligee of such Indebtedness of the
payment thereof or to protect such obligee against loss in respect thereof (in whole or in part), provided,
however, that the term “Guarantee” will not include endorsements for collection or deposit in the ordinary
course of business. The term “Guarantee” used as a verb has a corresponding meaning.
“Guarantors ” means the Initial Guarantors and any Restricted Subsidiary that Guarantees the Senior Secured Notes.
“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement,
Currency Agreement or Commodity Hedging Agreement.
“Holder ” means each Person in whose name the Senior Secured Notes are registered on the Registrar’s books, which
shall initially be the respective nominee of Euroclear or Clearstream, as applicable.
“Holding Company” means, in relation to any Person, any other Person in respect of which it is a Subsidiary.
“IFRS” means International Financial Reporting Standards (formerly International Accounting Standards) (“IFRS”)
endorsed from time to time by the European Union or any variation thereof with which the Issuer or its Restricted Subsidiaries
are, or may be, required to comply. Except as otherwise set forth in the Senior Secured Indenture, all ratios and calculations based
on IFRS contained in the Senior Secured Indenture shall be computed in accordance with IFRS as in effect on the Issue Date.
“Incur” means issue, create, assume, enter into any Notes Guarantee of, incur or otherwise become liable for; provided,
however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) will be deemed to be Incurred by such Restricted Subsidiary at the
time it becomes a Restricted Subsidiary and the terms “Incurred” and “Incurrence” have meanings correlative to the foregoing and
any Indebtedness pursuant to any revolving credit or similar facility shall only be “Incurred” at the time any funds are borrowed
thereunder.
“Indebtedness” means, with respect to any Person on any date of determination (without duplication):
(1)
the principal of indebtedness of such Person for borrowed money;
(2)
the principal of obligations of such Person evidenced by bonds, debentures, notes or other similar
instruments;
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(3)
all reimbursement obligations of such Person in respect of letters of credit, bankers’ acceptances or other
similar instruments (the amount of such obligations being equal at any time to the aggregate then undrawn
and unexpired amount of such letters of credit or other instruments plus the aggregate amount of drawings
thereunder that have been reimbursed) (except to the extent such reimbursement obligations relate to trade
payables or other obligations not constituting Indebtedness and such obligations are satisfied within
30 days of Incurrence), in each case only to the extent that the underlying obligation in respect of which the
instrument was issued would be treated as Indebtedness;
(4)
the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of
property (except trade payables), where the deferred payment is arranged primarily as a means of raising
finance, which purchase price is due more than one year after the date of placing such property in service or
taking final delivery and title thereto;
(5)
Capitalized Lease Obligations of such Person;
(6)
the principal component of all obligations, or liquidation preference, of such Person with respect to any
Disqualified Stock or, with respect to any Restricted Subsidiary, any Preferred Stock (but excluding, in
each case, any accrued dividends);
(7)
the principal component of all Indebtedness of other Persons secured by a Lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person; provided, however, that the amount of such
Indebtedness will be the lesser of (a) the fair market value of such asset at such date of determination (as
determined in good faith by the Board of Directors or a member of Senior Management of the Issuer) and
(b) the amount of such Indebtedness of such other Persons;
(8)
Guarantees by such Person of the principal component of Indebtedness of other Persons to the extent
Guaranteed by such Person; and
(9)
to the extent not otherwise included in this definition, net obligations of such Person under Currency
Agreements and Interest Rate Agreements (the amount of any such obligations to be equal at any time to
the termination value of such agreement or arrangement giving rise to such obligation that would be
payable by such Person at such time).
The term “Indebtedness” shall not include (i) Subordinated Shareholder Funding, (ii) any lease, concession or license of
property (or Guarantee thereof) which would be considered an operating lease under IFRS as in effect on the Issue Date,
(iii) prepayments of deposits received from clients or customers in the ordinary course of business or (iv) obligations under any
license, permit or other approval (or Guarantees given in respect of such obligations) Incurred prior to the Issue Date or in the
ordinary course of business.
The amount of Indebtedness of any Person at any time in the case of a revolving credit or similar facility shall be the
total amounts of funds borrowed and then outstanding. The amount of Indebtedness of any Person at any date shall be determined
as set forth above or otherwise provided in the Senior Secured Indenture, and (other than with respect to letters of credit or
Guarantees or Indebtedness specified in clause (7) or (8) above) shall equal the amount thereof that would appear on a balance
sheet of such Person (excluding any notes thereto) prepared on the basis of IFRS.
Notwithstanding the above provisions, in no event shall the following constitute Indebtedness:
(1)
Contingent Obligations Incurred in the ordinary course of business, obligations under or in respect of
Qualified Receivables Financings and accrued liabilities Incurred in the ordinary course of business that are
not more than 90 days past due;
(2)
in connection with the purchase by the Issuer or any Restricted Subsidiary of any business, any postclosing payment adjustments to which the seller may become entitled to the extent such payment is
determined by a final closing balance sheet or such payment depends on the performance of such business
after the closing; provided, however, that, at the time of closing, the amount of any such payment is not
determinable and, to the extent such payment thereafter becomes fixed and determined, the amount is paid
within 30 days thereafter; or
(3)
for the avoidance of doubt, any obligations in respect of workers’ compensation claims, early retirement or
termination obligations, pension fund obligations or contributions or similar claims, obligations or
contributions or social security or wage taxes.
“Independent Financial Advisor” means an investment banking or accounting firm of international standing or any
third party appraiser of international standing; provided, however, that such firm or appraiser is not an Affiliate of the Issuer.
“Initial Investors” means any funds or limited partnerships managed or advised by Bain Capital Europe LLP or any of
its Affiliates or direct or indirect Subsidiaries or any trust, fund, company or partnership owned, managed or advised by Bain
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Capital Europe LLP or any of its Affiliates or direct or indirect Subsidiaries or any entity controlled by all or substantially all of
the managing directors of such fund or Bain Capital Europe LLP from time to time.
“Initial Public Offering” means an Equity Offering of common stock or other common equity interests of the Issuer or
any Parent or any successor of the Issuer or any Parent (the “IPO Entity”) following which there is a Public Market and, as a result
of which, the shares of common stock or other common equity interests of the IPO Entity in such offering are listed on an
internationally recognized exchange or traded on an internationally recognized market.
“Intercreditor Agreement” means the Intercreditor Agreement dated on or about the Issue Date, by and among, inter
alios, the Issuer, the Guarantors, the Security Agent and the Trustee, as amended from time to time.
“Interest Rate Agreement” means, with respect to any Person, any interest rate protection agreement, interest rate future
agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement or other similar agreement or arrangement to which such Person is party or a beneficiary.
“Investment ” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates)
in the form of any advance, loan or other extensions of credit (other than advances or extensions of credit to customers, suppliers,
directors, officers or employees of any Person in the ordinary course of business, and excluding any debt or extension of credit
represented by a bank deposit other than a time deposit) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or use of others), or the Incurrence of a Notes Guarantee
of any obligation of, or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such
other Persons and all other items that are or would be classified as investments on a balance sheet (excluding any notes thereto)
prepared on the basis of IFRS; provided, however, that endorsements of negotiable instruments and documents in the ordinary
course of business will not be deemed to be an Investment. If the Issuer or any Restricted Subsidiary issues, sells or otherwise
disposes of any Capital Stock of a Person that is a Restricted Subsidiary such that, after giving effect thereto, such Person is no
longer a Restricted Subsidiary, any Investment by the Issuer or any Restricted Subsidiary in such Person remaining after giving
effect thereto will be deemed to be a new Investment equal to the fair market value of the Capital Stock of such Subsidiary not
sold or disposed of in an amount determined as provided in the final paragraph of the covenant described under the caption “—
Certain Covenants—Limitation on Restricted Payments.”
For purposes of “—Certain Covenants—Limitation on Restricted Payments”:
(1)
“Investment” will include the portion (proportionate to the Issuer’s equity interest in a Restricted
Subsidiary to be designated as an Unrestricted Subsidiary) of the fair market value of the net assets of such
Restricted Subsidiary of the Issuer at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary; and
(2)
any property transferred to or from an Unrestricted Subsidiary will be valued at its fair market value at the
time of such transfer, in each case as determined in good faith by the Board of Directors or a member of
Senior Management of the Issuer.
The amount of any Investment outstanding at any time shall be the original cost of such Investment, reduced (at the
Issuer’s option) by any dividend, distribution, interest payment, return of capital, repayment or other amount or value received in
respect of such Investment.
“Investment Grade Securities” means:
(1)
securities issued or directly and fully Guaranteed or insured by the United States or Canadian government
or any agency or instrumentality thereof (other than Cash Equivalents);
(2)
securities issued or directly and fully guaranteed or insured by a member of the European Union,
Switzerland or Norway or any agency or instrumentality thereof (other than Cash Equivalents);
(3)
debt securities or debt instruments with a rating of “BBB–” or higher from S&P or “Baa3” or higher by
Moody’s or the equivalent of such rating by such rating organization or, if no rating of Moody’s or S&P
then exists, the equivalent of such rating by any other Nationally Recognized Statistical Ratings
Organization, but excluding any debt securities or instruments constituting loans or advances among the
Issuer and its Subsidiaries;
(4)
investments in any fund that invests exclusively in investments of the type described in clauses (1), (2) and
(3); and
(5)
above which fund may also hold cash and Cash Equivalents pending investment or distribution.
“Investment Grade Status” shall occur when all of the Senior Secured Notes receive both of the following:
(1)
a rating of “BBB–” or higher from S&P; and
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(2)
a rating of “Baa3” or higher from Moody’s, or the equivalent of such rating by either such rating
organization or, if no rating of Moody’s or S&P then exists, the equivalent of such rating by any other
Nationally Recognized Statistical Ratings Organization.
“IPO Market Capitalization” means an amount equal to (i) the total number of issued and outstanding shares of
common stock or common equity interests of the IPO Entity at the time of closing of the Initial Public Offering multiplied by
(ii) the price per share at which such shares of common stock or common equity interests are sold in such Initial Public Offering.
“Issue Date” means June 11, 2013.
“Issuer” means Bravida Holding AB (publ).
“Lien” means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any
conditional sale or other title retention agreement or lease in the nature thereof).
“Management Advances” means loans or advances made to, or Guarantees with respect to loans or advances made to,
directors, officers, employees or consultants of any Parent, the Issuer or any Restricted Subsidiary:
(1)
(a) in respect of travel, entertainment or moving related expenses Incurred in the ordinary course of
business or (b) for purposes of funding any such person’s purchase of Capital Stock or Subordinated
Shareholder Funding (or similar obligations) of the Issuer, its Subsidiaries or any Parent with (in the case
of this sub-clause (b)) the approval of the Board of Directors;
(2)
in respect of moving related expenses Incurred in connection with any closing or consolidation of any
facility or office; or
(3)
(in the case of this clause (3)) not exceeding SEK30.0 million in the aggregate outstanding at any time.
“Management Investors” means (i) members of the management team of the Issuer or any Restricted Subsidiary
investing, or committing to invest, directly or indirectly, in the Issuer as at the Issue Date and any subsequent members of the
management team of the Issuer or any Restricted Subsidiary who invest directly or indirectly in the Issuer from time to time and
(ii) such entity as may hold shares transferred by departing members of the management team of the Issuer or any Restricted
Subsidiary for future redistribution to such management team.
“Market Capitalization” means an amount equal to (i) the total number of issued and outstanding shares of common
stock or common equity interests of the IPO Entity on the date of the declaration of the relevant dividend multiplied by (ii) the
arithmetic mean of the closing prices per share of such common stock or common equity interests for the 30 consecutive trading
days immediately preceding the date of declaration of such dividend.
“Moody’s” means Moody’s Investors Service, Inc. or any of its successors or assigns that is a Nationally Recognized
Statistical Rating Organization.
“Nationally Recognized Statistical Rating Organization” means a nationally recognized statistical rating organization
within the meaning of Rule 15c3-1(c)(2)(vi)(F) under the Exchange Act.
“Net Available Cash” from an Asset Disposition means cash payments received (including any cash payments received
by way of deferred payment of principal pursuant to a note or installment receivable or otherwise and net proceeds from the sale
or other disposition of any securities received as consideration, but only as and when received, but excluding any other
consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to the
properties or assets that are the subject of such Asset Disposition or received in any other non-cash form) therefrom, in each case
net of:
(1)
all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and
expenses Incurred, and all Taxes paid or required to be paid or accrued as a liability under IFRS (after
taking into account any available tax credits or deductions and any Tax Sharing Agreements), as a
consequence of such Asset Disposition;
(2)
all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition
(other than Capitalized Lease Obligations), in accordance with the terms of any Lien upon such assets, or
which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by
applicable law, be repaid out of the proceeds from such Asset Disposition;
(3)
all distributions and other payments required to be made to minority interest holders (other than any Parent,
the Issuer or any of their respective Subsidiaries) in Subsidiaries or joint ventures as a result of such Asset
Disposition; and
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(4)
the deduction of appropriate amounts required to be provided by the seller as a reserve, on the basis of
IFRS, against any liabilities associated with the assets disposed of in such Asset Disposition and retained
by the Issuer or any Restricted Subsidiary after such Asset Disposition.
“Net Cash Proceeds,” with respect to any issuance or sale of Capital Stock or Subordinated Shareholder Funding,
means the cash proceeds of such issuance or sale net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees,
listing fees, discounts or commissions and brokerage, consultant and other fees and charges actually Incurred in connection with
such issuance or sale and net of Taxes paid or payable as a result of such issuance or sale (after taking into account any available
tax credit or deductions and any Tax Sharing Agreements).
“Offering Memorandum” means the offering memorandum, dated 4 June 2013, prepared for the purpose of the offering
of the Notes in connection with the Issue.
“Officer ” means, with respect to any Person, (1) any member of the Board of Directors, the Chief Executive Officer,
the President, the Chief Financial Officer, any Vice President, the Treasurer or the Secretary (a) of such Person or (b) if such
Person is owned or managed by a single entity, of such entity, or (2) any other individual designated as an “Officer” for the
purposes of the Senior Secured Indenture by the Board of Directors of such Person.
“Officer’s Certificate” means, with respect to any Person, a certificate signed by one Officer of such Person.
“Opinion of Counsel” means a written opinion from legal counsel reasonably satisfactory to the Trustee. The counsel
may be an employee of or counsel to the Issuer or its Subsidiaries.
“Parent ” means any Person of which the Issuer at any time is or becomes a Subsidiary after the Issue Date and any
holding companies established by any Permitted Holder for purposes of holding its investment in any Parent.
“Parent Expenses” means:
(1)
costs (including all professional fees and expenses) Incurred by any Parent in connection with reporting
obligations under or otherwise Incurred in connection with compliance with applicable laws, rules or
regulations of any governmental, regulatory or self-regulatory body or stock exchange, the Senior Secured
Indenture or any other agreement or instrument relating to Indebtedness of the Issuer or any Restricted
Subsidiary, including in respect of any reports filed with respect to the Securities Act, Exchange Act or the
respective rules and regulations promulgated thereunder;
(2)
customary indemnification obligations of any Parent owing to directors, officers, employees or other
Persons under its charter or by-laws or pursuant to written agreements with any such Person to the extent
relating to the Issuer and its Subsidiaries;
(3)
obligations of any Parent in respect of director and officer insurance (including premiums therefor) to the
extent relating to the Issuer and its Subsidiaries;
(4)
fees and expenses payable by any Parent in connection with the Refinancing;
(5)
general corporate overhead expenses, including (a) professional fees and expenses and other operational
expenses of any Parent related to the ownership or operation of the business of the Issuer or any of its
Restricted Subsidiaries, and (b) costs and expenses with respect to the ownership, directly or indirectly, by
any Parent, (c) any Taxes and other fees and expenses required to maintain such Parent’s corporate
existence and to provide for other ordinary course operating costs, including customary salary, bonus and
other benefits payable to, and indemnities provided on behalf of, officers and employees of such Parent and
(d) to reimburse reasonable out of pocket expenses of the Board of Directors of such Parent;
(6)
other fees, expenses and costs relating directly or indirectly to activities of the Issuer and its Subsidiaries or
any Parent or any other Person established for purposes of or in connection with the Refinancing or which
holds directly or indirectly any Capital Stock or Subordinated Shareholder Funding of the Issuer, in an
amount not to exceed SEK5.0 million in any fiscal year;
(7)
any income taxes, to the extent such income taxes are attributable to the income of the Issuer and its
Restricted Subsidiaries and, to the extent of the amount actually received in cash from its Unrestricted
Subsidiaries, in amounts required to pay such taxes to the extent attributable to the income of such
Unrestricted Subsidiaries provided, however, that the amount of such payments in any fiscal year do not
exceed the amount that the Issuer and its Subsidiaries would be required to pay in respect of such taxes on a
consolidated basis on behalf of an affiliated group consisting only of the Issuer and its Subsidiaries; and
(8)
expenses Incurred by any Parent in connection with any public offering or other sale of Capital Stock or
Indebtedness;
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(a)
where the net proceeds of such offering or sale are intended to be received by or contributed to
the Issuer or a Restricted Subsidiary;
(b)
in a pro-rated amount of such expenses in proportion to the amount of such net proceeds
intended to be so received or contributed; or
(c)
otherwise on an interim basis prior to completion of such offering so long as any Parent shall
cause the amount of such expenses to be repaid to the Issuer or the relevant Restricted
Subsidiary out of the proceeds of such offering promptly if completed.
“Pari Passu Indebtedness” means Indebtedness of the Issuer or any Guarantor which does not constitute Subordinated
Indebtedness.
“Paying Agent” means any Person authorized by the Issuer to pay the principal of (and premium, if any) or interest on
any Note on behalf of the Issuer.
“Permitted Collateral Liens” means Liens on the Collateral:
(a)
that are described in one or more of clauses (3), (4), (5), (6), (9), (11), (12), (14), (18) and
(23) of the definition of “Permitted Liens” and, in each case, arising by law or that would not
materially interfere with the ability of the Security Agent to enforce the Security Interests in
the Collateral;
(b)
to secure:
(i)
the Senior Secured Notes (including any Additional Senior Secured Notes);
(ii)
Indebtedness permitted to be Incurred under the first paragraph of the covenant
described under “—Certain Covenants—Limitation on Indebtedness,” of which up
to an aggregate principal amount of SEK 300.0 million may have super senior
priority status not materially less favorable to Holders than that accorded to the
Revolving Credit Facility on the Issue Date pursuant to the Intercreditor
Agreement;
(iii)
Indebtedness described under clause (1) of “—Permitted Debt”, which
Indebtedness may have super senior priority status in respect of the proceeds from
the enforcement of the Collateral not materially less favorable to the Holders than
that accorded to the Revolving Credit Facility on the Issue Date pursuant to the
Intercreditor Agreement;
(iv)
Indebtedness described under clause (2) of “—Permitted Debt,” to the extent
Incurred by the Issuer or a Guarantor and to the extent such guarantee is in respect
of Indebtedness otherwise permitted to be secured and specified in this definition
of Permitted Collateral Liens;
(v)
Indebtedness described under clause (5) of “—Permitted Debt” and that is incurred
by the Issuer or a Guarantor provided that, at the time of the acquisition or other
transaction pursuant to which such Indebtedness was incurred and after giving
effect to the incurrence of such Indebtedness on a pro forma basis, (a) the Issuer
would have been able to incur SEK1.00 of additional Senior Secured Indebtedness
pursuant to the first paragraph of the covenant entitled “—Limitation on
Indebtedness” or (b) the Consolidated Senior Secured Leverage Ratio for the
Issuer and the Restricted Subsidiaries would not be greater than it was immediately
prior to giving pro forma effect to such acquisition or other transaction and to the
Incurrence of such Indebtedness);
(vi)
Indebtedness described under clause (6) of “—Permitted Debt,” provided that
Currency Agreements and Interest Rate Agreements entered into with respect to
any Indebtedness Incurred in compliance with the covenant described under “—
Limitation on Indebtedness” that is not subordinated in right of payment to the
Senior Secured Notes and that is permitted under the Senior Secured Indenture to
be secured by a Permitted Collateral Lien which ranks pari passu with the Lien on
the Collateral securing the Senior Secured Notes may have super senior priority
status not materially less favorable to the Holders than that accorded to the
Revolving Credit Facility on the Issue Date pursuant to the Intercreditor
Agreement;
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(vii)
Indebtedness described under clauses (7) (other than with respect to Capitalized
Lease Obligations) (11) or (13) of “—Permitted Debt”;
(viii)
any Refinancing Indebtedness in respect of Indebtedness referred to in the
foregoing clauses (i) to (vii);
provided, further, that each of the secured parties to any such Indebtedness (acting directly or
through its respective creditor representative) will have entered into the Intercreditor
Agreement or an Additional Intercreditor Agreement; provided, further, that all property and
assets (including, without limitation, the Collateral) securing such Indebtedness (including any
guarantees thereof) or Refinancing Indebtedness secure the Senior Secured Notes and the
Senior Secured Indenture on a senior or pari passu basis (including by application of payment
order, turnover or equalization provisions substantially consistent with the corresponding
provisions set forth in the Intercreditor Agreement or any Additional Intercreditor Agreement),
except to the extent provided in clauses (ii), (iii) and (vii) above.
“Permitted Holders” means, collectively, (1) the Initial Investors, (2) the Management Investors, (3) any Related
Person of any Persons specified in clauses (1) and (2), (4) any Person who is acting as an underwriter in connection with a public
or private offering of Capital Stock of any Parent or the Issuer, acting in such capacity and (5) any group (within the meaning of
Section 13(d)(3) or Section 14(d)(2) of the Exchange Act or any successor provision) of which any of the foregoing or any
Persons mentioned in the following sentence are members; provided that, in the case of such group and without giving effect to
the existence of such group or any other group, the Initial Investors and such Persons referred to in the following sentence,
collectively, have exclusive legal and beneficial ownership of more than 50% of the total voting power of the voting Stock of the
Issuer or any of its direct or indirect parent companies wholly owned by such group. Any person or group whose acquisition of
beneficial ownership constitutes (1) a Change of Control in respect of which a Change of Control Offer is made in accordance
with the requirements of the Senior Secured Indenture or (2) a Change of Control which is also a Specified Change of Control
Event, will thereafter, together with its Affiliates, constitute an additional Permitted Holder.
“Permitted Investment” means (in each case, by the Issuer or any of its Restricted Subsidiaries):
(1)
Investments in (a) a Restricted Subsidiary (including the Capital Stock of a Restricted Subsidiary) or the
Issuer or (b) a Person (including the Capital Stock of any such Person) and such Person will, upon the
making of such Investment, become a Restricted Subsidiary;
(2)
Investments in another Person and as a result of such Investment such other Person is merged, consolidated
or otherwise combined with or into, or transfers or conveys all or substantially all its assets to, the Issuer or
a Restricted Subsidiary;
(3)
Investments in cash, Cash Equivalents, Temporary Cash Investments or Investment Grade Securities;
(4)
Investments in receivables owing to the Issuer or any Restricted Subsidiary created or acquired in the
ordinary course of business, including Investments in connection with any Qualified Receivables
Financing;
(5)
Investments in payroll, travel, relocation, entertainment and similar advances to cover matters that are
expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that
are made in the ordinary course of business;
(6)
Management Advances and any advances or loans not to exceed SEK50.0 million at any one time
outstanding to any management equity plan or stock option plan or any other management or employee
benefit or incentive plan or unit trust or the trustees of any such plan or trust to pay for the purchase or
other acquisition for value of Capital Stock (other than Disqualified Stock) of the Issuer or a Parent of the
Issuer;
(7)
Investments in Capital Stock, obligations or securities received in settlement of debts created in the
ordinary course of business and owing to the Issuer or any Restricted Subsidiary, or as a result of
foreclosure, perfection or enforcement of any Lien, or in satisfaction of judgments or pursuant to any plan
of reorganization or similar arrangement including upon the bankruptcy or insolvency of a debtor;
(8)
Investments made as a result of the receipt of non-cash consideration from a sale or other disposition of
property or assets, including an Asset Disposition, in each case, that was made in compliance with “—
Certain Covenants—Limitation on Sales of Assets and Subsidiary Stock”;
(9)
Investments in existence on, or made pursuant to legally binding commitments in existence on, the Issue
Date, and any extension, modification or renewal of any such Investment; provided that the amount of the
Investment may be increased (i) as required by the terms of the Investment as in existence on the Issue
Date or (b) as otherwise permitted under the Senior Secured Indenture;
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(10)
Currency Agreements, Interest Rate Agreements, Commodity Hedging Agreements and related Hedging
Obligations, which transactions or obligations are Incurred in compliance with “—Certain Covenants—
Limitation on Indebtedness”;
(11)
Investments, taken together with all other Investments made pursuant to this clause (11) and at any time
outstanding, in an aggregate amount at the time of such Investment (net of any distributions, dividends,
payments or other returns in respect of such Investments) not to exceed the greater of 1.5% of Total Assets
and SEK150.0 million; provided that, if an Investment is made pursuant to this clause in a Person that is
not a Restricted Subsidiary and such Person subsequently becomes a Restricted Subsidiary or is
subsequently designated a Restricted Subsidiary pursuant to the covenant described under “—Certain
Covenants—Limitation on Restricted Payments,” such Investment shall thereafter be deemed to have been
made pursuant to clause (1) or (2) of the definition of “Permitted Investments” and not this clause;
(12)
pledges or deposits with respect to leases or utilities provided to third parties in the ordinary course of
business or Liens otherwise described in the definition of “Permitted Liens” or made in connection with
Liens permitted under the covenant described under “—Certain Covenants—Limitation on Liens”;
(13)
any Investment to the extent made using Capital Stock of the Issuer (other than Disqualified Stock),
Subordinated Shareholder Funding or Capital Stock of any Parent as consideration;
(14)
any transaction to the extent constituting an Investment that is permitted and made in accordance with the
provisions of clauses (4), (6), (10) or (14) the second paragraph of the covenant described under “—Certain
Covenants—Limitation on Affiliate Transactions”;
(15)
Guarantees of Indebtedness of the Issuer or its Restricted Subsidiaries permitted to be Incurred by the
covenant described under “—Certain Covenants—Limitation on Indebtedness” and (other than with respect
to Indebtedness) guarantees, keepwells and similar arrangements in the ordinary course of business; and
(16)
Investments in loans under the Revolving Credit Facility, the Senior Secured Notes and any Additional
Senior Secured Notes.
“Permitted Joint Venture” means a joint venture (which for the avoidance of doubt is not itself a Restricted Subsidiary)
engaged in a Similar Business, and in respect of which the Issuer or a Restricted Subsidiary beneficially owns at least 35.0% of
the Capital Stock.
“Permitted Liens” means, with respect to any Person:
(1)
Liens on assets or property of a Restricted Subsidiary that is not a Guarantor securing Indebtedness of any
Restricted Subsidiary that is not a Guarantor permitted by the covenant described under “—Certain
Covenants—Limitation on Indebtedness”;
(2)
pledges, deposits or Liens under workmen’s compensation laws, unemployment insurance laws, social
security laws or similar legislation, or insurance related obligations (including pledges or deposits securing
liability to insurance carriers under insurance or self-insurance arrangements), or in connection with bids,
tenders, completion guarantees, contracts (other than for borrowed money) or leases, or to secure utilities,
licenses, public or statutory obligations, or to secure surety, indemnity, judgment, appeal or performance
bonds, guarantees of government contracts (or other similar bonds, instruments or obligations), or as
security for contested Taxes or import or customs duties or for the payment of rent, or other obligations of
like nature, in each case Incurred in the ordinary course of business;
(3)
Liens imposed by law, including carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s and
repairmen’s or other similar Liens, in each case for sums not yet overdue for a period of more than 60 days
or that are bonded or being contested in good faith by appropriate proceedings;
(4)
Liens for Taxes, assessments or other governmental charges not yet delinquent or which are being
contested in good faith by appropriate proceedings; provided that appropriate reserves required pursuant to
IFRS have been made in respect thereof;
(5)
Liens in favor of issuers of surety, performance or other bonds, guarantees or letters of credit or bankers’
acceptances (not issued to support Indebtedness for borrowed money) issued pursuant to the request of and
for the account of the Issuer or any Restricted Subsidiary in the ordinary course of its business;
(6)
encumbrances, ground leases, easements (including reciprocal easement agreements), survey exceptions, or
reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning, building codes or other restrictions (including minor
defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental
to the conduct of the business of the Issuer and its Restricted Subsidiaries or to the ownership of its
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properties which do not in the aggregate materially adversely affect the value of said properties or
materially impair their use in the operation of the business of the Issuer and its Restricted Subsidiaries;
(7)
Liens on assets or property of the Issuer or any Restricted Subsidiary (other than Collateral) securing
Hedging Obligations permitted under the Senior Secured Indenture relating to Indebtedness permitted to be
Incurred under the Senior Secured Indenture and which is secured by a Lien on the same assets or property
that secures such Indebtedness;
(8)
leases, licenses, subleases and sublicenses of assets (including real property and intellectual property
rights), in each case entered into in the ordinary course of business;
(9)
Liens arising out of judgments, decrees, orders or awards not giving rise to an Event of Default so long as
any appropriate legal proceedings which may have been duly initiated for the review of such judgment,
decree, order or award have not been finally terminated or the period within which such proceedings may
be initiated has not expired;
(10)
Liens on assets or property of the Issuer or any Restricted Subsidiary for the purpose of securing
Capitalized Lease Obligations or Purchase Money Obligations, or securing the payment of all or a part of
the purchase price of, or securing other Indebtedness Incurred to finance or refinance the acquisition,
improvement or construction of, assets or property acquired or constructed in the ordinary course of
business; provided that (a) the aggregate principal amount of Indebtedness secured by such Liens is
otherwise permitted to be Incurred under clause (7) of the covenant described above under “—Certain
Covenants—Limitation on Indebtedness” and (b) any such Lien may not extend to any assets or property of
the Issuer or any Restricted Subsidiary other than assets or property acquired, improved, constructed or
leased with the proceeds of such Indebtedness and any improvements or accessions to such assets and
property;
(11)
Liens arising by virtue of any statutory or common law provisions relating to banker’s Liens, rights of setoff or similar rights and remedies as to deposit accounts or other funds maintained with a depositary or
financial institution;
(12)
Liens arising from New York Uniform Commercial Code financing statement filings (or similar filings in
other applicable jurisdictions) regarding operating leases entered into by the Issuer and its Restricted
Subsidiaries in the ordinary course of business;
(13)
Liens existing on, or provided for or required to be granted under written agreements existing on, the Issue
Date, after giving pro forma effect to the use of the proceeds of the Senior Secured Notes as described in
the Offering Memorandum;
(14)
Liens on property, other assets or shares of stock of a Person at the time such Person becomes a Restricted
Subsidiary (or at the time the Issuer or a Restricted Subsidiary acquires such property, other assets or
shares of stock, including any acquisition by means of a merger, consolidation or other business
combination transaction with or into the Issuer or any Restricted Subsidiary); provided, that such Liens do
not extend to any assets other than those of the Person that becomes a Restricted Subsidiary or that is
merged or consolidated into the Issuer or a Restricted Subsidiary;
(15)
Liens on assets or property of any Restricted Subsidiary that is not a Guarantor securing Indebtedness or
other obligations of such Restricted Subsidiary owing to the Issuer or another Restricted Subsidiary, or
Liens in favor of the Issuer or any Guarantor;
(16)
Liens securing Refinancing Indebtedness Incurred to refinance Indebtedness that was previously so
secured, and permitted to be secured under the Senior Secured Indenture; provided that any such Lien is
limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends
or distributions in respect thereof) that secured (or, under the written arrangements under which the original
Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is or could be
the security for or subject to a Permitted Lien hereunder;
(17)
any interest or title of a lessor under any Capitalized Lease Obligation or operating lease;
(18)
(a) mortgages, liens, security interest, restrictions, encumbrances or any other matters of record that have
been placed by any government, statutory or regulatory authority, developer, landlord or other third party
on property over which the Issuer or any Restricted Subsidiary of the Issuer has easement rights or on any
leased property and subordination or similar arrangements relating thereto and (b) any condemnation or
eminent domain proceedings affecting any real property;
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(19)
any encumbrance or restriction (including put and call arrangements) with respect to Capital Stock of, or
assets owned by, any joint venture or similar arrangement pursuant to any joint venture or similar
agreement;
(20)
Liens on property or assets under construction (and related rights) in favor of a contractor or developer or
arising from progress or partial payments by a third party relating to such property or assets;
(21)
Liens on Receivables Assets Incurred in connection with a Qualified Receivables Financing;
(22)
Liens on Escrowed Proceeds for the benefit of the related holders of debt securities or other Indebtedness
(or the underwriters or arrangers thereof) or on cash set aside at the time of the incurrence of any
Indebtedness or government securities purchased with such cash, in either case to the extent such cash or
government securities prefund the payment of interest on such Indebtedness and are held in escrow
accounts or similar arrangement to be applied for such purpose;
(23)
Liens securing or arising by reason of any netting or set-off arrangement entered into in the ordinary course
of banking or other trading activities;
(24)
Liens arising out of conditional sale, title retention, hire purchase, consignment or similar arrangements for
the sale of goods entered into in the ordinary course of business;
(25)
[Reserved];
(26)
[Reserved];
(27)
Liens on Capital Stock or other securities or assets of any Unrestricted Subsidiary that secure Indebtedness
of such Unrestricted Subsidiary;
(28)
any security granted over the marketable securities portfolio described in clause (9) of the definition of
“Cash Equivalents” in connection with the disposal thereof to a third party;
(29)
limited recourse Liens in respect of the ownership interests in, or assets owned by, any joint ventures which
are not Restricted Subsidiaries securing obligations of such joint ventures;
(30)
(a) Liens created for the benefit of or to secure, directly or indirectly, the Senior Secured Notes, and
(b) Liens pursuant to the Intercreditor Agreement and the security documents entered into pursuant to the
Revolving Credit Facility and (c) Liens in respect of property and assets securing Indebtedness if the
recovery in respect of such Liens is subject to loss-sharing as among the Holders of the Senior Secured
Notes and the creditors of such Indebtedness pursuant to the Intercreditor Agreement or an Additional
Intercreditor Agreement; and
(31)
Liens provided that the maximum amount of Indebtedness secured in the aggregate at any one time
pursuant to this clause (31) does not exceed SEK100.0 million.
“Permitted Reorganization” means any amalgamation, demerger, merger, voluntary liquidation, consolidation,
reorganization, winding up or corporate reconstruction on a solvent basis of one or more of the Restricted Subsidiaries of the
Issuer where:
(a)
all of the business and assets of such Restricted Subsidiaries remain owned by the Issuer or its Restricted
Subsidiaries;
(b)
immediately following completion of the reorganization, the Holders (or the Security Agent on their
behalf) will continue to have the same or substantially the same Liens over the shares of (or other interests
in) the transferees of the businesses and assets referenced in sub-clause (a) above as they had in the
transferors taking part in the reorganization;
(c)
the reorganization (or any consequential change in tax residency or center of main interest of such entity)
will not materially and adversely affect such Liens or enforcement remedies of the Holders (but excluding
for this purpose only any resetting of hardening periods arising from any release and retaking of any
Security Interest) either as a result of that reorganization or (compared to the position 20 Business Days
after the Closing Date) cumulatively as a result of that reorganization and all reorganizations effected prior
to such date; and
(d)
the prior to such reorganization, the Issuer will provide to the Trustee and the Security Agent a certificate
from its board of directors confirming that no Default is continuing or would arise as a result of such
reorganization.
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“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, limited liability company, government or any agency or political subdivision thereof or any other
entity.
“Preferred Stock,” as applied to the Capital Stock of any Person, means Capital Stock of any class or classes (however
designated) which is preferred as to the payment of dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation or dissolution of such Person, over shares of Capital Stock of any other class of such Person.
“Public Debt” means any Indebtedness consisting of bonds, debentures, notes or other similar debt securities issued in
(1) a public offering registered under the Securities Act or (2) a private placement to institutional investors that is underwritten for
resale in accordance with Rule 144A or Regulation S under the Securities Act, whether or not it includes registration rights
entitling the holders of such debt securities to registration thereof with the SEC for public resale.
“Public Market” means any time after:
(1)
an Equity Offering has been consummated; and
(2)
shares of common stock or other common equity interests of the IPO Entity having a market value in
excess of €100 million on the date of such Equity Offering have been distributed pursuant to such Equity
Offering.
“Public Offering” means any offering, including an Initial Public Offering, of shares of common stock or other
common equity interests that are listed on an exchange or publicly offered (which shall include an offering pursuant to Rule 144A
or Regulation S under the Securities Act to professional market investors or similar persons).
“Purchase Money Obligations” means any Indebtedness Incurred to finance or refinance the acquisition, leasing,
construction or improvement of property (real or personal) or assets (including Capital Stock), and whether acquired through the
direct acquisition of such property or assets or the acquisition of the Capital Stock of any Person owning such property or assets,
or otherwise.
“Qualified Receivables Financing” means any Receivables Financing of a Receivables Subsidiary that meets the
following conditions: (1) the Board of Directors or a member of Senior Management of the Issuer shall have determined in good
faith that such Qualified Receivables Financing (including financing terms, covenants, termination events and other provisions) is
in the aggregate economically fair and reasonable to the Issuer and the Receivables Subsidiary, (2) all sales of accounts receivable
and related assets to the Receivables Subsidiary are made at fair market value (as determined in good faith by the Board of
Directors or a member of Senior Management of the Issuer), and (3) the financing terms, covenants, termination events and other
provisions thereof shall be on market terms (as determined in good faith by the Board of Directors or a member of Senior
Management of the Issuer) and may include Standard Securitization Undertakings.
The grant of a security interest in any accounts receivable of the Issuer or any of its Restricted Subsidiaries (other than
a Receivables Subsidiary) to secure Indebtedness under a Credit Facility or Indebtedness in respect of the Senior Secured Notes
shall not be deemed a Qualified Receivables Financing.
“Rating Agencies” means Moody’s and S&P or, in the event Moody’s or S&P no longer assigns a rating to the Senior
Secured Notes, any other “nationally recognized statistical rating organization” within the meaning of Rule 15c3-1(c)(2)(vi)(F)
under the U.S. Exchange Act selected by the Issuer as a replacement agency.
“Receivable ” means a right to receive payment arising from a sale or lease of goods or services by a Person pursuant to
an arrangement with another Person pursuant to which such other Person is obligated to pay for goods or services under terms that
permit the purchase of such goods and services on credit, as determined on the basis of IFRS.
“Receivables Assets” means any assets that are or will be the subject of a Qualified Receivables Financing.
“Receivables Fees” means distributions or payments made directly or by means of discounts with respect to any
participation interest issued or sold in connection with, and other fees paid to a Person that is not a Restricted Subsidiary in
connection with, any Receivables Financing.
“Receivables Financing” means any transaction or series of transactions that may be entered into by the Issuer or any of
its Subsidiaries pursuant to which the Issuer or any of its Subsidiaries may sell, convey or otherwise transfer to (a) a Receivables
Subsidiary (in the case of a transfer by the Issuer or any of its Subsidiaries), or (b) any other Person (in the case of a transfer by a
Receivables Subsidiary), or may grant a security interest in, any accounts receivable (whether now existing or arising in the
future) of the Issuer or any of its Subsidiaries, and any assets related thereto, including all collateral securing such accounts
receivable, all contracts and all guarantees or other obligations in respect of such accounts receivable, proceeds of such accounts
receivable and other assets which are customarily transferred or in respect of which security interest are customarily granted in
connection with asset securitization transactions involving accounts receivable and any Hedging Obligations entered into by the
Issuer or any such Subsidiary in connection with such accounts receivable.
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“Receivables Repurchase Obligation” means any obligation of a seller of receivables in a Qualified Receivables
Financing to repurchase receivables arising as a result of a breach of a representation, warranty or covenant or otherwise,
including as a result of a receivable or portion thereof becoming subject to any asserted defense, dispute, off-set or counterclaim
of any kind as a result of any action taken by, any failure to take action by or any other event relating to the seller.
“Receivables Subsidiary” means a Wholly Owned Subsidiary of the Issuer (or another Person formed for the purposes
of engaging in a Qualified Receivables Financing with the Issuer in which the Issuer or any Subsidiary of the Issuer makes an
Investment and to which the Issuer or any Subsidiary of the Issuer transfers accounts receivable and related assets) which engages
in no activities other than in connection with the financing of accounts receivable of the Issuer and its Subsidiaries, all proceeds
thereof and all rights (contractual or other), collateral and other assets relating thereto, and any business or activities incidental or
related to such business, and which is designated by the Board of Directors of the Issuer (as provided below) as a Receivables
Subsidiary and:
(1)
no portion of the Indebtedness or any other obligations (contingent or otherwise) of which (i) is guaranteed
by the Issuer or any other Restricted Subsidiary of the Issuer (excluding guarantees of obligations (other
than the principal of, and interest on, Indebtedness) pursuant to Standard Securitization Undertakings),
(ii) is subject to terms that are substantially equivalent in effect to a guarantee of any losses on securitized
or sold receivables by the Issuer or any other Restricted Subsidiary of the Issuer, (iii) is recourse to or
obligates the Issuer or any other Restricted Subsidiary of the Issuer in any way other than pursuant to
Standard Securitization Undertakings, or (iv) subjects any property or asset of the Issuer or any other
Restricted Subsidiary of the Issuer, directly or indirectly, contingently or otherwise, to the satisfaction
thereof, other than pursuant to Standard Securitization Undertakings;
(2)
with which neither the Issuer nor any other Restricted Subsidiary of the Issuer has any contract, agreement,
arrangement or understanding other than on terms which the Issuer reasonably believes to be no less
favorable to the Issuer or such Restricted Subsidiary than those that might be obtained at the time from
Persons that are not Affiliates of the Issuer; and
(3)
to which neither the Issuer nor any other Restricted Subsidiary of the Issuer has any obligation to maintain
or preserve such entity’s financial condition or cause such entity to achieve certain levels of operating
results.
Any such designation by the Board of Directors of the Issuer shall be evidenced to the Trustee by filing with the
Trustee a copy of the resolution of the Board of Directors of the Issuer giving effect to such designation and an Officer’s
Certificate certifying that such designation complied with the foregoing conditions.
“refinance” means refinance, refund, replace, renew, repay, modify, restate, defer, substitute, supplement, reissue,
resell, extend or increase (including pursuant to any defeasance or discharge mechanism) and the terms “refinances,” “refinanced”
and “refinancing” as used for any purpose in the Senior Secured Indenture shall have a correlative meaning.
“Refinancing ” means the offering of the Senior Secured Notes and the use of proceeds therefrom as described under
“Summary — The Refinancing”.
“Refinancing Indebtedness” means Indebtedness that is Incurred to refund, refinance, replace, exchange, renew, repay
or extend (including pursuant to any defeasance or discharge mechanism) any Indebtedness existing on the date of the Senior
Secured Indenture or Incurred in compliance with the Senior Secured Indenture (including Indebtedness of the Issuer that
refinances Indebtedness of any Restricted Subsidiary and Indebtedness of any Restricted Subsidiary that refinances Indebtedness
of the Issuer or another Restricted Subsidiary) including Indebtedness that refinances Refinancing Indebtedness; provided,
however, that:
(1)
if the Indebtedness being refinanced constitutes Subordinated Indebtedness, the Refinancing Indebtedness
has a final stated maturity at the time such Refinancing Indebtedness is Incurred that is the same as or later
than the final stated maturity of the Indebtedness being refinanced or, if shorter, the Senior Secured Notes;
(2)
such Refinancing Indebtedness is Incurred in an aggregate principal amount (or if issued with original issue
discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount
(or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness
being refinanced (plus, without duplication, any additional Indebtedness Incurred to pay interest or
premiums required by the instruments governing such existing Indebtedness and costs, expenses and fees
Incurred in connection therewith);
(3)
if the Indebtedness being refinanced is expressly subordinated to the Senior Secured Notes, such
Refinancing Indebtedness is subordinated to the Senior Secured Notes on terms at least as favorable to the
Holders as those contained in the documentation governing the Indebtedness being refinanced, provided,
however, that Refinancing Indebtedness shall not include Indebtedness of the Issuer or a Restricted
Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary.
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Refinancing Indebtedness in respect of any Credit Facility or any other Indebtedness may be Incurred from time to time
after the termination, discharge or repayment of any such Credit Facility or other Indebtedness.
“Related Person” with respect to any Permitted Holder, means:
(1)
any controlling equity holder, majority (or more) owned Subsidiary or partner or member of such Person;
or
(2)
in the case of an individual, any spouse, family member or relative of such individual, any trust or
partnership for the benefit of one or more of such individual and any such spouse, family member or
relative, or the estate, executor, administrator, committee or beneficiaries of any thereof; or
(3)
any trust, corporation, partnership or other Person for which one or more of the Permitted Holders and
other Related Persons of any thereof constitute the beneficiaries, stockholders, partners or owners thereof,
or Persons beneficially holding in the aggregate a majority (or more) controlling interest therein; or
(4)
any investment fund or vehicle managed, sponsored or advised by such Person or any successor thereto, or
by any Affiliate of such Person or any such successor.
“Related Taxes” means any Taxes, including sales, use, transfer, rental, ad valorem, value added, stamp, property,
consumption, franchise, license, capital, registration, business, customs, net worth, gross receipts, excise, occupancy, intangibles
or similar taxes (other than (x) taxes measured by income and (y) withholding imposed on payments made by any Parent),
required to be paid (provided such taxes are in fact paid) by any Parent by virtue of its:
(a)
being incorporated or otherwise being established or having Capital Stock outstanding (but not
by virtue of owning stock or other equity interests of any corporation or other entity other than,
directly or indirectly, the Issuer or any of the Issuer’s Subsidiaries);
(b)
issuing or holding Subordinated Shareholder Funding;
(c)
being a holding company parent, directly or indirectly, of the Issuer or any of the Issuer’s
Subsidiaries;
(d)
receiving dividends from or other distributions in respect of the Capital Stock of, directly or
indirectly, the Issuer or any of the Issuer’s Subsidiaries; or
(e)
having made any payment with respect to any of the items for which the Issuer is permitted to
make payments to any Parent pursuant to “—Certain Covenants—Limitation on Restricted
Payments.”
“Replacement Assets” means non current properties and assets that replace the properties and assets that were the
subject of an Asset Disposition or non-current properties and assets that will be used in the Issuer’s business or in that of the
Restricted Subsidiaries as of the Issue Date or any and all other businesses that in the good faith judgment of the Board of
Directors or any member of Senior Management of the Issuer are related thereto.
“Representative ” means any trustee, agent or representative (if any) for an issue of Indebtedness or the provider of
Indebtedness (if provided on a bilateral basis), as the case may be.
“Restricted Investment ” means any Investment other than a Permitted Investment.
“Restricted Subsidiary ” means any Subsidiary of the Issuer other than an Unrestricted Subsidiary.
“Revolving Credit Facility” means the revolving credit facility established pursuant to the super senior revolving
facility agreement to be dated on or about the Issue Date, among, inter alios, the Issuer, the Guarantors, the senior lenders (as
named therein), Handelsbanken Capital Markets, Svenska Handelsbanken AB (publ), as agent and Deutsche Bank AG, London
Branch as security agent, as amended, restated, modified, renewed, refunded, replaced, restructured, refinanced, repaid, increased
or extended in whole or in part from time to time.
“S&P ” means Standard & Poor’s Investors Ratings Services or any of its successors or assigns that is a Nationally
Recognized Statistical Rating Organization.
“SEC” means the U.S. Securities and Exchange Commission.
“Securities Act” means the U.S. Securities Act of 1933, as amended and the rules and regulations of the SEC
promulgated thereunder, as amended.
“Security Documents” means the security agreements, pledge agreements, collateral assignments, and any other
instrument and document executed and delivered pursuant to the Senior Secured Indenture or otherwise or any of the foregoing, as
179
the same may be amended, supplemented or otherwise modified from time to time, creating the security interests in the Collateral
as contemplated by the Senior Secured Indenture.
“SEK Equivalent” means, with respect to any monetary amount in a currency other than SEK, at any time of
determination thereof by the Issuer or the Trustee, the amount of SEK obtained by converting such currency other than SEK
involved in such computation into SEK at the spot rate for the purchase of SEK with the applicable currency other than SEK as
published in The Financial Times in the “Currency Rates” section (or, if The Financial Times is no longer published, or if such
information is no longer available in The Financial Times, such source as may be selected in good faith by the Board of Directors
or a member of Senior Management of the Issuer) on the date of such determination.
“Senior Management” means the officers, directors, and other members of senior management of the Issuer or any of
its Subsidiaries, who at any date beneficially own or have the right to acquire, directly or indirectly, Capital Stock of the Issuer or
any Parent.
“Senior Secured Indebtedness” means, with respect to any Person as of any date of determination, any Indebtedness for
borrowed money that (a) is secured by a first-priority Lien on the Collateral or (b) that is Incurred by a Restricted Subsidiary that
is not a Guarantor and that in the case of each of (a) and (b), is Incurred under the first paragraph of the covenant described under
“—Certain Covenants—Limitation on Indebtedness” or clauses (1), (4), (5), (7), (11) or (13) of the second paragraph of the
covenant described under “—Certain Covenants—Limitation on Indebtedness” (in the case of clause (4), to the extent such
Indebtedness constitutes Indebtedness under the Senior Secured Notes (excluding Additional Senior Secured Notes and
Management Advances)) and any Refinancing Indebtedness in respect thereof.
“Senior Secured Notes Documents” means the Senior Secured Notes (including Additional Senior Secured Notes), the
Senior Secured Indenture, the Security Documents, the Intercreditor Agreement and any Additional Intercreditor Agreements.
“Significant Subsidiary” means any Restricted Subsidiary that meets any of the following conditions:
(1)
the Issuer’s and its Restricted Subsidiaries’ investments in and advances to the Restricted Subsidiary
exceed 10% of the total assets of the Issuer and its Restricted Subsidiaries on a consolidated basis as of the
end of the most recently completed fiscal year;
(2)
the Issuer’s and its Restricted Subsidiaries’ proportionate share of the total assets (after intercompany
eliminations) of the Restricted Subsidiary exceeds 10% of the total assets of the Issuer and its Restricted
Subsidiaries on a consolidated basis as of the end of the most recently completed fiscal year; or
(3)
the Issuer’s and its Restricted Subsidiaries’ proportionate share of the Consolidated EBITDA of the
Restricted Subsidiary exceeds 10% of the Consolidated EBITDA of the Issuer and its Restricted
Subsidiaries on a consolidated basis for the most recently completed fiscal year.
“Similar Business” means (a) any businesses, services or activities engaged in by the Issuer or any of its Subsidiaries or
any Associates on the Issue Date and (b) any businesses, services and activities that are related, complementary, incidental,
ancillary or similar to any of the foregoing or are extensions or developments of any thereof.
“Specified Change of Control Event” means the occurrence of any event that would constitute a Change of Control
pursuant to the definition thereof; provided that immediately prior to the occurrence of such event and immediately thereafter and
giving pro forma effect thereto, the Consolidated Leverage Ratio of the Issuer and its Subsidiaries would have been less than 4.5
to 1.0.
Notwithstanding the foregoing, only one Specified Change of Control Event shall be permitted under the Indenture
after the Issue Date.
“Standard Securitization Undertakings” means representations, warranties, covenants, indemnities and guarantees of
performance entered into by the Issuer or any Subsidiary of the Issuer which the Issuer has determined in good faith to be
customary in a Receivables Financing, including those relating to the servicing of the assets of a Receivables Subsidiary, it being
understood that any Receivables Repurchase Obligation shall be deemed to be a Standard Securitization Undertaking.
“Stated Maturity” means, with respect to any security, the date specified in such security as the fixed date on which the
payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision, but shall not
include any contingent obligations, including those described in “—Change of Control” and the covenant under “—Certain
Covenants—Limitation on Sales of Assets and Subsidiary Stock”, to repay, redeem or repurchase any such principal prior to the
date originally scheduled for the payment thereof.
“Subordinated Indebtedness” means, with respect to any person, any Indebtedness (whether outstanding on the Issue
Date or thereafter Incurred) which is expressly subordinated in right of payment to the Senior Secured Notes or any Notes
Guarantee of the Senior Secured Notes pursuant to a written agreement, provided that Subordinated Shareholder Funding is
excluded from this definition.
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“Subordinated Shareholder Funding” means, collectively, any funds provided to the Issuer by any Parent, any Affiliate
of any Parent or any Permitted Holder or any Affiliate thereof, in exchange for or pursuant to any security, instrument or
agreement other than Capital Stock, in each case issued to and held by any of the foregoing Persons, together with any such
security, instrument or agreement and any other security or instrument other than Capital Stock issued in payment of any
obligation under any Subordinated Shareholder Funding; provided, however, that such Subordinated Shareholder Funding:
(1)
does not mature or require any amortization, redemption or other repayment of principal or any sinking
fund payment prior to the first anniversary of the Stated Maturity of the Senior Secured Notes (other than
through conversion or exchange of such funding into Capital Stock (other than Disqualified Stock) of the
Issuer or any funding meeting the requirements of this definition) or the making of any such payment prior
to the first anniversary of the Stated Maturity of the Senior Secured Notes is restricted by the Intercreditor
Agreement, an Additional Intercreditor Agreement or another intercreditor agreement;
(2)
does not require, prior to the first anniversary of the Stated Maturity of the Senior Secured Notes, payment
of cash interest, cash withholding amounts or other cash gross-ups, or any similar cash amounts or the
making of any such payment prior to the first anniversary of the Stated Maturity of the Senior Secured
Notes is restricted by the Intercreditor Agreement or an Additional Intercreditor Agreement;
(3)
contains no change of control or similar provisions and does not accelerate and has no right to declare a
default or event of default or take any enforcement action or otherwise require any cash payment, in each
case, prior to the first anniversary of the Stated Maturity of the Senior Secured Notes or the payment of any
amount as a result of any such action or provision or the exercise of any rights or enforcement action, in
each case, prior to the first anniversary of the Stated Maturity of the Senior Secured Notes is restricted by
the Intercreditor Agreement or an Additional Intercreditor Agreement;
(4)
does not provide for or require any security interest or encumbrance over any asset of the Issuer or any of
its Subsidiaries; and
(5)
pursuant to its terms or to the Intercreditor Agreement, an Additional Intercreditor Agreement or another
intercreditor agreement, is fully subordinated and junior in right of payment to the Senior Secured Notes
pursuant to subordination, payment blockage and enforcement limitation terms which are customary in all
material respects for similar funding or are no less favorable in any material respect to Holders than those
contained in the Intercreditor Agreement as in effect on the Issue Date with respect to the “Shareholder
Liabilities” (as defined therein).
“Subsidiary” means, with respect to any Person:
(1)
any corporation, association, or other business entity (other than a partnership, joint venture, limited
liability company or similar entity) of which more than 50% of the total voting power of shares of Capital
Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time of determination owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person or a combination thereof; or
(2)
any partnership, joint venture, limited liability company or similar entity of which:
(a)
more than 50% of the capital accounts, distribution rights, total equity and voting interests or
general or limited partnership interests, as applicable, are owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that Person or a
combination thereof whether in the form of membership, general, special or limited partnership
interests or otherwise; and
(b)
such Person or any Subsidiary of such Person is a controlling general partner or otherwise
controls such entity.
“Tax Sharing Agreement” means any tax sharing or profit and loss pooling or similar agreement with customary or
arm’s-length terms entered into with any Parent or Unrestricted Subsidiary, as the same may be amended, supplemented, waived
or otherwise modified from time to time in accordance with the terms thereof and of the Senior Secured Indenture.
“Taxes” means all present and future taxes, levies, imposts, deductions, charges, duties and withholdings and any
charges of a similar nature (including interest and penalties with respect thereto) that are imposed by any government or other
taxing authority.
“Temporary Cash Investments” means any of the following:
(1)
any investment in:
(a)
direct obligations of, or obligations Guaranteed by, (i) the United States of America or Canada,
(ii) any European Union member state, (iii) Switzerland or Norway, (iv) any country in whose
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currency funds are being held specifically pending application in the making of an investment
or capital expenditure by the Issuer or a Restricted Subsidiary in that country with such funds
or (v) any agency or instrumentality of any such country or member state; or
(b)
(2)
direct obligations of any country recognized by the United States of America rated at least “A”
by S&P or “A-1” by Moody’s (or, in either case, the equivalent of such rating by such
organization or, if no rating of S&P or Moody’s then exists, the equivalent of such rating by
any Nationally Recognized Statistical Rating Organization);
overnight bank deposits, and investments in time deposit accounts, certificates of deposit, bankers’
acceptances and money market deposits (or, with respect to foreign banks, similar instruments) maturing
not more than one year after the date of acquisition thereof issued by:
(a)
any lender under the Revolving Credit Facility;
(b)
any institution authorized to operate as a bank in any of the countries or member states referred
to in sub-clause (1)(a) above; or
(c)
any bank or trust company organized under the laws of any such country or member state or
any political subdivision thereof,
in each case, having capital and surplus aggregating in excess of €250 million (or the foreign currency
equivalent thereof) and whose long-term debt is rated at least “A” by S&P or “A-2” by Moody’s (or, in
either case, the equivalent of such rating by such organization or, if no rating of S&P or Moody’s then
exists, the equivalent of such rating by any Nationally Recognized Statistical Rating Organization) at the
time such Investment is made;
(3)
repurchase obligations with a term of not more than 30 days for underlying securities of the types described
in clause (1) or (2) above entered into with a Person meeting the qualifications described in clause
(2) above;
(4)
Investments in commercial paper, maturing not more than 270 days after the date of acquisition, issued by
a Person (other than the Issuer or any of its Subsidiaries), with a rating at the time as of which any
Investment therein is made of “P-2” (or higher) according to Moody’s or “A-2” (or higher) according to
S&P (or, in either case, the equivalent of such rating by such organization or, if no rating of S&P or
Moody’s then exists, the equivalent of such rating by any Nationally Recognized Statistical Rating
Organization);
(5)
Investments in securities maturing not more than one year after the date of acquisition issued or fully
Guaranteed by any state, commonwealth or territory of the United States of America, Canada, any
European Union member state or Switzerland, Norway or by any political subdivision or taxing authority
of any such state, commonwealth, territory, country or member state, and rated at least “BBB–” by S&P or
“Baa3” by Moody’s (or, in either case, the equivalent of such rating by such organization or, if no rating of
S&P or Moody’s then exists, the equivalent of such rating by any Nationally Recognized Statistical Rating
Organization);
(6)
bills of exchange issued in the United States, Canada, a member state of the European Union, Switzerland,
Norway or Japan eligible for rediscount at the relevant central bank and accepted by a bank (or any
dematerialized equivalent);
(7)
any money market deposit accounts issued or offered by a commercial bank organized under the laws of a
country that is a member of the Organization for Economic Co-operation and Development, in each case,
having capital and surplus in excess of €250 million (or the foreign currency equivalent thereof) or whose
long term debt is rated at least “A” by S&P or “A2” by Moody’s (or, in either case, the equivalent of such
rating by such organization or, if no rating of S&P or Moody’s then exists, the equivalent of such rating by
any Nationally Recognized Statistical Rating Organization) at the time such Investment is made;
(8)
investment funds investing 95% of their assets in securities of the type described in clauses (1) through
(7) above (which funds may also hold reasonable amounts of cash pending investment or distribution); and
(9)
investments in money market funds complying with the risk limiting conditions of Rule 2a-7 (or any
successor rule) of the SEC under the U.S. Investment Company Act of 1940, as amended.
“Total Assets” means the consolidated total assets of the Issuer and its Restricted Subsidiaries as shown on the balance
sheet of such Person prepared on the basis of IFRS.
“U.S. GAAP” means generally accepted accounting principles in the United States of America as in effect from time to
time.
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“Unrestricted Subsidiary” means:
(1)
any Subsidiary of the Issuer that at the time of determination is an Unrestricted Subsidiary (as designated
by the Board of Directors of the Issuer in the manner provided below); and
(2)
any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors of the Issuer may designate any Subsidiary of the Issuer (including any newly acquired or
newly formed Subsidiary or a Person becoming a Subsidiary through merger, consolidation or other business combination
transaction, or Investment therein) to be an Unrestricted Subsidiary only if:
(1)
such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of, or own or
hold any Lien on any property of, the Issuer or any other Subsidiary of the Issuer which is not a Subsidiary
of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary; and
(2)
such designation and the Investment of the Issuer in such Subsidiary complies with “—Certain
Covenants—Limitation on Restricted Payments.”
Any such designation by the Board of Directors of the Issuer shall be evidenced to the Trustee by filing with the
Trustee a copy of the resolution of the Board of Directors of the Issuer giving effect to such designation and an Officer’s
Certificate certifying that such designation complies with the foregoing conditions.
The Board of Directors of the Issuer may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided
that immediately after giving effect to such designation (1) no Default or Event of Default would result therefrom and (2)(x) the
Issuer could Incur at least SEK1.00 of additional Indebtedness under the first paragraph of the covenant described under “—
Certain Covenants—Limitation on Indebtedness” or (y) the Fixed Charge Coverage Ratio would not be less than it was
immediately prior to giving effect to such designation, in each case, on a pro forma basis taking into account such designation.
Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such designation or an Officer’s Certificate certifying that such designation
complied with the foregoing provisions.
“Uniform Commercial Code” means the New York Uniform Commercial Code.
“Voting Stock” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled to
vote in the election of directors.
“Wholly-Owned Subsidiary” means a Restricted Subsidiary of the Issuer, all of the Capital Stock of which (other than
directors’ qualifying shares or shares required by any applicable law or regulation to be held by a Person other than the Issuer or
another Wholly-Owned Subsidiary) is owned by the Issuer or another Wholly-Owned Subsidiary.
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BOOK-ENTRY, DELIVERY AND FORM
General
Notes sold in connection with the Issue are represented by one or more global notes in registered form without interest
coupons attached (collectively, the “Global Notes”). The Global Notes are deposited with, or on behalf of, the common depositary
(the “Common Depositary”) for the accounts of Euroclear and Clearstream and registered in the name of the nominee of the
Common Depositary.
Ownership of interests in the Global Notes (the “Book-Entry Interests”) is limited to persons that have accounts with
Euroclear and/or Clearstream, or persons that hold interests through such participants or otherwise in accordance with applicable
transfer restrictions set forth in the Indenture and any applicable securities laws of any state of the United States or any other
jurisdiction. Euroclear and Clearstream hold interests in the Global Notes on behalf of their participants through customers’
securities accounts in their respective names on the books of their respective depositaries. Except under limited circumstances,
owners of beneficial interests in the Global Notes are not entitled to receive physical delivery of certificated Notes.
Book-Entry Interests are shown on, and transfers thereof are done only through, records maintained in book-entry form
by Euroclear and Clearstream and their respective participants. The laws of some jurisdictions, including certain states of the
United States, may require that certain purchasers of securities take physical delivery of such securities in definitive certificated
form. The foregoing limitations may impair your ability to own, transfer or pledge Book-Entry Interests. In addition, while the
Notes are in global form, holders of Book-Entry Interests are not considered the owners or “holders” of Notes for any purpose.
So long as the Notes are held in global form, Euroclear and/or Clearstream (or their respective nominees), as
applicable, are considered the sole holders of Global Notes for all purposes under the Indenture. In addition, participants in
Euroclear and/or Clearstream must rely on the procedures of Euroclear and/or Clearstream, as the case may be, and indirect
participants must rely on the procedures of Euroclear, Clearstream and the participants through which they own Book-Entry
Interests, to transfer their interests or to exercise any rights of holders under the Indenture.
Neither we nor the Trustee nor any of our or its respective agents and neither the Registrar nor the Transfer Agent have
any responsibility or be liable for any aspect of the records relating to the Book-Entry Interests.
Redemption of the Global Notes
In the event any Global Note (or any portion thereof) is redeemed, Euroclear and/or Clearstream (or their respective
nominees), as applicable, will redeem an equal amount of the Book-Entry Interests in such Global Note from the amount received
by it in respect of the redemption of such Global Note. The Common Depositary will surrender such Global Note to the Registrar
for cancellation or, in the case of a partial redemption, the Common Depositary will request the Registrar or the Paying Agent to
mark down, endorse and return the applicable Global Note to reflect the reduction in the principal amount of such Global Note as
a result of such partial redemption. The redemption price payable in connection with the redemption of such Book-Entry Interests
will be equal to the amount received by Euroclear and Clearstream, as applicable, in connection with the redemption of such
Global Note (or any portion thereof). If less than all of any series of Notes is to be redeemed at any time, the Principal Paying
Agent or the Registrar will select Notes for redemption on a pro rata basis (or, in the case of Notes issued in global form as
discussed under “Book-Entry, Delivery and Form,” based on a method that most nearly approximates a pro rata selection as the
Principal Paying Agent or the Registrar deems fair and appropriate), unless otherwise required by law or applicable stock
exchange or depository requirements.
Payments on Global Notes
We make payments of any amounts owing in respect of the Global Notes (including principal, premium, if any, interest
and additional interest, if any) to the Paying Agent, who makes payments as directed by the Common Depositary to Euroclear and
Clearstream, which distribute such payments to participants in accordance with their customary procedures. We make payments of
all such amounts without deduction or withholding for, or on account of, any present or future taxes, duties, assessments or
governmental charges of whatever nature, except as may be required by law and as described under “Description of the Senior
Secured Notes—Withholding Taxes.” If any such deduction or withholding is required to be made, then, to the extent described
under “Description of the Senior Secured Notes—Withholding Taxes,” we pay additional amounts as may be necessary in order
that the net amounts received by any holder of the Global Notes or owner of Book-Entry Interests after such deduction or
withholding equal the net amounts that such holder or owner would have otherwise received in respect of such Global Note or
Book-Entry Interest, as the case may be, absent such withholding or deduction. We expect that standing customer instructions and
customary practices govern payments by participants to owners of Book-Entry Interests held through such participants.
Under the terms of the Indenture, we, the agents and the Trustee treat the registered holders of the Global Notes (i.e.,
the nominee for the Common Depositary for Euroclear or Clearstream) as the owners thereof for the purpose of receiving
payments and for all other purposes. Consequently, neither we, the agents, the Trustee, nor any of our or its respective agents has
or will have any responsibility or liability for:
•
any aspect of the records of Euroclear, Clearstream or any participant or indirect participant relating to, or
payments made on account of, a Book-Entry Interest or for maintaining, supervising or reviewing the records of
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Euroclear, Clearstream or any participant or indirect participant relating to, or payments made on account of, a
Book-Entry Interest; or
•
Euroclear, Clearstream or any participant or indirect participant.
Payments by participants to owners of Book-Entry Interests held through participants are the responsibility of such
participants.
Currency of Payment for the Global Notes
Except as may otherwise be agreed between Euroclear and/or Clearstream and any holder, the principal of, premium, if
any, and interest on, and all other amounts payable in respect of the SEK Senior Secured Floating Rate Notes are paid to holders
of interests in such Notes through Euroclear and/or Clearstream in Swedish kronor.
Payments are subject in all cases to any fiscal or other laws and regulations (including any regulations of the applicable
clearing system) applicable thereto. None of us, the agents or the Trustee or the Initial Purchasers nor any of our or their
respective agents will be liable to any holder of a Global Note or any other person for any commissions, costs, losses or expenses
in relation to or resulting from any currency conversion or rounding effected in connection with any such payment.
Action by Owners of Book-Entry Interests
Euroclear and Clearstream have advised us that they will take any action permitted to be taken by a holder of Notes
only at the direction of one or more participants to whose account the Book-Entry Interests in the Global Notes are credited and
only in respect of such portion of the aggregate principal amount of Notes as to which such participant or participants has or have
given such direction. Euroclear and Clearstream will not exercise any discretion in the granting of consents, waivers or the taking
of any other action in respect of the Global Notes. However, if there is an event of default under the Notes, each of Euroclear and
Clearstream reserves the right to exchange the Global Notes for definitive registered Notes in certificated form (the “Definitive
Registered Notes”), and to distribute such Definitive Registered Notes to its participants.
Transfers
Transfers of beneficial interests in the Global Notes will be subject to the applicable rules and procedures of Euroclear
and Clearstream and their respective direct or indirect participants, which rules and procedures may change from time to time.
Further, the Notes and the Note Guarantees have not been, and will not be, registered under the U.S. Securities Act or the
securities laws of any other jurisdiction. The Notes are subject to restrictions on transfer and may only be offered or sold in
transactions that are exempt from the registration requirements of the U.S. Securities Act. See “Important information.”
Following the Issue Date, we intend to make an application to also list the SEK Senior Secured Floating Rate Notes on
NASDAQ OMX Stockholm. Application has also been made to list the Notes on the Official List of the Irish Stock Exchange and
for the Notes to be admitted to trading on the Global Exchange Market thereof and trading has commenced on October 22, 2013.
Accordingly, the SEK Senior Secured Floating Rate Notes will be listed both on the Irish Stock Exchange and on NASDAQ
OMX Stockholm, subject to acceptance of the application to list the SEK Senior Secured Floating Rate Notes on NASDAQ OMX
Stockholm for which there can be no assurance. Transfers of interests in the Global Notes between participants in Euroclear and
Clearstream will be effected in the ordinary way in accordance with their respective rules and operating procedures, which rules
and operating procedures may change from time to time.
Although Euroclear and Clearstream currently follow the foregoing procedures in order to facilitate transfers of
interests in the Global Notes between participants in Euroclear or Clearstream, as the case may be, they are under no obligation to
perform or continue to perform such procedures, and such procedures may be discontinued or modified at any time. None of the
Issuer, the Trustee, the Paying Agent or any of our or their respective agents will have any responsibility for the performance by
Euroclear or Clearstream or their respective participants or indirect participants of their respective obligations under the rules and
procedures governing their operations.
Global Clearance and Settlement Under the Book-Entry System
Secondary Market Trading
The Book-Entry Interests trade through participants of Euroclear or Clearstream and settle in same-day funds. Since the
purchase determines the place of delivery, it is important to establish at the time of trading of any Book-Entry Interests where both
the purchaser’s and the seller’s accounts are located to ensure that settlement can be made on the desired value date.
Special Timing Considerations
You should be aware that investors are only able to make and receive deliveries, payments and other communications
involving Notes through Euroclear or Clearstream on days when those systems are open for business.
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Clearing Information
The Notes have been accepted for clearance through the facilities of Euroclear and Clearstream. The international
securities identification numbers, common codes and CUSIP numbers for the Notes are set forth under “Listing and General
Information—Clearing Information.”
Information Concerning Euroclear and Clearstream
The following description of the operations and procedures of Euroclear and Clearstream are provided solely as a
matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are
subject to change by them. Neither we nor the Initial Purchasers take any responsibility for these operations and procedures and
we urge investors to contact the systems or their participants directly to discuss these matters.
We understand as follows with respect to Euroclear and Clearstream:
Euroclear and Clearstream hold securities for participating organizations. They also facilitate the clearance and
settlement of securities transactions between their respective participants through electronic book-entry changes in the accounts of
such participants. Euroclear and Clearstream provide various services to their participants, including the safekeeping,
administration, clearance, settlement, lending and borrowing of internationally traded securities. Euroclear and Clearstream also
interface with domestic securities markets in several countries. Euroclear and Clearstream participants are financial institutions
such as underwriters, securities brokers and dealers, banks, trust companies and certain other organizations. Indirect access to
Euroclear or Clearstream is also available to others such as banks, brokers, dealers and trust companies that clear through or
maintain a custodial relationship with a Euroclear or Clearstream participant, either directly or indirectly.
Euroclear and Clearstream have no record of or relationship with persons holding through their account holders. Since
Euroclear and Clearstream only act on behalf of participants, who in turn act on behalf of indirect participants and certain banks,
the ability of an owner of a beneficial interest to pledge such interest to persons or entities that do not participate in the Euroclear
or Clearstream systems, or otherwise take actions in respect of such interest, may be limited by the lack of a definite certificate for
that interest. We understand that, under existing industry practices, if either the Issuer or the Trustee requests any action by
owners of Book-Entry Interests or if an owner of a Book-Entry Interest desires to give or take any action that a holder is entitled to
give or take under the Indenture, Euroclear and Clearstream would authorize participants owning the relevant Book-Entry Interest
to give or take such action, and such participants would authorize indirect participants to give or take such action or would
otherwise act upon the instructions of such indirect participants.
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CERTAIN TAX CONSIDERATIONS IN SWEDEN
Swedish Taxation
The following summary outlines certain Swedish tax consequences relating to holders of the SEK Senior Secured
Floating Rate Notes that are considered to be Swedish residents for Swedish tax purposes (if not otherwise stated) and to
payments by a Guarantor under the Note Guarantees in respect of the SEK Senior Secured Floating Rate Notes. The summary is
based on Swedish legislation currently in effect and is intended to provide general information only. The summary is not
exhaustive and does thus not address all potential aspects of Swedish taxation that may be relevant for a potential investor in the
SEK Senior Secured Floating Rate Notes and is neither intended to be nor should be construed as legal or tax advice. For instance,
the summary does not cover tax issues for holders of EUR Senior Secured Floating Rate Notes or tax issues in cases where SEK
Senior Secured Floating Rate Notes are held as current assets in business operations or by a partnership. Furthermore, the
summary does not address situations where SEK Senior Secured Floating Rate Notes are held in an investment savings account
(investeringssparkonto) or the special rules that may be applicable to private individuals who make or reverse a so-called investor
deduction (investeraravdrag). The tax consequences for investors depend in part on their particular circumstances. Specific tax
rules apply to certain categories of investors, e.g., life insurance companies. Investors should consult professional tax advisors
regarding tax consequences of acquiring, owning and disposing of SEK Senior Secured Floating Rate Notes in their particular
circumstances.
Holders Resident in Sweden
General
The disposal (including redemption) of a SEK Senior Secured Floating Rate Note is subject to capital gains taxation.
The capital gain or the capital loss is computed as the difference between the consideration (less selling expenses) and the tax
acquisition value of the SEK Senior Secured Floating Rate Note.
When computing the capital gain or the capital loss, the acquisition value for all SEK Senior Secured Floating Rate
Notes of the same class and type shall be added together and computed collectively in accordance with the “average
method”(genomsnittsmetoden).
Private Individuals
All capital income such as interest and capital gains on the SEK Senior Secured Floating Rate Notes is taxed in the
capital income category for private individuals and estates of deceased persons. The tax rate is 30%. A capital loss on the SEK
Senior Secured Floating Rate Notes is deductible at 70% in the same income category, provided the SEK Senior Secured Floating
Rate Notes are deemed not to be listed for Swedish tax purposes.
Should a net loss arise in the capital income category a reduction is granted on the tax on income from employment and
business operations, as well as national and municipal property tax. This tax reduction is granted with 30% of the net loss that
does not exceed SEK100,000 and with 21% of any remaining net loss. An excess net loss cannot be carried forward to future
years.
If amounts that are considered to be interest for Swedish tax purposes are paid by a legal entity domiciled in Sweden,
including a Swedish branch, to a private individual (or an estate of a deceased person) with residence in Sweden for Swedish tax
purposes, Swedish preliminary taxes are normally withheld by the legal entity on such payments. Swedish preliminary taxes are
also normally withheld on other returns on the SEK Senior Secured Floating Rate Notes (but not capital gains), if the return is
paid out together with interest, as referred to above.
Limited Liability Companies
For limited liability companies (aktiebolag), all income, including interest and capital gains on SEK Senior Secured
Floating Rate Notes, is taxed as income from business operations at a rate of 22% (for financial years commencing from
January 1, 2013). Deductible capital losses on the SEK Senior Secured Floating Rate Notes may normally be fully off-set in the
income from business operations category.
Interest income is generally treated for tax purposes in accordance with the accounting treatment.
Non-resident Investors
Under current Swedish tax law, payment of interest and the repayment of principal by the Issuer under the SEK Senior
Secured Floating Rate Notes will be made free of withholding or deduction for or on account of Swedish tax.
Non-resident investors are not taxable in Sweden in respect of the SEK Senior Secured Floating Rate Notes as long as
the investor does not have a permanent establishment in Sweden to which the SEK Senior Secured Floating Rate Notes are
effectively connected.
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Payments by a Guarantor
For payments by a Guarantor under a Note Guarantee considered to be interest for Swedish tax purposes (and other
returns on SEK Senior Secured Floating Rate Notes) to holders of the SEK Senior Secured Floating Rate Notes resident in
Sweden for Swedish tax purposes, see “—Holders Resident in Sweden” regarding the tax treatment of holders of the SEK Senior
Secured Floating Rate Notes.
For payments by a Guarantor under a Note Guarantee considered to be interest for Swedish tax purposes to holders of
the SEK Senior Secured Floating Rate Notes not resident in Sweden for Swedish tax purposes, see “—Non-resident Investors”
regarding the tax treatment of holders of the SEK Senior Secured Floating Rate Notes.
EU Savings Directive
Under EC Council Directive 2003/48/EC of June 3, 2003 on the taxation of savings income in the form of interest
payments (the “EU Savings Directive”), a Member State is required to provide to the tax authorities of another Member State
details of payments of interest (or similar income) paid by a paying agent within the jurisdiction of the first Member State to an
individual resident, or certain entities established, in that other Member State. However, for a transitional period, Luxembourg and
Austria are instead required (unless during that period they elect otherwise) to operate a withholding system in relation to such
payments. The ending of such transitional period is dependent on the conclusion of certain other agreements relating to
information exchange with certain other countries. A number of non-EU countries and territories have adopted similar measures.
The European Commission has proposed certain amendments to the EU Savings Directive, which may, if implemented,
amend or broaden the scope of the requirements described above.
188
INCORPORATION BY REFERENCE & DOCUMENTS ON DISPLAY
This Prospectus should be read and construed in conjunction with the following financial statements:
•
audited consolidated financial statements of Bravida AB and its consolidated subsidiaries as of and for the years
ended December 31, 2010, 2011 and 2012, prepared in accordance with IFRS;
•
unaudited condensed consolidated interim financial statements of Bravida AB and its consolidated subsidiaries as
of and for the three months ended March 31, 2012, prepared in accordance with IAS 34;
•
audited financial statements of the Issuer as of and for the period April 25, 2012 – December 31, 2012, prepared
in accordance with Swedish GAAP;
•
and for the three months ended March 31, 2013, prepared in accordance with IAS 34; and
•
and for the nine months ended September 30, 2013, prepared in accordance with IAS 34.
Such documents are, by reference, incorporated in, and form part of this Prospectus.
The following documents can be downloaded from www.bravida.com.
• The Issuer’s articles of association.
• The Prospectus.
• The financial statements referred to above.
Copies of these documents are also available during regular office hours at the Issuer’s office during the validity period
of this Prospectus.
189
LISTING AND GENERAL INFORMATION
Listing on NASDAQ OMX Stockholm
The Issuer shall use commercially reasonable efforts to list the SEK Senior Secured Floating Rate Notes on NASDAQ
OMX Stockholm within six months from the Issue Date. The total expenses related to the admission of the SEK Senior Secured
Floating Rate Notes to trading on NASDAQ OMX Stockholm are expected to be approximately €10,000.
Prescription
Claims against the Issuer for the payment of principal or additional amounts, if any, on the Notes will be prescribed ten
years after the applicable due date for payment thereof. Claims against the Issuer for the payment of interest on the Notes will be
prescribed five years after the applicable due date for payment of interest.
Clearing Information
The SEK Senior Secured Floating Rate Notes have been accepted for clearance through the facilities of Euroclear and
Clearstream. Certain trading information with respect to the Notes is set forth below.
ISIN
SEK Senior Secured Floating Rate Notes................................................................
XS0940979676
Common codes
094097967
Issuer and Guarantor Information
The Issuer
The Issuer of the Notes, Bravida Holding AB (publ) (formerly Bravissima AB), is a public limited liability company
incorporated under the laws of Sweden on April 10, 2012, with registration number 556891-5390. The Issuer’s registered office is
at SE-126 81 Stockholm, Sweden. The Issuer is a wholly owned indirect subsidiary of the Parent. For a full description of the
principal shareholders of the Issuer, see “Principal Shareholder.”
The Parent
The indirect parent of the Issuer, Bravissima Sweden AB (formerly Goldcup 7838 AB), is a private limited liability
company incorporated under the laws of Sweden on June 5, 2012, with registration number 556896-0578. The Parent’s registered
office is at SE-126 81 Stockholm, Sweden.
Guarantors
Sweden
The Notes are guaranteed on a senior secured basis by Bravida Installation och Service AB (formerly Bravissima
Acquisitions AB), a private limited liability company incorporated under the laws of Sweden on April 20, 2012, with registration
number 55892-0705.
The Notes are guaranteed on a senior secured basis by Scandinavian Installation Acquisition AB, a private limited
liability company incorporated under the laws of Sweden on October 10, 2006, with registration number 556713-6519.
The Notes are guaranteed on a senior secured basis by Bravida Sverige AB, a private limited liability company
incorporated under the laws of Sweden on April 27, 1978, with registration number 556197-4188.
The Notes are guaranteed on a senior secured basis by Bravida Prenad AB, a private limited liability company
incorporated under the laws of Sweden on September 21, 1992, with registration number 556454-1315.
Norway
The Notes are guaranteed on a senior secured basis by Bravissima AS, a private limited company incorporated under
the laws of Norway on March 15, 2013, with registration number 998 121 221.
The Notes are guaranteed on a senior secured basis by Bravida AS, a private limited company incorporated under the
laws of Norway on August 21, 2000, with registration number 982 281 024.
The Notes are guaranteed on a senior secured basis by Bravida Norge AS, a private limited company incorporated
under the laws of Norway on December 8, 2004, with registration number 987 582 561.
190
Denmark
The Notes are guaranteed on a senior secured basis by Bravida Danmark A/S, a limited company incorporated under
the laws of Denmark on December 19, 1910 with registration number CVR 14769005.
Authorizations and Responsibility
The Issuer and the Guarantors have obtained all necessary consents, approvals and authorizations (if any) in connection
with the issuance of the Notes. The issuance of the Notes was approved by resolutions of the board of directors of the Issuer
passed on May 27, 2013.
The Board of Directors of the Issuer is, to the extent provided by law, responsible for the information contained in this
Prospectus and declares that, having taken all reasonable care to ensure that such is the case, the information contained in this
Prospectus is, to the best of its knowledge, in accordance with the facts and contains no omission likely to affect its import.
Material Adverse Change in Issuer’s Financial Position
Except as disclosed elsewhere in this Prospectus, there has been no material adverse change in our consolidated
financial position since September 30, 2013, the date of the Issuers last published unaudited condensed consolidated interim
financial statements.
Litigation
Except as disclosed elsewhere in this Prospectus, none of us, the Issuer or any of the Guarantors is involved, or has
been involved during the twelve months preceding the date of this Prospectus, in any litigation, arbitration, governmental or
administrative proceedings which would, individually or in the aggregate, have a material adverse effect on our results of
operations, condition (financial or other) or general affairs and, so far as each is aware, having made all reasonable inquiries, there
are no such litigation, arbitration or administrative proceedings pending or threatened.
191
CERTAIN DEFINITIONS
Unless otherwise specified or the context requires otherwise, in this Prospectus reference to:
“Acquisition Transactions”
means our acquisition by investment funds advised by Bain Capital and its
affiliates, which was completed on July 31, 2012, and the financing thereof;
“Adjusted EBITDA”
means EBITDA as adjusted for certain non-recurring and non-cash items. See
“Summary—Summary Consolidated Historical and Recalculated Financial and
Other Information”;
“Bain Capital”
means Bain Capital, LLC;
“Calculation Agent”
means Deutsche Bank AG, London Branch;
“Clearstream”
means Clearstream Banking, société anonyme;
“Collateral”
means the collateral with respect to the Notes as described in “Description of the
Senior Secured Notes—Security.”;
“company,” “us,” “group,” “our” and “we”
except where the context otherwise requires or where otherwise indicated,
means the Issuer and its subsidiaries;
“Danish krone,” “Danish kroner” or “DKK”
means the lawful currency of the Kingdom of Denmark;
“EEA”
means the European Economic Area;
“EU”
means the European Union;
“euro,” “euros,” “EUR” or “€”
means the lawful currency of the European Monetary Union;
“Euroclear”
means Euroclear Bank SA/NV;
“eurozone”
means the EU Member States that have adopted the euro as their official
currency;
“EUR Senior Secured Floating Rate Notes”
means the senior secured floating rate notes due 2019 issued by the Issuer on the
Issue Date denominated in euro;
“Existing Credit Facilities”
means the credit facility under the Existing Credit Facilities Agreement,
including one or more term loans and revolving credit facilities;
“Existing Credit Facilities Agreement”
means the existing credit facilities agreement entered into on July 17, 2012 (as
amended and restated from time to time) by and among, inter alios, the Parent,
as original borrower; the Issuer and Bravida Installation och Service AB
(formerly Bravissima Acquisitions AB), as original guarantors; Citigroup Global
Markets Limited, Morgan Stanley Bank International Limited, Nordea Bank AB
(publ), Deutsche Bank AG, London Branch, Svenska Handelsbanken AB (publ)
and Crédit Agricole Corporate and Investment Bank (France) Sweden Branch,
as mandated lead arrangers; Nordea Bank Finland plc, as issuing bank; Nordea
Bank AB (publ), as agent; and Nordea Bank AB (publ), as security agent;
“GDP”
means gross domestic product;
“Guarantors”
has the meaning assigned to it in “Summary—The Issue—Note Guarantees”;
“HVAC”
means heating, ventilation and air conditioning;
“IFRS”
means International Financial Reporting Standards as adopted by the European
Union;
“Indenture”
means the indenture dated on the Issue Date governing the Notes;
“Initial Purchasers”
means, collectively, Deutsche Bank AG, London Branch, Morgan Stanley Bank
& Co International plc, Nordea Bank Danmark A/S and Svenska Handelsbanken
192
AB (publ);
“installation”
refers to our installation business, comprising new installation or the
redevelopment of, and adaptations to, technical systems in buildings, plants and
infrastructure;
“Intercreditor Agreement”
means the intercreditor agreement dated the Issue Date, by and among, inter
alios, the lenders and agents under the Revolving Credit Facility, certain hedge
counterparties, the Issuer, the Trustee and the Security Agent, which is described
in more detail under “Description of Certain Financing Arrangements—
Intercreditor Agreement”;
“Intermediate Holiday Companies”
means, collectively, Bravida Installation och Service AB (formerly Bravissima
Acquisition AB), Scandinavian Installation Refi AB and Scandinavian
Installation Acquisition AB;
“Issue”
means the issue of €225 million EUR Senior Secured Floating Rate Notes and
SEK1,300 million SEK Senior Secured Floating Rate Notes on the Issue Date;
“Issue Date”
means June 11, 2013;
“Issuer”
means Bravida Holding AB (publ), a public limited liability company (publikt
aktiebolag) existing under the laws of Sweden with registration number 5568915390;
“Member States”
means the member states of the European Union;
“Norwegian krone,” “Norwegian kroner” or
“NOK”
means the lawful currency of the Kingdom of Norway;
“Notes”
means, together, the EUR Senior Secured Floating Rate Notes and the SEK
Senior Secured Floating Rate Notes;
“Note Guarantees”
has the meaning assigned to it in “Summary—The Issue—Note Guarantees”;
“order backlog”
means the anticipated revenues from signed and binding contractual
commitments existing on a certain date less amounts invoiced on those
commitments up to that date;
“Parent”
means Bravissima Sweden AB, a private limited liability company (privat
aktiebolag) existing under the laws of Sweden with registration number 5568960578;
“Paying Agent”
“Predecessor”
means Bravida AB and its consolidated subsidiaries;
“Predecessor periods”
means each of the periods for which historical consolidated financial
information is presented for the Predecessor;
“Prospectus Directive”
means EU Prospectus Directive (2003/71/EC) (and amendments thereto,
including Directive 2010/73/EU, to the extent implemented in the Relevant
Member State);
“Purchase Agreement”
means the purchase agreement dated on June 4, 2013 relating to the Notes,
entered into between the Issuer, the Guarantors and the Initial Purchasers;
“Recalculation Basis”
means the information qualified by this term gives recalculation effect to the
Acquisition Transactions for the three months ended March 31, 2012 or for the
year ended December 31, 2012, as the case may be, as if such transactions had
occurred on January 1, 2012. See “Unaudited Recalculated Condensed
Consolidated Financial Information”;
“Recalculation Basis Three Months Ended
March 31, 2012”
means the information qualified by this term gives recalculation effect to the
Acquisition Transactions for the three months ended March 31, 2012, as if such
transactions had occurred on January 1, 2012. See “Unaudited Recalculated
Condensed Consolidated Financial Information”;
193
“Refinancing”
means the Issue and the use of proceeds therefrom, described under
“Summary—The Refinancing”;
“Registrar”
means Deutsche Bank Luxembourg S.A.;
“Revolving Credit Facility”
means the revolving credit facility entered into under the Revolving Credit
Facility Agreement, which is described in more detail under “Description of
Certain Financing Arrangements—Revolving Credit Facility”;
“Revolving Credit Facility Agreement”
means the senior revolving credit facility agreement entered into on the Issue
Date (as amended and restated from time to time) by and among, inter alios, the
Issuer, the Guarantors, Handelsbanken Capital Markets, Svenska Handelsbanken
AB (publ), as agent, the financial institutions named therein as lenders and the
Security Agent;
“Scandinavia”
means, collectively, Sweden, Norway and Denmark;
“Scandinavian Building Services Market”
means the market for electrical, heating and plumbing and HVAC installation
and services in Scandinavia;
“Security Agent”
“Security Documents”
means the agreements entered into between, inter alios, the Security Agent, the
Issuer and the Guarantors pursuant to which security interests in the Collateral
are granted to secure the Notes, the Revolving Credit Facility and certain
hedging obligations;
means the senior secured floating rate notes due 2019 issued by the Issuer on the
Issue Date denominated in Swedish kronor;
“SEK Senior Secured Floating Rate Notes”
“services”
refers to our building services business, comprising operation, maintenance,
repair, replacement, reconfiguration and monitoring of installations in buildings,
plans and infrastructure;
“Successor”
means the Issuer and its consolidated subsidiaries;
“Successor period”
means the period for which consolidated historical and recalculated financial
information is presented for the Successor;
“Swedish krona,” “Swedish kronor” or “SEK”
means the lawful currency of the Kingdom of Sweden;
“Transfer Agent”
means Deutsche Bank Luxembourg S.A.;
“Trustee”
means Deutsche Trustee Company Limited;
“United States” and “U.S.”
means the United States of America;
“U.S. dollar,” “U.S. dollars,” “USD” or “$”
means the lawful currency of the United States; and
“U.S. Securities Act”
means the United States Securities Act of 1933, as amended.
194
ADDRESSES
REGISTERED OFFICE OF THE ISSUER
Bravida Holding AB (publ)
SE-126 81 Stockholm
Sweden
Telephone: +46 8 695 20 00
www.bravida.com
LEGAL ADVISORS TO THE ISSUER
as to U.S. law
Kirkland & Ellis International LLP
30 St. Mary Axe
London EC3A 8AF
United Kingdom
as to Swedish law
Advokatfirman Vinge KB
Smålandsgatan 20
Box 1703
111 87 Stockholm
Sweden
AUDITOR TO THE ISSUER
KPMG AB
Box 16106
103 23 Stockholm
Sweden
TRUSTEE
PRINCIPAL PAYING AGENT,
CALCULATION AGENT AND SECURITY AGENT
Deutsche Trustee Company Limited
Winchester House
1 Great Winchester Street
London EC2N 2DB
United Kingdom
Deutsche Bank AG, London Branch
Winchester House
1 Great Winchester Street
London EC2N 2DB
United Kingdom
REGISTRAR AND TRANSFER AGENT
LEGAL ADVISOR TO THE TRUSTEE
Deutsche Bank Luxembourg S.A.
2, boulevard Konrad
Adenauer
L-1115 Luxembourg
Duchy of Luxembourg
Baker & McKenzie LLP
100 New Bridge Street
London EC4V 6JA
United Kingdom
The date of this prospectus is 18 December, 2013
195

1 bravida holding ab (publ)

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