Lehto Group Plc: Lehto and the banks have agreed on financing as part of a financial package of around 50 million euros

Lehto Group Plc
Inside information
May 20, 2022 at 8:30 a.m. (EET)

Lehto Group Plc (“Lehto”) announced the April 28, 2022 prepare a financial package to implement its updated strategy. Lehto has signed a binding preliminary agreement on new financing (“Preliminary Agreement”) with OP Corporate Bank Plc (“OP”) and Nordea Bank Plc (“Nordea”). The Preliminary Agreement defines the amounts, the main conditions and principles of bank financing, and the main terms of the issue of convertible bonds.

The preliminary agreement is part of approximately 50 million euros financial package in preparation. The main elements of the financing mechanism are:

• Disposal of the Lehto pipeline renovation business (approximately +29 million euros)
• New RCF credit facility with banks (approximately +13 million euros)
• SR funding for ongoing and new housing projects (approx. +26 million euros)
• Issue of the convertible bond (approximately +15 million euros)
• The new financing replaces the current RCF credit facility and the bilateral bank loans that will be repaid (approximately -32 million euros)

According to the preliminary agreement, the PO and Nordea have agreed to grant a new 13 million euros RCF credit limit valid until March 31, 2024. In addition, the banks have undertaken to finance the so-called RS housing projects of approximately 26 million euros during the years 2022-2023. The New Funding Agreement to be prepared pursuant to the Preliminary Agreement (“New Funding Agreement”) will replace the current Lehto Agreement €25.1 million Revolving Credit Facility (RCF) with a banking syndicate comprising OP Corporate Bank plc, Nordea Bank plc and Swedbank AB.

The validity of the New Financing Agreement is subject to the completion of the disposal of the pipeline renovation activity, the completion of the issue of convertible bonds as well as the repayment of the current RCF credit facility and the bilateral loans by June 30, 2022. The new financing agreement will include securities, financial covenants related to EBITDA and minimum cash requirements, restrictions on distributions and conditions related to the operations and incorporation of the company and the chairman of the board of directors. .

The financing package is expected to improve Lehto’s cash flow by approximately 50 million euros, the majority of which is expected to take place in 2022. Apart from the divestment of the pipeline business, the financial package has no immediate effect on earnings. As previously announced in the press release from the stock exchange of April 28, 2022the disposal of the pipeline renovation business is expected to have the following effects on Lehto’s key figures in 2022:

• Estimated non-recurring effects
  • The result for the 2022 financial year will improve by approximately 30 million euros
  • Equity will improve by approximately 30 million euros
  • Net cash flow in 2022 will improve by around 29 million euros
  • The capital ratio will improve by around 6 to 7 percentage units

• The estimated impact of the disposal on net sales and operating income in 2022
  • Net sales from continuing operations decreased by approximately -€36 million.
  • Operating income from continuing operations decreased by approximately –5 million euros.

In addition to the financial arrangement, as previously announced, the company has made staff reductions and the company has outsourced and is still outsourcing land in order to improve its profitability and cash flow.

Further information :

Juuso HietanenCEO
Uh. +358 50 343 4023

Veli-Pekka Paloranta
CFO
Uh. +358 400 944 074

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