HEAD N.V. and HTM Sport- und Freizeitgeräte AG (“HTM”), a Subsidiary of HEAD N.V., Announce Improved Terms of Private Exchange Offer and Consent Solicitation Relating to HTM’s €135,000,000 8½% Senior Notes due 2014.
Amsterdam – July 30, 2009 – HEAD (VSX: HEAD, U.S. OTC: HEDYY.PK), a leading global manufacturer and marketer of sports equipment, and HTM, a subsidiary of Head N.V., announced today the improved terms of the private exchange offer (the “Exchange Offer”), to exchange HTM’s outstanding €135,000,000 8½% Senior Notes due 2014 (the “Existing Notes”). The private offer is not being made to all holders of Existing Notes, but exclusively to certain holders as further specified below.
The consideration for the Exchange Offer has been increased to €510.625 aggregate principal amount of HTM’s newly issued secured notes (the “Secured Notes”) and 262.372 Head N.V. ordinary shares for each €1,000 principal amount of Existing Notes exchanged. The Exchange Offer is conditional upon the receipt of valid tenders and consents representing at least €96,752,000 in aggregate principal amount of Existing Notes, among other conditions.
Holders who have tendered Existing Notes prior to July 30, 2009 and who do not re-tender their Existing Notes prior to the expiration date for the Exchange Offer will be deemed not to have accepted the Exchange Offer and will retain their Existing Notes.
Up to 29,864,512 ordinary shares (the “Offered Shares”) will be issued to holders of Existing Notes, assuming 100% participation in the Exchange Offer by holders of the Existing Notes other than Head Sport GmbH, representing approximately 29.999% of Head N.V.’s issued ordinary shares on a fully-diluted basis following completion of the Exchange Offer and the issuance of ordinary shares to Head Sports Holding N.V. and its shareholders in consideration for the guarantee undertaking described below.
By tendering their Existing Notes, holders will consent to forfeit any interest accrued thereon from and including February 2, 2009 up to and including August 1, 2009, subject to completion of the Exchange Offer.
In order to facilitate the settlement of the Exchange Offer and in accordance with the terms of the Exchange Offer, HTM does not intend to make the interest payment in respect of the Existing Notes that is due on August 1, 2009 until after the settlement date for the Exchange Offer (the “Settlement Date”) which is expected to be on or about August 19, 2009. HTM will make this interest payment promptly following the Settlement Date (other than to holders of Existing Notes that have tendered their Existing Notes in the Exchange Offer) and in any event prior to the expiration of the applicable grace period provided in the indenture governing the Existing Notes (the “Existing Indenture”).
The Existing Notes were, and the Secured Notes will be, issued by HTM. The Secured Notes will be jointly and severally guaranteed by Head N.V. and Head Holding Unternehmensbeteiligung GmbH, HTM’s indirect and direct parent companies, respectively, and certain of HTM’s subsidiaries, and will be secured by pledges or charges, as applicable, over certain inventory and trade receivables of HTM and certain subsidiaries of HTM, and cash under certain circumstances.
The Secured Notes will mature on August 1, 2012, subject to HTM’s right to extend the maturity date to February 1, 2014 upon payment of an extension fee equal to 1% of the aggregate principal amount of the Secured Notes then outstanding.
Interest on the Secured Notes will be payable on February 1 and August 1 of each year, beginning on February 1, 2010. HTM may, at its option, elect to pay interest on the Secured Notes (a) at the rate of 10% per annum in cash; or (b) at the rate of (i) 8.5% per annum in cash and (ii) 3.5% per annum through the issuance of payment-in-kind notes.
The Secured Notes will be issued in minimum denominations of €1,000 and integral multiples thereof.
Concurrently with the Exchange Offer, HTM is also soliciting consents (the “Consent Solicitation”), from holders of Existing Notes to certain proposed amendments (the “Proposed Amendments”) to the Existing Indenture. All tenders of Existing Notes which are submitted will be deemed to be consents to the Proposed Amendments as a whole. The Proposed Amendments will reduce the protections afforded to holders of the Existing Notes by (i) eliminating substantially all of the covenants in the Existing Indenture governing the actions of the Issuer and its restricted subsidiaries (ii) eliminating or modifying certain events of default and (iii) modifying Mares S.p.A.’s guarantee of the Existing Notes. The supplemental indenture (the “Supplemental Indenture”) giving effect to the Proposed Amendments is expected to be executed on the Settlement Date, subject to the consent of holders of not less than a majority of the outstanding (determined in accordance with the Existing Indenture) aggregate principal amount of the Existing Notes having validly consented to the Proposed Amendments. The Proposed Amendments will become effective and operative upon execution of the Supplemental Indenture.
Head N.V. and HTM are further extending the expiration date of the Exchange Offer until 5:00 p.m., London time, on August 12, 2009. The expiration date was previously 5:00 p.m., London time, on July 31, 2009. As a result, the Settlement Date is expected to be postponed from August 6, 2009 to August 19, 2009. Lucid Issuer Services Limited, the exchange, information and tabulation agent in connection with the Exchange Offer, has informed us that as at 5:00 pm, London time on July 29, 2009, approximately €6.6 million in aggregate principal amount of the Existing Notes had been validly tendered in the Exchange Offer.
The Exchange Offer is being made within the United States only to “qualified institutional buyers” as that term is defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”) and to persons located outside of the United States and who would be participating in any transaction in accordance with Regulation S. The Secured Notes and the Offered Shares have not been and will not be registered under the Securities Act and may not be offered or sold in the United States absent an applicable exemption from registration requirements. This press release does not constitute an offer to sell or the solicitation of an offer to buy Existing Notes, Secured Notes or Offered Shares in any jurisdiction in which such an offer or sale would be unlawful.
The Exchange Offer is not being made and will not be made, directly or indirectly, in or into the Republic of Italy, whether by mail or by any means or other instrument (including, without limitation, telephonically or electronically) or any facility of a national securities exchange publicly or privately available in the Republic of Italy.
HTM’s obligation to accept any Existing Notes tendered and to pay the applicable consideration for them is set forth solely in the offering circular dated April 21, 2009, as supplemented by the first supplement thereto dated May 7, 2009 and the second supplement thereto dated July 30, 2009 (the “Offering Circular”). The Exchange Offer is made only by, and pursuant to, the terms set forth in the Offering Circular, and the information in this press release is qualified by reference to the Offering Circular. Subject to applicable law, Head N.V. and HTM may amend, extend or terminate the Exchange Offer.
An application will be made to admit the Secured Notes to listing on the Official list of the Luxembourg Stock Exchange and to trading on the Euro MTF Market of that exchange and to admit the Offered Shares to trading on the Vienna Stock Exchange.
In connection with the Exchange Offer, on July 30, 2009, Head Sports Holdings N.V. and Mr. Johan Eliasch entered into an agreement with HTM and Head N.V. pursuant to which Mr. Johan Eliasch agreed to personally guarantee the obligations of the lender under a working capital facility providing for commitments of at least €10 million to be entered into by Head N.V. or one of its subsidiaries on commercially reasonable terms with a bank or other financial institution on or prior to the closing of the Exchange Offer, provided that Mr. Eliasch’s personal guarantee will not be required if such facility is provided by a bank or other financial institution organized under the laws of the United States of America or any state thereof or the District of Columbia or any member state of the European Union as of July 1, 2009 having combined capital and surplus of not less than €250 million as of the date of this press release (the “WCF Guarantee Undertaking”). As of the date of this press release we have not identified a lender for this working capital facility. In consideration for the WCF Guarantee Undertaking, Head N.V. has agreed to issue up to 36,797,403 ordinary shares to Head Sports Holdings N.V. and its shareholders on the Settlement Date.
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” and similar terms and phrases, including references to assumptions, as they relate to Head N.V., its management or third parties, identify forward-looking statements. Forward-looking statements include statements regarding Head N.V.’s business strategy, financial condition, results of operations, and market data, as well as any other statements that are not historical facts. These statements reflect beliefs of Head N.V.’s management as well as assumptions made by its management and information currently available to Head N.V. Although Head N.V. believes that these beliefs and assumptions are reasonable, the statements are subject to numerous factors, risks and uncertainties that could cause actual outcomes and results to be materially different from those projected. These factors include, but are not limited to, the following: the impact of the current global economic turmoil, weather and other factors beyond their control, competitive pressures and trends in the sporting goods industry, our ability to implement their business strategy, our liquidity and capital expenditures, our ability to obtain financing, our ability to realize the cost savings expected from the cost reduction program, our ability to compete, including internationally, our ability to introduce new and innovative products, legal proceedings and regulatory matters, our ability to fund their future capital needs, and general economic conditions. These factors, risks and uncertainties expressly qualify all subsequent oral and written forward-looking statements attributable to Head N.V. or persons acting on its behalf.
HEAD Group is a leading global manufacturer and marketer of premium sports equipment.
HEAD NV’s ordinary shares are listed on the Vienna Stock Exchange (“HEAD”).
HTM is a subsidiary of Head N.V.
Our business is organized into four divisions: Winter Sports, Racquet Sports, Diving and Licensing. We sell products under the HEAD (tennis, squash and racquetball racquets, tennis balls, tennis footwear, badminton products, alpine skis, ski bindings and ski boots, snowboards, bindings and boots), Penn (tennis and racquetball balls), Tyrolia (ski bindings), and Mares/Dacor (diving equipment) brands.
We hold leading positions in all of our product markets and our products are endorsed by some of the world’s top athletes including Andre Agassi, Hermann Maier, Bode Miller, Amelie Mauresmo, Svetlana Kuznetsova, Novak Djokovic Andrew Murray, Ivan Ljubicic, Didier Cuche, Marco Büchel, Patrick Staudacher, Maria Riesch and Sarka Zahbrovska.
For more information, please visit our website: http://www.head.com
Analysts, investors, media and others seeking financial and general information, please contact:
Clare Vincent, Investor Relations
Tel: +44 207 499 7800
Fax: +44 207 491 7725
E mail: email@example.com
Gunter Hagspiel, Chief Financial Officer
Tel: +43 5 574 608 150
Fax +43 5 574 608 130
NL 1012 KK Amsterdam
Stock Market: Official Market of the Vienna Stock Exchange
HTM Sport- und Freizeitgeräte AG
A 2320 Schwechat
ISIN: XS0184717956 / XS0184719143
Stock Market: Luxembourg Stock Exchange