Dufry publishes terms of the planned capital increase by way of a Rights OfferingDownload Press Release
Dufry AG (SIX: DUFN) (“Dufry”) today announces the terms of the ordinary capital increase by way of a rights offering to be approved by Dufry's Extraordinary General Meeting today, October 6, 2020. The envisaged gross proceeds of approx. CHF 700 million from the planned capital increase will be used in part to finance the acquisition of all remaining equity interest in Hudson Ltd. (NYSE: HUD) (“Hudson”) previously announced on August 19, 2020, as well as for general corporate purposes, which may include the setup and operations of the Joint Venture with Alibaba Group to pursue growth opportunities in China and to accelerate Dufry's digital transformation.
The Board of Directors proposes to today’s Extraordinary General Meeting to increase the share capital of Dufry through the issuance of up to 24,696,516 fully paid-up new registered shares with a par value of CHF 5 each (the “New Shares”). This will result in an increase of the share capital of Dufry from currently CHF 277,835,830 by up to CHF 123,482,580 to a maximum amount of CHF 401,318,410. The planned capital increase will be executed as an “at-market” rights offering with pre-emptive rights for existing shareholders. Existing shareholders will receive one subscription right for every registered share they hold on October 9, 2020 (after market close) to subscribe for New Shares to be issued in the planned capital increase at a ratio of 4 New Shares for each 9 existing shares held. The pre-emptive rights will not be listed on SIX Swiss Exchange nor traded on any stock exchange and will lapse without compensation unless exercised during the rights exercise period.
Dufry has secured equity investment commitments to purchase New Shares not taken up by existing shareholders (“Rump Shares”) from funds managed by Advent International Corporation or its affiliates (“Advent International”) and from a wholly owned subsidiary of Alibaba Group (“Alibaba Group”). Advent International has agreed to purchase Rump Shares up to a maximum investment amount of CHF 415 million (to be automatically increased by an amount equal to 20% of any amount by which the gross proceeds from the offering exceed CHF 500 million, up to a maximum investment amount of CHF 455 million), and Alibaba Group has agreed to purchase Rump Shares up to a maximum investment amount in CHF equal to the product of (i) the maximum number of Rump Shares which does not result in a holding of Rump Shares by Alibaba Group of 10% or more of Dufry’s registered share capital immediately following the capital increase and (ii) its commitment price, but not to exceed CHF 250 million, at a fixed subscription price of CHF 28.50 per Rump Share or such higher price as Advent International and Alibaba Group may decide until the end of the International Offering period, whereby the commitment price for Alibaba Group will be the price per Rump Share at which Advent International commits to purchase Rump Shares in the International Offering pursuant to the Advent Commitment Letter (provided that if Advent International agrees to increase the current commitment price of CHF 28.50, then, depending on the amount of the increase, the consent of Alibaba Group may become necessary before such increased commitment price becomes also binding for Alibaba Group) or such higher price as notified by Alibaba Group during the book-building procedure until the end of the International Offering Period) (the “Commitment Price”). Advent International and Alibaba Group have agreed to pay the Commitment Price even if the Offer Price (as defined below) is lower than the Commitment Price. If the Offer Price is higher than the Commitment Price, the commitments of Advent International and Alibaba Group will no longer be valid, and Advent International and Alibaba Group will neither be obliged nor entitled to purchase Rump Shares.
Immediately following the closing of the rights offering, Advent International's stake in Dufry will in no event exceed 19.99%, and Alibaba Group’s stake will in no event exceed 9.99%. The commitment of Alibaba Group is subject to the number of Rump Shares allocated to Alibaba Group being at least equal to a minimum participation of 8.5% of Dufry’s registered share capital immediately following the capital increase, unless waived or reduced by Alibaba Group, and other customary conditions. Advent International and Alibaba Group have agreed to a lock-up period of six months following the first day of trading of the offered shares.
The planned rights offering will be made to existing shareholders, subject to certain legal limitations based on residency (the "Rights Offering"). Rump Shares will (x) in first priority be sold to Advent International at the Commitment Price up to its committed investment amount, (y) in second priority be sold to Alibaba Group at the Commitment Price up to its committed investment amount, in the case of (x) and (y) provided that the Offer Price will not be higher than the Commitment Price, and (z) in third priority be offered for sale by way of a public offering in Switzerland and private placements in certain jurisdictions outside Switzerland in compliance with applicable securities laws (the “International Offering”).
Subject to the Extraordinary General Meeting approving the proposal by the Board of Directors for the ordinary capital increase, the rights exercise period is expected to start on October 12, 2020 and to end on October 19, 2020, 12:00 noon CEST, and the International Offering period is expected to commence on October 12, 2020 and to end on October 20, 2020 at 15:00 CEST. The offering and listing prospectus is expected to be published on October 7, 2020.
If (i) the volume weighted average price (“VWAP”) of the existing shares on the last day of the rights exercise period (the “Trading Price”) is higher than the Commitment Price or (ii) the number of Rump Shares that Advent International and Alibaba Group have agreed to purchase (the "Commitment Shares") is lower than the number of Rump Shares necessary to raise gross proceeds of CHF 700 million (the “Necessary Rump Shares”), then the offer price in the Rights Offering and the International Offering (the “Offer Price”) will be determined by Dufry and the Joint Global Coordinators, acting on behalf of the Managers, on the last day of the International Offering period on the basis of the number of offered shares for which rights have been exercised, sufficiency of investor demand for the offered shares resulting from the book-building procedure (including, for the avoidance of doubt, the orders placed by Advent International and Alibaba Group at the Commitment Price), the market price for the existing shares, and general market conditions. If (i) the Trading Price equals, or is lower than, the Commitment Price and (ii) the number of Commitment Shares is equal to or exceeds the number of Necessary Rump Shares, then the Offer Price will be the Commitment Price.
If (i) the Trading Price is higher than the Commitment Price or (ii) the number of Commitment Shares is lower than the number of Necessary Rump Shares, then the final number of offered shares and the Offer Price will be published through electronic media and in a supplement on or about October 20, 2020, after the close of trading. If (i) the Trading Price equals, or is lower, than the Commitment Price and (ii) the number of Commitment Shares is equal to or exceeds the number of Necessary Rump Shares, then the final number of offered shares and the Offer Price will be published through electronic media and in a supplement on or about October 19, 2020, after the close of trading.
The New Shares are expected to commence trading on SIX Swiss Exchange on October 22, 2020, and settlement and delivery of the New Shares against payment of the Offer Price are expected to occur on the same day.
The expected timetable for the planned capital increase and Rights Offering is summarized below.*
October 7, 2020
Publication of offering and listing prospectus
October 12, 2020
Commencement of the rights exercise period and the International Offering period
October 19, 2020
12:00 noon CEST: End of rights exercise period
After close of trading: Announcement of take-up in the Rights Offering and, if (i) the Trading Price equals, or is lower than, the Commitment Price and (ii) the number of Commitment Shares is equal to or exceeds the number of Necessary Rump Shares, of the final number of New Shares and the Offer Price
October 20, 2020
15:00 CEST: End of International Offering period.
After the close of trading: Announcement of final number of New Shares and of Offer Price (if (i) the Trading Price is higher than the Commitment Price or (ii) the number of Commitment Shares is lower than the number of Necessary Rump Shares)
October 22, 2020
First day of trading of the New Shares
Settlement and delivery of the New Shares against payment of the Offer Price
*The Company, together with the Joint Global Coordinators, acting on behalf of the Managers, reserves the right to extend or shorten the rights exercise period, the International Offering period or to terminate the Offering without any prior notice, at any time and for any reason.
In the listing prospectus to be published on October 7, 2020, certain information regarding Dufry’s current trading will be disclosed as follows: We estimate that turnover decreased by between 75% and 85% for the two-month period of July and August 2020 compared to July and August of 2019, as passenger volumes have continued to remain significantly depressed when compared to the prior year period. As of August 31, 2020, more than 1,000 of our approximately 2,410 shops globally had re-opened, representing approximately 67% of sales capacity (based on turnover for the year ended December 31, 2019), including in key locations such as the UK, Spain, Switzerland, Mexico, the U.S., Turkey, Russia, Hong Kong, India, Cambodia, South Korea and Kuwait.
Through June 30, 2020, we were able to close several agreements releasing partially or totally CHF 161.8 million of MAG requirements in relation to the first half of 2020. In addition, during the third quarter of 2020, we closed further agreements releasing partially or totally at least CHF 140 million of MAG requirements. Meanwhile, management remains in negotiations with other lessors reviewing the lease terms, in order to address the ongoing impacts of COVID-19.
As of September 30, 2020, we had cash and cash equivalents of at least CHF 700 million. In addition, as of September 30, 2020, approximately CHF 222.7 million and CHF 396.1 million was available for borrowing under the Facilities Agreement and the New Liquidity Facilities Agreement, respectively, in each case after giving effect to outstanding letters of credit.
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