NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, INTO OR IN THE UNITED STATES, CANADA, AUSTRALIA JAPAN OR TÜRKIYE OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE PROHIBITED BY APPLICABLE LAW. THIS ANNOUNCEMENT DOES NOT CONSTITUTE OR FORM AN OFFER OF SECURITIES IN THE UNITED STATES, CANADA, AUSTRALIA, JAPAN OR TÜRKIYE OR ANY OTHER JURISDICTION.
PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.
Press Information
June 12, 2023
Erdemoğlu announces proposed sale of part of its stake in SASA.
Erdemoğlu Holding A.Ş. (“Erdemoğlu”) announces the launch of a sale of a portion of its ordinary shares in SASA Polyester Sanayi A.Ş. (“SASA”) (the “Shares”) to raise gross proceeds of approximately TL 3.55 billion equivalent to approximately 56.7 million Shares representing approximately 1.1% of the issued share capital of SASA* (the “Transaction”).
The sale (by way of an accelerated bookbuilding transaction) will be made to qualified institutional investors residing outside of Türkiye, with the final terms including the price per share to be determined through the accelerated bookbuilding process which will commence immediately. Erdemoğlu reserves the right to change the terms and timing of the Transaction at any time. SASA will not directly receive any proceeds from the sale of the Shares (see Use of Proceeds below).
The Transaction is expected to settle through an off-exchange transaction.
HSBC Bank plc (“HSBC”) is appointed as sole global coordinator and bookrunner in relation to the Transaction.
Erdemoğlu currently holds directly approximately 61.0% of the issued share capital of SASA and approximately 81.8% indirectly (including those shares held by Merinos Halı Sanayi ve Ticaret A.Ş. and Dinarsu İmalat ve Ticaret Türk A.Ş.) and following the successful completion of the Transaction, its expected direct shareholding interest in SASA will be approximately 60%.
Following the completion of the Transaction, Erdemoğlu will remain the majority shareholder of SASA and maintain management control of SASA. Erdemoğlu remains fully committed and supportive of SASA.
Erdemoğlu has agreed to a customary 90 day lock-up period with HSBC, subject to customary exceptions, with respect to any remaining SASA shares held by Erdemoğlu.
Use of Proceeds
Erdemoğlu notes the announcement by SASA on 8 June 2023 with respect to the intention to make an application to the Capital Markets Board (“CMB”) (the “CMB Application”) for approval for SASA to issue an up to four billion Turkish Lira denominated subordinated perpetual contingent convertible instrument (the “Instrument”) with the intention to lower the net leverage of SASA on issuance.
The conversion price and coupon rate of the Instrument will be determined at issuance between Erdemoğlu Holding and SASA however the coupon rate will be determined at a favourable rate for SASA and the conversion price is expected to be set at equal to the placement price in the Transaction.
Erdemoğlu intends to use the majority of the proceeds of the Transaction to fully subscribe to the Instrument (as the sole investor), once issued. Any additional proceeds will be used by Erdemoğlu for general corporate purposes. The proceeds of the Transaction, which are reserved for the subscription of the Instrument, will be kept in cash and cash equivalents until the date of issuance.
Investors should note that no application to CMB has been made to date and there is no guarantee that approval for the Instrument will be granted. Should the CMB Application not be made or approved, Erdemoğlu intends to use the proceeds to fund an investment / instrument for SASA that would achieve a similar impact.
Further material developments in respect of the sale of Shares by Erdemoğlu will continue to be disclosed in accordance with applicable law.
Postponed Disclosure
On 9 June 2023, an engagement letter (“Engagement Letter”) containing the terms of the agreement between Erdemoğlu and HSBC regarding the execution of the Transaction was signed. However, as the details of the transaction were not finalized nor guaranteed up until the date of this press release and as Erdemoğlu had legitimate interests on postponement of the disclosure, the board of directors of Erdemoğlu resolved on 9 June 2023 to postpone the disclosure of inside information in accordance with Article 6 of the Communiqué on Material Events (communiqué numbered II-15.1). With the announcement of the Transaction, it has become clear that the abovementioned points of postponement have cleared and Erdemoğlu hereby discloses the execution of the Engagement Letter between Erdemoğlu and HSBC regarding the Transaction.
About Erdemoğlu
The foundations of the companies and brands within the body of Erdemoğlu were laid in 1970 under the leadership of its Founding Honorary President, the late Mehmet Erdemoğlu.
Erdemoğlu harbors brands such as Merinos Halı Sanayi ve Ticaret A.Ş., which is the world leader in carpet production, Dinarsu İmalat ve Ticaret Türk A.Ş., which is the largest wall-to-wall carpet manufacturer in Turkey; and SASA, which is the largest polyester producer in the geography stretching from the Far East to Americas. Erdemoğlu Group is the largest machine-made carpet producer in the world and holds 7 percent of the global production on its own. The group operates over 2,300,000 sqm. of indoor and 10,400,000 sqm. of outdoor productions sites in eight cities.
Considering that creating value is about not only the result but also the process, Erdemoğlu continues its activities in compliance with the corporate governance principles and satisfies all relevant quality standards. Erdemoğlu believes in sharing the gain with all its stakeholders including its suppliers, workers, clients as well as the social environment where this value is generated. Erdemoğlu Group aims at fulfilling its responsibilities as a corporate citizen through social responsibility projects, such as building schools, social housing projects and healthcare facilities.
Key highlights about Erdemoglu;
IMPORTANT NOTICE
This announcement is not for publication or distribution, directly or indirectly, in or into the United States. The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
This announcement does not contain or constitute an offer of, or the solicitation of an offer to buy, securities to any person in the United States, Australia, Canada, Japan, Türkiye or in any jurisdiction to whom or in which such offer or solicitation is unlawful. The shares referred to herein may not be offered or sold in the United States unless registered under the US Securities Act of 1933 (the “Securities Act”) or offered in a transaction exempt from, or not subject to, the registration requirements of the Securities Act. The offer and sale of shares referred to herein has not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, Canada, Japan or Türkiye. Subject to certain exceptions, the shares referred to herein may not be offered or sold in Australia, Canada, Japan or Türkiye or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada, Japan or Türkiye. There will be no public offer of the shares referred to herein in the United States, Australia, Canada, Japan or Türkiye or elsewhere.
In member states of the European Economic Area (“EEA”) (each, a “Relevant Member State”), this announcement and any offer if made subsequently is directed only at persons who are “qualified investors” within the meaning of the Prospectus Directive (“Qualified Investors”). For these purposes, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in a Relevant Member State), and includes any relevant implementing measure in the Relevant Member State and the expression “2010 PD Amending Directive” means Directive 2010/73/EU. In the United Kingdom, this announcement is directed exclusively at Qualified Investors (i) who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”) or (ii) who fall within Article 49(2)(A) to (D) of the Order, and (iii) to whom it may otherwise lawfully be communicated (all such persons together being referred to as “relevant persons”), and any investment activity to which it relates will only be engaged in with such relevant persons and it should not be relied on by anyone other than such persons. Persons in the United Kingdom who are not relevant persons and persons in other Relevant Member States who are not Qualified Investors should not take any action on the basis of this announcement and should not act or rely on it.
HSBC Bank plc which is authorised by the Prudential Regulatory Authority and regulated by the Financial Conduct Authority and Prudential Regulatory Authority in the United Kingdom (the “Bookrunner”) is acting exclusively for Erdemoğlu and no-one else in connection with the Transaction. HSBC will not regard any other person as its client in relation to the Transaction and will not be responsible to anyone other than Erdemoğlu for providing the protections afforded to its clients, nor for providing advice in relation to the Transaction, the contents of this announcement or any transaction, arrangement or other matter referred to herein.
No prospectus or offering document has been or will be prepared in connection with the Transaction. Any investment decision in connection with the Transaction must be made on the basis of publicly available information. Such information has not been independently verified. The information contained in this announcement is for background purposes only and does not purport to be full or complete.
The Bookrunner and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward looking statement contained in this announcement whether as a result of new information, future developments or otherwise.
In connection with the Transaction, the Bookrunner and any of its affiliates may take up a portion of the shares referred to herein as a principal position and in that capacity may retain, purchase, sell, offer to sell for their own accounts such shares and other securities of SASA or related investments in connection with the Transaction or otherwise. In addition, the Bookrunner and any of its affiliates may enter into financing arrangements (including swaps or contracts for differences) with investors in connection with which the Bookrunner and any of its affiliates may from time to time acquire, hold or dispose of shares. Accordingly, references to the shares being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, the Bookrunner and any of its affiliates acting in such capacity. The Bookrunner does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.
None of the Bookrunner or any of its respective affiliates or any of its or their affiliates’ directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to Erdemoğlu, SASA, their subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith.
This announcement may include statements that are, or may be deemed to be, “forward-looking statements”. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms “believes”, “estimates”, “plans”, “projects”, “anticipates”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect Erdemoğlu’s current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions. Forward-looking statements speak only as of the date they are made.
* On the basis of the closing share price of the Shares on the Borsa Istanbul on 12 June 2023
