Ratos's Board of Directors has decided to propose that the Annual General Meeting to be held on 4 April 2006 decides on a mandatory redemption combined with a share split. The redemption amount will be approximately SEK 19 per share or SEK 1,500m. At the same time, the Board proposes an ordinary dividend of SEK 9 (8.50) per existing share, or just over SEK 700m.
The distribution will be made through a split of each Ratos share into two new ordinary shares and one so-called redemption share. The redemption share will automatically be redeemed by Ratos for SEK 19 per redemption share. After completion of this procedure, the shareholder will hold two Ratos shares.
Ratos, the largest listed private equity company in the Nordic region, invests in medium-sized and large, primarily unlisted companies in the Nordic region. Through the professional, active and responsible exercise of its ownership role, Ratos's goal is that each individual investment should provide an annual average return (IRR) of 20%. Added-value is created in three stages: acquisition, development and divestment. Ratos invests equity of SEK 150-1,500m in each individual investment. The investment portfolio is between 15 and 20 holdings.
Since December 1998, when the Board decided that the company should change its strategic focus and become a private equity company, Ratos has developed well. In 1999-2005 the average pre-tax profit was just about SEK 1.9 billion, the average annual return (IRR) on divested holdings 29% and the total return on Ratos shares +420%.
This good performance has led to a steady increase in the value of Ratos's assets. This in turn affects the company's ability to continue to work within the framework of the present investment strategy, which has in principle remained unchanged since 1999. Changing this strategy for larger average investments or a higher number of portfolio companies would result in significant changes in relation to the company's current direction.
- Ratos CEO, Arne Karlsson: "Our strategy thus far has been successful. Our investment focus and the section of the corporate market in which we operate have shown that they can provide the excellent return opportunities we anticipated when we initiated our change of strategy in 1999. If we now start to make larger average investments, this would mean moving up into a segment with considerably tougher competition for far fewer investment opportunities. If we instead were to increase the number of investments in our portfolio, we would be forced to change so that we would no longer be a highly qualified specialist organisation. In the opinion of the Board and management, both these scenarios would be detrimental to our ability to continue to create a high return for our shareholders. I am therefore pleased that the Board, with this proposal for distribution, will allow us to continue to work with the strategic focus that has proved successful so far."
Ratos's Board of Directors has also decided to propose that the Annual General Meeting decides on an ordinary dividend of SEK 9 (8.50) per existing share
- Olof Stenhammar: "The Board's proposal should be seen against the background of our aim to continue to have an aggressive dividend policy. This means that Ratos shareholders, in addition to the proposed distribution of capital, can expect the Board to continue to promote good dividend growth."
Decisions on the dividend and redemption will be made at Ratos's Annual General Meeting on 4 April. According to the preliminary timetable for the dividend and redemption, Ratos shareholders will receive the ordinary dividend of SEK 9 per share on about 12 April. After 20 April, each existing Ratos share is expected to be traded as two ordinary shares and one redemption share. Trading in redemption shares will then take place for about three subsequent weeks. On about 22 May, Ratos will redeem the redemption shares for SEK 19 each.
For additional information, please contact
Olof Stenhammar, Chairman of the Ratos Board, +46 8 700 17 45
Arne Karlsson, CEO Ratos, +46 8 700 17 00