- The offering, addressed to institutional and individual investors, will include 8,053,306 shares in two series:
- Series D ? 4,026,653 shares, offered by the Company by way of subscription,
- Series B1 and C 4,026,653 shares, as the sale of shares held by the existing shareholders.
- The offering is divided into two tranches: institutional, including 6,500,000 shares and individual of 1,553,306 offered shares.
- The maximum price of Offered Shares has been set at PLN 5.50.
- The Company plans to acquire at least PLN 17 mn from the issue of Series D shares (after deducting costs). The total value of the offering will be at least double as a result of the sale of a portion of shares currently held by the existing shareholders ERGIS SA and Finergis Investments Limited.
- The issue of new shares of Eurofilms S.A. is aimed primarily at co-financing capital investments that can significantly increase production capacity of the company: by 50% as regards stretch film and by 100% as regards PVC thermoshrink film. The increase in production capacity will enable further dynamic development of the Company's export sales and strengthening its position on the Polish market, which will translate into an increase in the Company’s sales by about 50%, starting from 2007.
- Investors can place their subscription orders for shares from May 31 to June 2, 2006.
- Financial forecasts of Eurofilms for 2006 assume sales revenue at a level of PLN 133.4 mn and net profit of PLN 5.5 mn. For 2007, the Company forecasts revenues of PLN 154.3 mn and net profit of PLN 8.1 mn.
AIMS OF THE ISSUE OF SERIES D SHARES
The issue of Series D Shares is intended for co-financing the following investments:
- Continuation of investment into the third CAST line for the production of stretch film, 2006 y., 13,502 mln PLN
- Purchase and launching the operation of the second line for the production of PVC thermoshrink film, 20062,262 mln PLN
- Purchase of film winding machines, 2006-2007 y., 1,330 mln PLN
- Replacement investments, 2006-2007 y., 2, 509 mln PLN
- Total investments in fixed assets, 2006-2007 y.,19,603 mln PLN
- Expenditures for the increase of working capital, 2006-2007 y., 8,500 mln PLN
- Total2006-2007 y., 28,103 mln PLN
- The Company plans to acquire at least PLN 17 mn from the issue of Series D shares (after deducting costs). The remaining part of the investment will be financed with own resources of the Company and possibly with bank loans and lease.
These investments will enable strengthening the position of the Company on the Polish market and further dynamic development of its export sales, which will result in the increase of Eurofilms sales by about 50%, starting from 2007. Ultimately, Eurofilms forecasts that the export of products will represent 40% of its sales revenue (in 2005, it was 23% of its revenue).
Third CAST line
The decision about starting an investment in the third CAST line for the production of PE stretch film was taken by the Company in 2005. This project, realised in 2005-2006, includes:
- purchase and launching the operation of the third line for the production of stretch film;
- associated investments including purchase of real property, development of existing production hall, construction of an electrical switching station 20 kV, modernisation of a high voltage switching station, modernisation of warehouses, construction and modernisation of water and sewage system as well as fire systems and others;
- increase in working funds (raw material stocks, finished goods and amounts due), necessary for the execution of such projects.
Total capital expenditures for this purpose have been planned in the amount of about PLN 26.8 mn (PLN 19.0 mn for fixed assets and PLN 7.8 mn for the increase in working funds). A new line is planned to be launched in May 2006.
Second PVC line
This project, realised in 2006, includes:
- purchase and launching the operation of the second line for the production of PVC thermoshrink film;
- associated investments including, above all, the preparation of the production hall and warehouse extension;
- increase in working funds (raw material stock, finished goods and amounts due).
Total capital expenditures for this purpose have been planned at the amount of about PLN 2.96 mn (PLN 2.26 mn for fixed assets and PLN 0.7 mn for the increase in working funds). A new line is planned to be launched in November 2006.
Purchase of film winding machines
Purchase of film winding machines is closely related to the investment in the third CAST line. The aim of purchasing winding machines is to increase the sales of manual stretch film. As the production volumes of film have increased, the demand for additional machines for winding it on the rolls became apparent. The issuer plans to buy three winding machines, including one for a new product ? pre-stretch film. Total investment expenditures for winding machines are planned at the level of PLN 1.33 mn and will be incurred in the period 2006-2007.
Replacement and modernisation investments
These investments include modernisation of warehouses, production facilities, construction of the fence, replacement of vehicles and forklifts, as well as expenditures for modernisation of the first line for the production of PVC film. Total expenditures for replacement and modernisation investments have been planned for the period 2006-2007, in the amount of PLN 2.51 mn.
SUBSCRIPTION FOR SHARES
Subscriptions in the Individual Tranche and the Institutional Tranche will be accepted between May 31 and June 2, 2006 at Customer Service Points of Millennium Brokerage House.
The maximum price of Offered Shares has been set at PLN 5.50. The final price for shares will be determined before the commencement of subscriptions, on the basis of the bookbuilding process.
ALLOCATION OF SHARES
The allocation of shares in both tranches will be carried out no later than within 7 days from the subscription day, i.e. June 9, 2006. During this process, the Company may decide to reallocate shares between the Individual and the Institutional Tranches. In such a case, only those shares that have not been covered and paid in a given tranche will be reallocated.
PUBLIC OFFERING SCHEDULE
- May 29, 2006Commencement of the bookbuilding process
- May 30, 2006 3.00 p.m.End of bookbuilding process
- May 30, 2006 Public announcement of the price
- May 31, 2006 Commencement of subscriptions in Institutional and Individual Tranches
- June 2, 2006 End of subscriptions in Institutional and Individual Tranches from June 9, 2006Closing of the Public Offering and allocation of Offered Shares
- June 2006 First quotations on the Warsaw Stock Exchange