Photon Energy issues a clarification regarding its corporate restructuring
07-12-2010
In response to numerous requests by investors in relation to recent media coverage the management board of Photon Energy a.s. issues a clarification regarding the reasons for its corporate restructuring.
In EBI report 81/2010 issued on 23 November 2010 Photon Energy announced the establishment of Photon Energy N.V. by the company's two largest shareholders, Michal Gärtner and Georg Hotar, who plan to contribute their combined 71.75% shareholding in Photon Energy a.s. with the intention of inviting all other Photon Energy a.s. shareholders into the Dutch entity on the same terms through an exchange offer.
The management of Photon Energy a.s. obtained legal advice based on a very detailed analysis of Czech corporate law. The conclusion was very clear that a Czech joint-stock company - in particular after it has become a public company like Photon Energy a.s. - is a highly unsuitable vehicle for a capital increase due to various limitations by Czech law. The main issues are as follows:
1. The pre-emptive rights of shareholders can only be excluded by a court decision (which can only be obtained under exceptional circumstances) so that any capital increase is automatically a public offering and hence requires each time an approved prospectus. Exceptions available to Polish issuers are therefore not available to Czech issuers. Furthermore, the capital increase must be structured in two rounds where existing shareholders can subscribe to new shares using their pre-emptive rights in the first round and unsubscribed shares can be offered to other investors in a second round. Each round cannot be shorter than 14 days leading to a minimum total subscription period of 28 days.
2. Because of the legal procedure of registering a capital increase it is not possible to offer new investors delivery-versus-payment settlement and in combination with the timing described in point 1 the time period between the capital contribution by investors and the delivery of the new shares into the their accounts could be as long as 1 month.
3. Unlike in other jurisdictions including Poland pre-emptive rights in a Czech company can only be transferred between parties based on a written agreement between the right holder and the buyer. Hence, the trading of pre-emptive rights through the market is legally not feasible, which creates significant inefficiencies.
4. While not directly relevant to a capital increase, the pre-emptive rights limitation described in point 1, also renders the implementation of an employee share option program or the issuance of a convertible bond impossible for a public Czech joint-stock company.
The management board of Photon Energy a.s. is strongly committed to treating all its shareholders equally and fairly. The corporate restructuring aims to provide the best available corporate form in a stable jurisdiction for the planned IPO and listing on the main market of the Warsaw Stock Exchange in the interest of maximizing the value for all shareholders.
Photon Energy a.s. will inform about all steps related to its corporate restructuring and planned IPO and listing on the main market of the Warsaw Stock Exchange in separate EBI reports.
Legal Basis: Article 3, Section 2, Point 10 of Exhibit 3 of the Alternative Trading System Rules, as adopted by Resolution Nr. 147/2007, dated 1 March 2007, and amended by Resolution Nr. 733/2009, dated 18 December 2009, of the Warsaw Stock Exchange Management Board.
In EBI report 81/2010 issued on 23 November 2010 Photon Energy announced the establishment of Photon Energy N.V. by the company's two largest shareholders, Michal Gärtner and Georg Hotar, who plan to contribute their combined 71.75% shareholding in Photon Energy a.s. with the intention of inviting all other Photon Energy a.s. shareholders into the Dutch entity on the same terms through an exchange offer.
The management of Photon Energy a.s. obtained legal advice based on a very detailed analysis of Czech corporate law. The conclusion was very clear that a Czech joint-stock company - in particular after it has become a public company like Photon Energy a.s. - is a highly unsuitable vehicle for a capital increase due to various limitations by Czech law. The main issues are as follows:
1. The pre-emptive rights of shareholders can only be excluded by a court decision (which can only be obtained under exceptional circumstances) so that any capital increase is automatically a public offering and hence requires each time an approved prospectus. Exceptions available to Polish issuers are therefore not available to Czech issuers. Furthermore, the capital increase must be structured in two rounds where existing shareholders can subscribe to new shares using their pre-emptive rights in the first round and unsubscribed shares can be offered to other investors in a second round. Each round cannot be shorter than 14 days leading to a minimum total subscription period of 28 days.
2. Because of the legal procedure of registering a capital increase it is not possible to offer new investors delivery-versus-payment settlement and in combination with the timing described in point 1 the time period between the capital contribution by investors and the delivery of the new shares into the their accounts could be as long as 1 month.
3. Unlike in other jurisdictions including Poland pre-emptive rights in a Czech company can only be transferred between parties based on a written agreement between the right holder and the buyer. Hence, the trading of pre-emptive rights through the market is legally not feasible, which creates significant inefficiencies.
4. While not directly relevant to a capital increase, the pre-emptive rights limitation described in point 1, also renders the implementation of an employee share option program or the issuance of a convertible bond impossible for a public Czech joint-stock company.
The management board of Photon Energy a.s. is strongly committed to treating all its shareholders equally and fairly. The corporate restructuring aims to provide the best available corporate form in a stable jurisdiction for the planned IPO and listing on the main market of the Warsaw Stock Exchange in the interest of maximizing the value for all shareholders.
Photon Energy a.s. will inform about all steps related to its corporate restructuring and planned IPO and listing on the main market of the Warsaw Stock Exchange in separate EBI reports.
Legal Basis: Article 3, Section 2, Point 10 of Exhibit 3 of the Alternative Trading System Rules, as adopted by Resolution Nr. 147/2007, dated 1 March 2007, and amended by Resolution Nr. 733/2009, dated 18 December 2009, of the Warsaw Stock Exchange Management Board.
