Fir Tree Issues Open Letter to Fellow SBB Noteholders Outlining Concerns with Company's Tender Offer
Fir Tree Partners ("Fir Tree" or "we"), a meaningful holder of the 2028 Notes and 2029 Notes guaranteed by Samhällsbyggnadsbolaget I Norden Ab (publ) ("SBB" or the "Company"), today issued an open letter to fellow noteholders to outline its concerns with the Company's tender offer memorandum dated November 16, 2023.
The full text of the letter is below.
November 20, 2023
Dear Fellow Noteholders:
We are writing to share our concerns regarding the tender offer memorandum, dated November 16, 2023 (the "Tender Offer Memorandum"), issued by Samhällsbyggnadsbolaget I Norden Ab (publ) ("SBB" or the "Company").
Within the Tender Offer Memorandum, the Company has offered to purchase the EUR denominated notes under its EMTN programmes (the "EMTN Notes") and its EUR denominated subordinated hybrid notes (the "Hybrid Notes", together with the EMTN Notes, the "Notes", and a holder thereof, a "Noteholder") for cash, subject to the terms and conditions contained therein (the "Tender Offer").
As outlined by the Company, Noteholders that wish to partake in the Tender Offer have been invited to tender their Notes by submitting a tender instruction by November 22, 2023, which will be irrevocable, subject to limited exceptions. The Company, in its sole discretion, may accept or reject any tender submitted by a Noteholder.
Given the complex and convoluted language included in the Tender Offer Memorandum, we believe it is important that all Noteholders understand the potential ramifications of participating in the Tender Offer before making a decision in advance of this week's deadline.
Noteholders Who Tender May Be Waiving and Releasing All Claims Against SBB
It is important to be aware that by electing to take part in the Tender Offer, you may be waiving an releasing all of your claims against the Company. Based on the language in SBB's Tender Offer, this may even apply to your Notes that were not submitted for tender and/or were submitted for tender but ultimately not accepted for purchase by SBB. This means that even if SBB does not accept your Notes for purchase under the tender, your rights could still be waived solely based upon your decision to tender.
SBB has drafted (either intentionally or unintentionally) the language within the Tender Offer section titled "Renunciation of title and claims" to be unclear for Noteholders. In a typical tender offer, a reasonable interpretation of the language appearing in this section would be that it is only those notes that are both tendered and accepted for purchase that result in the waiver and release of rights solely with respect to the purchase notes - however, the language in SBB's Tender Offer does not make this clear.
As a result, we call upon the Company to clarify this point out of an abundance of caution, particularly given that any waiver and release could materially prejudice a Noteholder's rights to pursue remedies against SBB in relation to an Event of Default.
SBB Appears to Be Devoting its Scarce Resources to Preserving Equity Value, Rather Than Focusing on Near- and Long-Term Senior Obligations
We also question the Company's rationale in including the Hybrid Notes in the Tender Offer alongside the EMTN Notes. The Hybrid Notes have no maturity date, and interest payments due under these Notes can be deferred indefinitely, as long as the Company refrains from paying dividends.
Given the Company's limited cash resources and current liquidity concerns, SBB should be focusing exclusively on addressing its near- and longer-term senior obligations. Instead, the Company appears to be committed to devoting its scarce resources to try to preserve equity value by retaining its ability to issue dividends to shareholders. We find this approach of including the Hybrid Notes to be completely unacceptable under the current circumstances.
SBB Did Not Need to Do a Tender Offer in Order to Buy Back Unsecured Bonds
Finally, Noteholders should also be aware that SBB did not need to do a Tender Offer. The Company already had the ability to buy back unsecured bonds through repurchases in the open market. From our perspective, this makes the Tender Offer open to question and leads us to ask: what is the Company's true motive for offering Noteholders a Tender Offer at this moment in time?
We strongly encourage all Noteholders to consider the concerns outlined above before participating in the Tender Offer.
About Fir Tree Partners
Fir Tree was founded in 1994 and is a New York based private investment firm that invests worldwide in public and private companies, real estate and sovereign debt. Fir Tree manages assets on behalf of leading endowments, foundations, pension funds and sovereign wealth funds. Where shareholder engagement could be value-accretive for its investors, Fir Tree follows a Positive Activism® approach in creating, not just identifying, value.