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AS Tallink Grupp, Stock Exchange Release
12.06.2006
Sea Containers to sell Silja ferry business to Tallink
AS Tallink Grupp (“Tallink”, TSE:TAL1T ET, www.tallink.com) and Sea Containers Ltd (“Sea Containers”, NYSE: SCRA and SCRB, www.seacontainers.com) have on 11 June 2006 entered into a definitive agreement whereby Sea Containers will sell its Baltic ferry subsidiary Silja Oy Ab (“Silja”) to Tallink.
The transaction is structured as a share sale deal whereby Tallink and its wholly-owned Estonian subsidiary AS Tallink Scandinavian will acquire from Sea Containers’ subsidiary Silja Holdings Limited 100 per cent of the issued shares (i.e. 62,897,682 shares) in Silja Oy Ab together with most of the Silja shipping business.
Silja Oy Ab is a Finnish passenger and cargo shipping company operating in the Baltic Sea that offers its customers high-quality passenger and cargo transportation services. Silja Oy Ab is currently part of the passenger and cargo transport division of Sea Containers Ltd. For more information on Silja Oy Ab, please see www.silja.fi.
The consideration for the sale of Silja’s shares is € 450 million (EEK 7,041 million) cash and 5 million new ordinary shares in Tallink to be issued by Tallink. The Tallink’s 5 million new ordinary shares will be issued in exchange for the contribution to Tallink of a portion of Silja’s shares having corresponding value and the share exchange ratio shall be determined on the basis of the assessment of the market value of Silja’s shares to be verified by Tallink’s auditors in accordance with applicable law. The shares in Tallink to be issued to Sea Containers’ subsidiary Silja Holdings Limited as part of the consideration for the sale of Silja’s shares cannot be sold within 12 months of the sale’s completion without Tallink’s permission. The € 450 million (EEK 7,041 million) cash consideration will be financed through a combination of Silja’s existing debt refinancing and external bank loans of up to approx. € 400 million (EEK 6,258 million) and equity of approx. € 60 million (EEK 939 million).
In addition to the 5 million new ordinary shares to be issued to Sea Containers after completion of the transaction Tallink expects to offer additional shares to its existing shareholders in order to raise another € 50 million(EEK 782 million) or more of equity. The largest institutional shareholders of Tallink have expressed their readiness to ensure that the offering of the new shares to existing shareholders is completed successfully.
The sale of Silja is subject to customary conditions including the receipt of regulatory approvals from the relevant competition authorities and corporate approval of Tallink’s shareholders. It is a condition of the contract that the sale be completed by 28 July 2006.
The transaction includes six of the eight ships held for sale by Sea Containers as part of the Silja ‘core business’: Symphony and Serenade operated on Stockholm-Helsinki route and Europa, Festival, SeaWind and Skywind operated on Stockholm-Turku, and their staff, facilities and the Silja brand. These ships generated an EBITDA profit before depreciation, amortization and non-recurring items of approximately €30 million (dollar equivalent $37 million) in 2005. Since mid 2005 Silja has been undergoing an intensive restructuring programme, which is expected to lead to EBITDA improvements over the coming 12 to 18 months. In 2005 the passenger volume on these routes was 3.4 million and the revenue of business now being sold to Tallink was EUR 380 million (pro forma). The number of employees was 2,740 in 2005. The transaction does not include the fast ferry services from Helsinki to Tallinn and the two SuperSeaCat fast ferries which operate on the route. That business will continue to be operated by Sea Containers on a stand alone basis. The transaction also excludes Silja’s ‘legacy’ vessels (i.e. Walrus, Opera and Finnjet) which are not employed on the core routes.
Tallink will continue to operate the business under the Silja brand and the ships will continue to sail under their current flags and with their existing officers and crew. Tallink will ensure that the Silja's existing obligations towards its employees, including existing pension rights, are not adversely affected by the transaction.
Commenting on the sale, Enn Pant, Chairman and CEO of Tallink, said that as a result of the acquisition Tallink and Silja will together form the leading shipping company in the Baltic Sea area, which has been a vision of Tallink for years. “Tallink’s bold and successful growth strategy is boosted by Silja Line’s long history, valuable brand and outstanding professionals. This transaction is firmly founded in our conviction that clients, employees as well as shareholders will benefit from the integration of these two shipping companies.”
Bob MacKenzie, Chief Executive Officer of Sea Containers Ltd, added: “We updated the market on 24 March on the process of selling the core of the Silja fleet and we believe that the price we have negotiated is a fair one. The sale of Silja is a vital part of our efforts to reduce substantially the overall level of Sea Containers’ debt. As a result of the transaction, approximately $510 million of related bank debt will be repaid.”
Tallink confirms that the transaction does not constitute a transaction with connected persons within the meaning of the TSE Rules and the members of the supervisory board and management board of AS Tallink Grupp are otherwise not personally interested in the transaction.
Tallink was advised by Citigroup. The financing package was provided by HSH Nordbank, DVB Bank and Nordea Bank.
The acquisition of the shares in Silja constitutes significant acquisition within the meaning of the TSE Rules and Tallink is currently preparing a more detailed overview of the Silja’s financial results and other matters required to be disclosed in accordance with the requirements of the TSE Rules upon significant acquisitions.
AS Tallink Grupp is a dynamic and rapidly growing international shipping company that operates 15 vessels in Baltic Sea region and provides cruise and passenger transport as well as cargo services. In the financial year ended 31 August 2005, the company altogether transported more than 3.2 million passengers and the company’s revenue in the same period was EEK 4,063 million (€ 260 million). As of the end of 2004/2005 financial year the company employed 2,632 persons. Tallink’s shares are listed on the Tallinn Stock Exchange.
1 EUR=15,647 EEK
Additional information:
Peter Roose
Investor Relations Manager
AS Tallink Grupp
tel.: +372 6 409 800
www.tallink.com |