Serneke evaluates existing bond financing

On December 17, 2020, Serneke Group AB ("Serneke" or the "Company") announced that it had secured the financing for Karlatornet, which will be the Nordic region's tallest skyscraper, in a transaction with Fastighets AB Balder ("Balder") and a construction credit facility of approximately SEK 3 billion. In addition, Serneke has entered into a contract for the remaining project development and contract work at a fixed price of approximately SEK 3.2 billion. Occupation of Karlatornet is estimated to begin during the second half of 2023 and at completion Serneke will have received its invested capital of approximately SEK 1.5 billion together with the expected share of the profit from the project estimated to at least SEK 300 million.

To date, all the work has been conducted within budget, including constructing the complex foundation, and the costs for the remaining construction work are approximately 70 per cent agreed and fixed with suppliers and sub-contractors. In addition, Serneke has completed a rights issue of approximately SEK 122 million and a divestment of building rights to Balder that is expected to provide a liquidity effect of approximately SEK 250 million during 2021. Jointly, these transactions have contributed to a close to full reduction of the net debt for the Company, creating a strong position for Serneke to carry out the construction agreement in Karlatornet as well as other signed construction agreements.

The Company's existing bond financing of SEK 700 million, maturing in December 2022, has a built-in refinancing period from March 1 to June 1, 2021 during which the bonds can be redeemed at the nominal amount. Following this period, the redemption price will be increased and the terms and conditions also stipulates a mandatory amortisation of SEK 200 million by June 2021, at the latest.

Based on the above and considering the importance of a strong cash position over the coming years, and for purposes of attaining a maturity profile that is aligned with the cash flows resulting from the completion of Karlatornet, Serneke has decided to evaluate its existing bond financing. For this purpose, the Company has assigned Carnegie Investment Bank AB and Nordea Bank Abp to explore a fixed income capital market transaction as a possible alternative in this evaluation.