Các cổ đông của ams OSRAM chấp thuận phát hành quyền mua cổ phiếu trị giá 800 triệu euro
News: Optoelectronics
26 October 2023
At an extraordinary general meeting (EGM) meeting on 20 October, shareholders of ams OSRAM GmbH of Premstätten, Austria and Munich, Germany approved (“with a large majority and without any contestation”) a proposed rights issue of €800m, expected to take place this fall/winter 2023/24 (subject to market conditions).
“We are very pleased that our shareholders trust in our recently announced financing plan and the strategic direction we are taking,” comments CEO Aldo Kamper. “Approving the capital raise, which is intended primarily for the reduction of debt, is the centerpiece for creating a solid financial base on which we can execute our revised strategy to create sustainable value.”
To strengthen its balance sheet long-term for structural growth (targeting ‘investment grade’ profile by 2026), ams OSRAM plans to secure a total of €2.25bn through the combination of a capital increase, new corporate bonds, and other financing instruments.
“Firstly, we have sharpened our strategy towards structural growth. Secondly, we are cleaning-up our semiconductor portfolio by exiting non-performing businesses. Thirdly, we are making our organization efficient and accountable,” says Kamper. “The foundation for ‘re-establishing the base’ of ams OSRAM is having a solid and sustainable capital structure. With the holistic financing plan we present today, we aim to put our balance sheet on a solid footing, such that we can fully concentrate on executing our strategy for growth, higher profitability and monetizing innovation.”
The financing follows a multi-stage plan. The rights issue of €800m will be combined with an issuance of senior unsecured notes in € and US$, which are expected to raise a total of about €800m. The volume of the capital increase is underwritten by the banks HSBC, Morgan Stanley and UBS. In addition, ams OSRAM expects to execute certain asset transactions — such as sale & lease-backs of corporate assets, to keep overall borrowing cost lower in a high-interest environment — in winter 2023/24 to raise a further €300m. The total financing package is expected to be completed in 2024 with an additional €350m in a mix of debt instruments, such as unsecured notes, bi-lateral debt facilities, or other instruments – the mix will be subject to market conditions.
“Our comprehensive plan consists of new equity to reduce gross and net debt as well as new senior notes to refinance additional outstanding debt with a well-balanced maturity profile,” says chief financial officer Rainer Irle. “We will also use additional financing instruments, such as sale & lease-back transactions, with the aim of bringing the company on track to reach a healthy investment-grade leverage.”
The financing plan creates a base for the strategic realignment of ams OSRAM, which is focusing its semiconductor portfolio on its profitable core business with intelligent sensor and emitter components. The firm hence aims to expand what it claims is its leading position in the relevant automotive, industrial and medical sectors. This will be complemented by selected offerings for the consumer electronics markets, such as micro-LEDs. The Automotive & Specialty Lamps segment continues to be an important part of the group after its portfolio was cleaned up and is delivering sustainable double-digit adjusted EBIT margins.
The new strategy and the associated efficiency program ‘Re-establish the Base’ aim to align the group with the focused semiconductor portfolio and to strengthen profitability with expected run-rate savings of about €150m by the end of 2025. ams OSRAM says that it is well on the track to achieve this. The organizational adjustments to strengthen accountability and to make the set-up leaner (e.g. reducing from four to three business units) are close to being fully implemented. Preparations are progressing for the exit of the passive optical components business, which is no longer part of the core business. Initial talks with interested parties are promising, says the firm. Potential proceeds from a sale of the non-core semiconductor portfolio could also be used to reduce leverage.
Placement and later repurchase of treasury shares
ams OSRAM intends to sell its entire self-held 12.86 million of treasury shares prior to the start of the rights issue. Under Austrian corporate law, the treasury shares are not entitled to subscription rights in the event of a capital increase. Essentially, the sale is a technical measure to avoid automatic dilution. Consequently, ams OSRAM intends to repurchase treasury shares in the market after execution of the rights issue to cover outstanding obligations under its long-term incentive programs. Details of this public share buyback program will be determined by the management and the Supervisory Board and communicated in due time.
Senior unsecured notes
The firm plans to issue senior unsecured notes (a mix of €, US$ and potentially staggered maturities) totaling about €800m in 2023. The new issuance is interlinked with the rights issue. Any new bond issuance could also be combined with a tender offer for the outstanding senior notes to optimize the debt structure and interest costs and allow existing bondholders to roll over their risk exposure.
Assets transactions to optimize borrowing cost
In view of the increased interest rate level compared with 2020, the company plans asset transactions including, for example, selling certain company assets and subsequently leasing them back. The implicit borrowing costs of such transactions are typically lower compared with straight debt financing and thus will be designed to optimize overall borrowing costs under the planned financing package. These transactions are planned to amount to €300m. Further details will be published once contracts have been signed.
Extension of revolving credit facility and OSRAM Licht minority share holdings
ams OSRAM’s core relationship banks are expected to extend the currently undrawn €800m revolving credit facility (RCF) by one year to September 2026. The RCF mainly serves as a backstop for the outstanding put options of the OSRAM Licht AG minority shareholders. The put options (including compounded interest) stood at €748m as of 30 June, representing about 17% of total shares outstanding.
State funding or grants
The company has received confirmation for grants and support by state entities showing confidence in its innovation and industrialization power — e.g. funding from the IPCEI (Important Project of Common European Interest) and the Malaysian Investment Development Authority (MIDA) — and will continue to apply under eligible schemes globally. All governmental grants combined, the firm expects a high triple-digit million EUR amount of support until 2033. Such support is typically tied to certain milestones that need to be achieved per scheme. These fundings allow the company to accelerate the related technology developments, as they typically support R&D expenditures or partially cover investments in property, plant & equipment and are reflected in the company’s business plans.
Pro-forma equity ratio at about 30% after implementing complete financing plan
Upon completion of all financing measures, ams OSRAM will have strengthened its balance sheet, with an expected pro-forma equity ratio (i.e. the ratio of equity to total assets) of about 30% (compared with 18% in June) and a smoother debt maturity profile. The financing would result in a pro-forma group leverage ratio (as of second-quarter 2023) below 2x, defined as net debt/adjusted EBITDA. The firm will work towards fulfilling all requirements for achieving investment grade over time.
Change in Supervisory Board
After Dr Wolfgang Leitner resigned from the firm’s Supervisory Board in early September due to personal reasons, the EGM on 20 October also elected Arunjai Mittal to the board in a by-election. With over 30 years of experience in the industry, Arunjai is expected to further strengthen the technology and industry expertise of the Supervisory Board.
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