Terms of the rights offering
Based on the authorization granted by the extraordinary meeting of shareholders on June 6, 2002, the board of Ericsson has now set the terms of the rights offering.
One share of series A or series B of Ericsson, held as of the record date of August 13, 2002, carries the right to subscribe for one new share of series B. The subscription price is SEK 3.80 per share. Equivalent terms are offered to holders of the Nasdaq-traded ADSs.
Ericsson currently has 656,218,640 series A shares and 7,252,509,947 series B shares outstanding (excluding 156,775,980 treasury shares of series B), which means that a maximum of 7,908,728,587 new series B shares will be issued (assuming that no further convertibles are converted or warrants are exercised prior to the record date). Subscriptions will be possible on a non-preferential basis for shares not taken up by shareholders exercising preferential rights. Allocation preference will be given to subscriptions made by those who have exercised their subscription rights. The offering will raise approximately SEK 30 billion, before expenses.
Underwriting and subscription commitments
Due to the current negative sentiment in stock markets in general and the telecom industry in particular, and in order to ensure the success of the rights issue, the Board of Ericsson has decided to have the rights issue fully underwritten.
Industrivärden and Investor, representing 7.4 percent of the share capital and 66.7 percent of the votes, have together undertaken to subscribe for SEK 8 billion of the rights issue.
In addition, Alecta, Skandia Life, Second National Pension Fund and Third National Pension Fund, representing approximately 7.0 percent of eligible shares have undertaken to subscribe for their respective rights in the issue, corresponding to slightly more than an aggregate of SEK 2 billion.
The remaining SEK 20 billion, is underwritten by a consortium of banks, consisting of Morgan Stanley, SEB/Enskilda Securities, Goldman Sachs International, Handelsbanken Securities and Schroder Salomon Smith Barney.
The underwriting is subject to customary returns and conditions.
Ericsson estimates that the rights offering will follow the below timetable:
Ericsson's series A and series B shares will be traded exclusive of the right to participate in the offering.
Record date for participation in the rights offering, i.e. shareholders and ADS holders registered as owners on this day will obtain B share rights or ADS rights, as applicable, to participate in the offering.
First day for subscription and payment for B shares and ADSs. First day for trading in B share rights and ADS rights.
Last day for trading in ADS rights, as well as the last day for subscription and payment for ADSs.
Last day for trading in B share rights.
Last day for subscription and payment for B shares.
On or about Sep. 6
Announcement of preliminary rights offering results.
Offering documentation will be sent to shareholders and ADS holders registered as owners as of the record date around the time of the start of the subscription period.
Morgan Stanley, Enskilda Securities, Goldman Sachs International, Handelsbanken Securities and Schroder Salomon Smith Barney are financial advisors to Ericsson for the rights offering.