Prospectus. Blom ASA

Transcription

1 Prospectus Blom ASA (a public limited liability company organized under the laws of the Kingdom of Norway) Business registration number: Listing of 973,367,160 New Shares on Oslo Børs, each with a nominal value of NOK 0.05 issued in connection with the conversion of 15 per cent Blom ASA Senior Secured Bond Issue 2012/2013, FRN Blom ASA Senior Bond Issue 2011/2012 and 2 per cent Blom ASA subordinated Convertible Callable Bond Issue 2012/2017 to equity in October 2013 Manager: 19 November 2013

2 IMPORTANT INFORMATION For the definition of certain capitalised terms used throughout this Prospectus, please see Section 14 Definitions and Glossary of Terms which also applies to the front page. Readers are expressly advised that the Shares are exposed to financial and legal risk and they should therefore read this Prospectus in its entirety, in particular Section 2 Risk Factors. The contents of this Prospectus are not to be construed as legal, financial or tax advice. Each reader should consult his, her or its own legal adviser, independent financial adviser or tax adviser for legal, financial or tax advice. This Prospectus, dated 19 November 2013 has been prepared by Blom ASA ( Blom or the Company ) in order to provide a presentation of Blom in connection with the listing of the New Shares on Oslo Børs, as defined and described herein (the Listing ). This Prospectus has been prepared to comply with the Securities Trading Act sections 7-2 and 7-3 and related legislation and regulations, including the Commission Regulation (EC) No. 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council. This Prospectus has been prepared solely in the English language. The information contained herein is as of the date of this Prospectus and subject to change, completion and amendment without notice. In accordance with section 7-15 of the Securities Trading Act, any new circumstance, material error or inaccuracy relating to information included in this Prospectus, which may have significance for the assessment of the Shares, and arises between the date of this Prospectus and before the New Shares are listed on Oslo Børs, will be presented in a supplement to this Prospectus. Publication of this Prospectus shall not create any implication that there has been no change in the Company s affairs or that the information herein is correct as of any date subsequent to the date of this Prospectus. All inquiries relating to this Prospectus must be directed to the Company. No other person is authorised to give information or to make any representation in connection with the listing of the New Shares. If any such information is given or made, it must not be relied upon as having been authorised by the Company or by any of the employees, affiliates or advisers of any of the foregoing. No action has been or will be taken in any jurisdiction other than Norway by the Company that would permit the possession or distribution of this Prospectus, any documents relating thereto, or any amendment or supplement thereto, in any country or jurisdiction where specific action for such purpose is required. The distribution of this Prospectus in certain jurisdictions may be restricted by law. Persons into whose possession this Prospectus may come are required by the Company to inform themselves about and to observe such restrictions. The Company shall not be responsible or liable for any violation of such restrictions by prospective investors. The restrictions and limitations listed and described herein are not exhaustive, and other restrictions and limitations in relation to this Prospectus that are not known or identified at the date of this Prospectus may apply in various jurisdictions. This Prospectus serves as a listing prospectus as required by applicable laws and regulations only. This Prospectus does not constitute an offer to buy, subscribe or sell any of the securities described herein, and no securities are being offered or sold pursuant to it. The securities described herein have not been and will not be registered under the US Securities Act of 1933 as amended (the US Securities Act ), or with any securities authority of any state of the United States. Accordingly, the securities described herein may not be offered, pledged, sold, resold, granted, delivered, allotted, taken up, or otherwise transferred, as applicable, in the United States, except in transactions that are exempt from, or in transactions not subject to, registration under the US Securities Act and in compliance with any applicable state securities laws. This Prospectus is subject to Norwegian law, unless otherwise indicated herein. Any dispute arising in respect of this Prospectus is subject to the exclusive jurisdiction of the Norwegian courts with Oslo District Court as legal venue in the first instance.

3 TABLE OF CONTENTS 1 EXECUTIVE SUMMARY... 3 SECTION A INTRODUCTION AND WARNINGS... 3 SECTION B - ISSUER... 3 SECTION C - SECURITIES... 8 SECTION D - RISKS... 8 SECTION E - OFFER RISK FACTORS STATEMENTS CONVERSION OF DEBT TO EQUITY AND LISTING OF THE NEW SHARES PRESENTATION OF THE COMPANY MARKET ANALYSIS ORGANISATION, BOARD OF DIRECTORS AND MANAGEMENT FINANCIAL INFORMATION SHARES AND SHARE CAPITAL SHAREHOLDER MATTERS AND NORWEGIAN COMPANY AND SECURITIES LAW NORWEGIAN TAXATION LEGAL MATTERS ADDITIONAL INFORMATION DEFINITIONS AND GLOSSARY OF TERMS

4 1 EXECUTIVE SUMMARY Summaries are made up of disclosure requirements known as Elements. These Elements are numbered in Sections A E (A.1 E.7) below. This summary contains all the Elements required to be included in a summary for this type of securities and the issuer. Because some Elements are not required to be addressed, there may be gaps in the numbering sequence of the Elements. Even though an Element may be required to be inserted in the summary because of the type of securities and issuer, it is possible that no relevant information can be given regarding the Element. In this case a short description of the Element is included in the summary with the mention of not applicable. Section A Introduction and Warnings A.1 Warning This summary should be read as introduction to this Prospectus; any decision to invest in the securities should be based on consideration of this Prospectus as a whole by the investor; where a claim relating to the information contained in this Prospectus is brought before a court, the plaintiff investor might, under the national legislation of the Member States, have to bear the costs of translating this Prospectus before the legal proceedings are initiated; and civil liability attaches only to those persons who have tabled the summary including any translation thereof, but only if the summary is misleading, inaccurate or inconsistent when read together with the other parts of the Prospectus or it does not provide, when read together with the other parts of the Prospectus, key information in order to aid investors when considering whether to invest in such securities. Section B - Issuer B.1 Legal and commercial name B.2 Domicile and legal form, legislation and country of incorporation B.3 Current operations, principal activities and markets B.4a Significant recent trends affecting the issuer and the industry in which it operates B.5 Description of the Group Blom ASA Blom was incorporated on 12 September 1966 and is a public limited liability company, organised and existing under the laws of Norway pursuant to the Public Limited Companies Act. Blom estimates that it is one of Europe s largest providers of geospatial products, services and solutions, and its customers range from public administrations and enterprises to consumers. The Company provides a wide variety of mapping and geographic services, meeting local, regional and international standards and specifications, as well as custom solutions for specific customer demand. Blom s strength lies in the expertise, innovative capability and the technical know-how of its people. There have not been any recent trends or changes in the operating environment for the Company since 30 June Blom is the parent company of the Group. Blom is a holding company and not an operative company. The following companies are the main subsidiaries directly owned by Blom: Name of subsidiary Blom Data AS, Oslo (100%) Blom Kartta Oy, Finland (100%) Blom Geomatics AS, Oslo (100%) Blom Romania S.R.L, Romania (100%) PT. Blom Nusantara, Indonesia (90%) Blom Deutschland GmbH, Germany (100%) Blom Aerofilms Ltd, England (100%) Blom Sweden AB, Sweden (100%) 3

5 B.6 Interests in the Company and voting rights Blom Sistemas Geoespaciales S.L.U, Spain (100%) Shareholders owning 5% or more of the Shares have an interest in the Company s share capital which is notifiable pursuant to the Norwegian Securities Trading Act. The table below shows the 20 largest shareholders in the Company on 21 October 2013 There are no differences in voting rights between the shareholders. The Company is not aware of any arrangements the operation of which may at a subsequent date result in a change of control of the Company. B.7 Selected historical key financial information Below is an overview of selected historical key information for the Company. Income statement: INCOME STATEMENT, CONSOLIDATED Q Q (NOK 1,000) (Unaudited ) (Unaudit ed) (Unaudited) (Unaudited ) Operating revenues Cost of materials Salaries and personnel costs Depreciation and write downs Other operating and administrative costs Other gains and losses Operating expenses Operating profit/loss Profit/loss attributable to

6 associates Net financial items Pre-tax profit/loss Taxes Net profit/loss from continuing operations Net profit/loss from discontinued operations Net profit/loss for the year Profit/loss attributable to: Shareholders Minority interests Net profit/loss for the year Earnings per share: From continuing operations -0,91-1,15 from discontinued operations -0,07-0,01 From net/profit/loss for the year -0,98-1,16 INCOME STATEMENT, CONSOLIDATED FY 2012 FY 2011 FY 2010 FY 2010 (NOK 1,000) (Audited) (Audited) (Unaudited adjusted) (Audited) Operating revenues Cost of materials Salaries and personnel costs Depreciation and write downs Other operating and administrative costs Other gains and losses Operating expenses Operating profit/loss Profit/loss attributable to associates Net financial items Pre-tax profit/loss Taxes Net profit/loss from continuing

7 operations Net profit/loss from discontinued operations Net profit/loss for the year Profit/loss attributable to: Shareholders Minority interests Net profit/loss for the year Earnings per share: From continuing operations -1,59-150,27-13,58-13,58 from discontinued operations -1,6-52,31-0,33-0,33 From net/profit/loss for the year -3,19-202,58-13,91-13,91 Balance sheet: BALANCE SHEET, CONSOLIDATED (Unaudited (NOK 1,000) ) (Audited) (Audited) (Audited) ASSETS Patents, licenses and similar rights Deferred tax assets Goodwill Intangible noncurrent assets Property plant and equipment Tangible non-current assets Non-current asset investments Investments in associates Total non-current asset investments Total non-current assets Inventories Work in progress Total inventories Trade receivables Other current receivables Total receivables

8 Cash and cash equivalents Assets classified as held for sale Total current assets Total assets BALANCE SHEET, CONSOLIDATED (Unaudited (NOK 1,000) ) (Audited) (Audited) (Audited) EQUITY AND LIABILITIES Share capital Treasury shares Share premium account Currency translation differences Retained earnings Minority interests Total equity Pension obligations Non-current liabilities Deferred taxes Total other noncurrent liabilities Overdraft facilities Other interest-bearing current liabilities Total interest-bearing current liabilities Trade payables Unpaid government taxes Tax payable Other current liabilities Total other current liabilities Liabilities classified as held for sale Total current liabilities Total equity and liabilities B.8 Selected key pro forma financial information Not applicable. There is no pro forma financial information. 7

9 B.9 Profit forecast or estimate B.10 Audit report qualifications B.11 Insufficient working capital Not applicable. No profit forecast or estimate is made. The auditor's report for 2012 included a clarification regarding going concern assumption as set out below: We draw attention to the Board of Director s report and Note 26 in the financial statements which indicate that there is uncertainty regarding whether the company will be able to service its debt at maturity. These conditions, along with other matters as set forth in the Board of Directors report and Note 26, indicate the existence of a material uncertainty that might cast significant doubt about the company s ability to continue as a going concern. Our opinion is not qualified in respect of this matter. Not applicable. The Company is of the opinion that the working capital available to the Group is sufficient for the Group s present requirements, for the period covering at least 12 months from the date of this Prospectus. Section C - Securities C.1 Type and class of securities admitted to trading and identification number The New Shares are ordinary shares in the Company and will have the same ISIN as the existing shares in the Company ISIN NO C.2 Currency of issue The New Shares are denominated in NOK. C.3 Number of shares in issue and par value C.4 Rights attaching to the securities C.5 Restrictions on transfer C.6 Admission to trading As of the date of this Prospectus the Company s registered share capital is NOK 50,353,245 divided into 1,007,064,900 Shares with a par value of NOK The New Shares are ordinary shares in the Company and will be listed on Oslo Stock Exchange as the rest of the shares in the Company. The New Shares receive rights to dividends on the date the capital increases are registered in the Norwegian Register of Business Enterprises. The Shares and the New Shares have equal rights to the Company's profits and upon liquidation. The Company's shares are freely transferrable. The Company's shares are listed on Oslo Stock Exchange with ticker "BLO". The listing of the New Shares on Oslo Stock Exchange is subject to the approval of this Prospectus by the Norwegian Financial Supervisory Authority. The Company will not apply for admission to trading of the New Shares on any other stock exchange than Oslo Stock Exchange. C.7 Dividend policy The Company does not have an established dividend policy but the Company's aim and focus is to enhance shareholder value and provide an active market for its shares. In accordance with the Company s future growth goals, Blom will seek to maintain a sound financial platform. Dividends have historically been considered on an on-going basis as a result of the Company s strategy and earnings. No dividend has been paid during the last 4 years. The Company does not anticipate that it will be able to distribute any dividend to its shareholders in the near future, but always aims to enhance shareholder value. Section D - Risks D.1 Key risks specific to the Company or its industry The Company s revenues are affected by the economic conditions in the countries in which it operates The Company operates in market segments that are highly competitive Governmental bodies and local municipalities represent significant customer groups for the Company The Company is subject to local laws and regulations in the countries in which it operates and requires regulatory approvals for conducting 8

10 D.3 Key risks specific to the securities its operations The Company may be subject to changes in taxation The Company s success depends on key members of its management team The Company relies on its reputation and commercial integrity The Company s results depend on utilisation of its resources The Company relies upon intellectual property rights From time to time, the Company, its customers or third parties with whom the Company works may receive claims, including claims from various industry participants, alleging infringement of their intellectual property rights The Company may file claims against other parties for infringement of its intellectual property that may cause significant costs and may not be resolved in its favour There are significant risks associated with rapid technological change The Company will from time to time be involved in disputes and legal or regulatory proceedings Risks related to funding needs The Company is relying on external subcontractors and suppliers of services and goods to meet agreed or generally accepted standards The Company may not have adequate insurance Foreign currency risk Interest rate risk Credit risk Liquidity risk Need for additional funding There may not be a liquid market for the Shares Volatility of the share price Shareholders may be diluted if they are unable to participate in future offerings Pre-emptive rights may not be available to U.S. holders and certain other foreign holders of the Shares Holders of Shares that are registered in a nominee account may not be able to exercise voting rights as readily as shareholders whose Shares are registered in their own names with the Norwegian Central Securities Depository The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions Certain shareholders will control a substantial shareholding in the Company going forward and the interests of these shareholders could conflict with those of the Company s other shareholders Section E - Offer E.1 Net proceeds and estimated expenses The News Shares are divided in two groups. The first group consists of 973,367,160 shares which were issued at a subscription price of NOK 0.10 and where the total share subscription price of NOK 97,336,716 was settled by way of set off by the bondholders in the Company's existing bond loans. The 9

11 E.2a Reasons for the Offering and use of proceeds Company does not receive any cash proceeds from the issuance of shares in the first group, but converts debt to equity. The second group of shares consists of 15 shares offered to Merckx AS at a subscription price of 0.05 per share and for a total subscription price of NOK The shares in the second group are settled in cash and the net proceeds are thereby NOK The estimated costs for the debt conversion and issuance of the New Shares are approximately NOK 5 million. The debt conversions results in an improved balance sheet for the Company by reducing the debt burden significantly. The implementation of this exercise was vital for the Company and is part of the proposed restructuring the Company is currently carrying out. E.3 Terms and conditions of the Offering E.4 Material and conflicting interests E.6 Dilution resulting from the Offering E.7 Estimated expenses charged to investor The extraordinary general meeting of the Company approved the issuance of the New Shares on 27 September The listing of the New Shares will be carried out as soon as possible after publication of this Prospectus. The Manager or its affiliates have provided from time to time, and may provide in the future, investment and commercial banking services to the Company and its affiliates in the ordinary course of business, for which they may have received and may continue to receive customary fees and commissions. Other than this there are no material and conflicting interests. The dilutive effect for existing shareholders in connection with the issuance of the New Shares resulting from the conversion of debt to equity is approximately 96.7%. The Company will not charge any costs, expenses or taxes directly to any shareholder or to the investor in connection with the listing of the New Shares. 10

12 2 RISK FACTORS Investing in Blom involves inherent risks. Prospective investors should consider carefully, among other things, all of the information set forth in this Prospectus, and in particular, the specific risk factors set out below. An investment in the Shares is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of the investment. If any of the risks described below materialises, individually or together with other circumstances, they may have a material adverse effect on the Company s business, operating results and financial condition, which may cause a decline in the value and trading price of the Shares that could result in a loss of all or part of any investment in the Shares. The order in which the risks are presented below is not intended to provide an indication of the likelihood of their occurrence nor of their severity or significance. 2.1 MARKET RISK The Company s revenues are affected by the economic conditions in the countries in which it operates The Company s business, operating results and financial condition depend on the demand for its key products and services. General economic conditions in the countries in which the Company sells its products and services influence the demand for the Company s products and services. The countries in which the Company has operations have experienced an economic downturn of varying degrees during recent years. If existing economic conditions in the countries in which the Company operates do not improve and demand for the Company s products and services do not increase, its business, operating results and financial condition are likely to be negatively affected. The Company operates in market segments that are highly competitive The market segments in which the Company operates are highly competitive. The Company believes that it is well positioned to retain and strengthen its market position through, among other things, its high quality service offering and position within niches which offer differentiating opportunities. However, the Company s competitive position may be harmed by increased competition, in the form of better technology and product offering, price reductions and/or increased capacity by other operators. Increased competition can come from current competitors or new entrants to the market with a similar product and service offering as the Company. The failure of the Company to maintain its competitiveness could have a material adverse effect on the Company s business, operating results and financial condition. Governmental bodies and local municipalities represent significant customer groups for the Company Governmental bodies and local municipalities throughout Europe represent significant customer groups for the Company. Public spending may be subject to significant fluctuations from year to year and from country to country. Adverse economic and political conditions may reduce the amount of public spending. A change in the funding of customers for financing the products and services provided by the Company could result in a reduction in the demand for the Company s services. Furthermore, defence organisations represent an important market segment for the Company and reduction of defence budgets could impact the demand for the Company s products and services. The failure of the Company to successfully retain current customers and/or attract new customers could have a material adverse effect on the Company s business, operating results and financial condition. 2.2 OPERATIONAL RISK The Company is subject to local laws and regulations in the countries in which it operates and requires regulatory approvals for conducting its operations The Company operates in several European and international markets. It is subject to local laws and regulations and requires regulatory approval for conducting its operation. Flight operation for Blom s aircrafts is dependent on permits for each country. The Company has permits for most countries in Europe and there are normally no difficulties involved in obtaining a flight permit for new countries. If the Company fails to comply with any laws and regulations or fails to obtain necessary regulatory approval, then the Company may be subject to, among other things, civil and criminal liability. Changes in the local laws and regulations or in regulatory approvals that are required in the Company s operations, or the loss of such approvals or permits, could have a material adverse effect on the Company s business, operating results and financial condition.

13 The Company may be subject to changes in taxation The Company is subject to taxes in the countries in which it operates. There can be no assurance that the Company s operations will not become subject to increased taxation by national, local or foreign authorities or to new or modified taxation regulations and requirements, including requirements relating to the timing of any tax payments. From time to time the Company s tax payments may be subject to review or investigation by tax authorities of the jurisdictions in which the Company operates. The consequences of such tax reviews or investigations could have a material adverse effect on the Company s business, operating results and financial condition. The Company s success depends on key members of its management team The Company s success depends, to a significant extent, on the continued services of the individual members of its management team, who have substantial experience in the industry and in the local jurisdictions in which the Company operates. The Company s ability to continue to identify and develop opportunities depends on the management s knowledge of, and expertise in, the industry and such local jurisdictions and on their external business relationships. There can be no assurance that any management team member will remain with the Company. Any loss of the services of key members of the management team could have a material adverse effect on the Company s business, operating results and financial condition. The Company relies on its reputation and commercial integrity The Company s success depends on its ability to maintain and enhance its reputation and trustworthiness. An event or series of events that materially damages the Company s reputation, such as allegations of price collaboration or any unethical behaviour, such as fraud or bribery, could have a material adverse effect on the Company s business, operating results and financial condition. The Company s results depend on utilisation of its resources The Company must to a certain extent keep resources available in order to respond in due time to project requests. The Company evaluates its needs for resources continuously. However, the resources involving staffing, infrastructure and aircrafts, lead to a substantial fixed cost base and risk of overcapacity in relation to the scope of projects in progress. Overcapacity of resources could have a material adverse effect on the Company s business, operating results and financial condition. The Company relies upon intellectual property rights The Company mainly relies upon copyrights, database rights and agreements with its employees, customers, suppliers and other parties to establish and maintain its intellectual property rights in technology and products used in operations. Despite its efforts to protect its intellectual property rights, such rights could be challenged. From time to time, the Company, its customers or third parties with whom the Company works may receive claims, including claims from various industry participants, alleging infringement of their intellectual property rights Although the Company is not currently aware of any parties pursuing intellectual property rights infringement claims against it, there can be no assurance that it will not be subject to such claims in the future. The Company s third party suppliers may also become subject to infringement claims, which in turn could negatively impact the Company s business. Intellectual property litigation is expensive and time-consuming, could divert management s attention from the Company s business and could have a material adverse effect on its business, prospects, operating results or financial condition. If there is a successful claim of infringement against the Company or its third party intellectual property providers, the Company may be required to pay substantial damages to the party claiming infringement, stop selling products or using technology that contains the alleged infringement of intellectual property, or enter into royalty or license agreements that may not be available on acceptable terms, if at all. Any of these developments could materially damage the Company s business, prospects, financial condition or results of operations. The Company may have to develop non-infringing technology, and any failure to do so or to obtain licenses to the proprietary rights on a timely basis could have a significant adverse effect on the Company s business, prospects, financial results and results of operations. The Company may file claims against other parties for infringement of its intellectual property that may cause significant costs and may not be resolved in its favour Although the Company currently is not aware of infringement of its intellectual property by other parties, it cannot guarantee that such infringement does not currently exist or will not occur in the future. To protect its intellectual property rights and to maintain its competitive advantage, the Company may file suits against parties who it believes are infringing its intellectual property. Intellectual property litigation is expensive and time consuming, could divert management s attention from the Company s business and could have a material adverse effect on its business, prospects, operating results or financial condition. In addition, the Company s enforcement efforts may not be successful. In certain situations, the Company may have to bring such suits in foreign jurisdictions, in which case it is subject to additional risk as to the result of the proceedings and the 12

14 amount of damage that it can recover, including currency risk. Moreover enforcement of the judgment is not assured. Certain foreign jurisdictions may not provide protection to intellectual property comparable to that in the United States or Western Europe. The Company s engagement in intellectual property enforcement actions may have significant adverse effects on its business, prospects, financial results and results of operations. There are significant risks associated with rapid technological change The market for the Company's products and services is subject to rapid technological change and is characterised by frequent introductions of improved or new products and services and ever-changing and new customer requirements. The Company expects that this will continue to be the case in the future. The success of the Company depends decisively on the timely perception of new trends, developments and customer needs, constant further development of technological expertise and ensuring that the portfolio of products and services keeps pace with technological developments. This presents the risk that competitors may launch new products and services earlier or at more competitive prices or secure exclusive rights to new technologies. If these circumstances were to materialise, it may have a material adverse effect on the business, prospects, financial condition or results of operations of the Company. The Company will from time to time be involved in disputes and legal or regulatory proceedings The Company will from time to time be involved in disputes and legal or regulatory proceedings. Such disputes and legal or regulatory proceedings may be expensive and time-consuming, and could divert management s attention from the Company s business. Furthermore, legal proceedings could be ruled against the Company and the Company could be required to, inter alia, pay damages or fines, halt its operations, stop its projects, stop the sale of its products, etc., which can consequently have a material adverse effect on the Company s business, prospects, financial results or results of operations. Risks related to funding needs As of the date of this Prospectus the Company does not have any outstanding bond debt or significant bank debt, see chapter 8.7 Capital resources for an overview of the Company's debt. The Company s ability to meet its payment obligations related to its running operations is dependent on its future performance and may be affected by events beyond its control. If the financing available to the Company is insufficient to meet its financing needs, it may be forced to reduce or delay capital expenditures, sell assets or businesses at unanticipated times and/or at unfavourable prices or other terms, seek additional equity capital or restructure or refinance its debt. There can be no assurance that such measures would be successful or adequate to meet the Company s financing needs. The Company is relying on external subcontractors and suppliers of services and goods to meet agreed or generally accepted standards The Company relies on external subcontractors and suppliers of services and products to varying degrees. This operating model inherently contains a risk to the Company s goodwill and branding, if suppliers fail to meet agreed or generally accepted standards in areas such as environmental compliance, human rights, labour relations and product quality. Failure by subcontractors to deliver products or services with the required quality could lead to the Company not being able to fulfil its obligations towards its customers, which in turn could lead to termination of contracts and/or claims for contractual liability. The Company may not have adequate insurance The Company has insurance for certain liabilities and losses. If the Company incurs significant liabilities or losses for which it is not adequately insured, or not insured at all, or if the Company s insurance policies are terminated for any reason and the Company is not able to obtain replacement insurance policies at favourable rates, or at all, the Company s business, operating results and financial condition may be materially adversely affected. The Company may also face consequential claims from customers who have made use of data and information supplied by the Company. 2.3 FINANCIAL RISK Foreign currency risk The Company is somewhat exposed to fluctuations in foreign exchange rates, since substantial revenues are in foreign currencies, primarily Euro. The Company has relatively large operative subsidiaries in eight European countries, three of which use Euro as their functional currency, while the five remaining subsidiaries use four other functional currencies. The Company has certain investments in foreign subsidiaries, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the Company s net investments in foreign operations is managed essentially through raising loans in the relevant foreign currency. The Company focuses on reducing any foreign currency risk associated with cash flows and does not focus on reducing the foreign currency risk associated with assets and liabilities. The subsidiaries income and expenses are in the same currency, and this reduces the Company s cash flow exposure to a single currency substantially. An 13

15 assessment of the need for and any hedging of currency risks are performed by a central financial function. In 2012 the Company did not find it necessary to hedge cash flows against currency risks. Interest rate risk The Company s interest-bearing assets are cash and cash equivalents, and the Company s profit and cash flow from operations are in general independent of changes in market interest rates. The interest-bearing debt has adjustable or fixed interest rates that are shorter than three months at any given time. Since the debt can be repaid at the points in time when the interest rate is adjusted, the difference between the fair value and book value will be small and insignificant. The Company's interest rate risk is associated with interest bearing loans, financial leasing and overdraft facilities. The Company has not made use of interest rate swaps or other financial instruments. Credit risk The credit risk in connection with sales to customers is managed in the local subsidiaries and at the group level for particularly large projects. The credit risk is monitored locally with central monitoring of the local subsidiary. The Company has guidelines for new contracts that focus on various elements, all of which shall contribute to the customer paying the company as quickly as possible. The company s customers are primarily municipalities, government agencies, or companies or institutions where municipalities or government agencies have a dominant influence. Inherently the risk of potential future losses from this type of customer is low. The Company has earmarked provisions for potential losses on specific customers and evaluated the size of the potential loss. The provisions for potential losses on receivables are based on the management s discretionary assessment of potential future losses on receivables from customers. The Company has not entered into any transactions that involve financial derivatives or other financial instruments to mitigate credit risks. Liquidity risk The Company s management of liquidity risk entails maintenance of adequate liquid reserves and credit facilities. The central management team and the local managers of subsidiaries monitor the Company s liquid resources and credit facilities through revolving forecasts based on the expected cash flow. The Company's operations are discernible by seasonal fluctuations, since a large portion of the Company's operations consist of airborne data acquisition and the processing and modelling of the resultant map data. Data acquisition is not normally performed when the surface of the earth is covered in snow. This denotes that the company ties up working capital in the spring being the start of the airborne data acquisition. The subsequent processing of data is not normally remunerated for until the summer months. The Company has not entered into any financial instruments and consequently does not have any liquidity risk originating from financial instruments. Need for additional funding The Company's future capital requirements and level of expenses depend on several factors, including, among other things, the timing and terms on which contracts can be negotiated, the amount of cash generated from operations, the level of demand for the Company's services and general industry conditions. There can be no assurance that the Company's business will generate sufficient cash flow from operations to service its debt and fund future capital requirements and expenses. In the event that the Company's existing resources are insufficient to fund the Company's business activities, the Company may need to raise additional funds through public offerings or private placements of debt or equity securities. The Company cannot guarantee that it will be able to obtain additional funding at all or on terms acceptable to the Company. Failure to do so could have a material adverse effect on the Company's business, operations and financial conditions. 2.4 RISKS RELATED TO THE SHARES There may not be a liquid market for the Shares Following the mandatory offer from Merckx AS and the conversion of the Company's bond issues, Merckx AS holds approximately 69.5% of the Shares. The Company's market capitalisation, based on the closing share price on 17 October 2013 is approximately NOK 10,000,000, which means that the Company is among the lowest valued companies on Oslo Børs. The limited free float and the low market capitalisation may result in limited or no liquidity in the Company's Shares going forward. Active, liquid trading markets generally result in lower price volatility and more efficient execution of buy and sell orders for investors. If there proves to be no active trading market for the Shares, the price of the Shares may be more volatile and it may be more difficult to complete a buy or sell order for Shares. Even if there is an active public trading market d, there may be little or no market demand for the Shares, making it difficult or impossible to resell the shares, which would have an adverse effect on the resale price, if any, of the Shares. Furthermore, there can be no assurance that the Company will maintain its listing on Oslo Børs. A delisting from Oslo Børs would make it more difficult for shareholders to sell their Shares and could have a negative impact on the market value of the Shares. 14

16 Volatility of the share price The trading price of the Shares could fluctuate significantly in response to quarterly variations in operating results, general economic outlook, adverse business developments, interest rate changes, changes in financial estimates by securities analysts, matters announced in respect of competitors or changes to the regulatory environment in which the Company operates. Market conditions may affect the Shares regardless of the Company s operating performance or the overall performance in the industry. Accordingly, the market price of the Shares may not reflect the underlying value of the Group s net assets, and the price at which investors may dispose of their Shares at any point in time may be influenced by a number of factors, only some of which may pertain to the Company, while others of which may be outside the Company s control. The market price of the Shares could decline due to sales of a large number of Shares in the Company in the market or the perception that such sales could occur. Such sales could also make it more difficult for the Company to offer equity securities in the future at a time and at a price that are deemed appropriate. Shareholders may be diluted if they are unable to participate in future offerings The development of the Group s business may, inter alia, depend upon the Company s ability to obtain equity financing. Shareholders may be unable to participate in future offerings, due to misapplication of shareholders pre-emptive rights in order to raise equity on short notice in the investor market, or for reasons relating to foreign securities laws or other factors. Unless otherwise resolved by the general meeting or the Board by proxy, shareholders in Norwegian public companies such as the Company have pre-emptive rights proportionate to the aggregate amount of the shares they hold with respect to new shares issued by the Company. Pre-emptive rights may not be available to U.S. holders and certain other foreign holders of the Shares Under Norwegian law, prior to the Company s issuance of any new Shares for consideration in cash, the Company must offer holders of the Company s then-outstanding Shares pre-emptive rights to subscribe and pay for a sufficient number of Shares to maintain their existing ownership percentages, unless these rights are waived at a general meeting of the Company s shareholders. These pre-emptive rights are generally transferable during the subscription period for the related offering and may be listed on Oslo Stock Exchange. U.S. holders of the Shares may not be able to receive trade or exercise pre-emptive rights for new Shares unless a registration statement under the U.S. Securities Act is effective with respect to such rights or an exemption from the registration requirements of the U.S. Securities Act is available. The Company is not a registrant under the U.S. securities laws. If U.S. holders of the Shares are not able to receive trade or exercise pre-emptive rights granted in respect of their Shares in any rights offering by the Company, then they may not receive the economic benefit of such rights. In addition, their proportional ownership interests in the Company will be diluted. Similar restrictions may apply to other foreign holders of Shares, including, but not limited to shareholders in Australia, Canada, Hong Kong, Japan and Switzerland. Holders of Shares that are registered in a nominee account may not be able to exercise voting rights as readily as shareholders whose Shares are registered in their own names with the Norwegian Central Securities Depository Beneficial owners of the Company s Shares that are registered in a nominee account (e.g., through brokers, dealers or other third parties) may not be able to vote for such Shares unless their ownership is re-registered in their names with the VPS prior to the Company s general meetings. The Company cannot guarantee that beneficial owners of the Company s Shares will receive the notice for a general meeting in time to instruct their nominees to either effect a re-registration of their Shares or otherwise vote for their Shares in the manner desired by such beneficial owners. The transfer of Shares is subject to restrictions under the securities laws of the United States and other jurisdictions The Company has not registered the Shares under the U.S. Securities Act or the securities laws of other jurisdictions than Norway and the Company does not expect to do so in the future. The Shares may not be offered or sold in the United States, nor may they be offered or sold in any other jurisdiction in which the registration of the Shares is required but has not taken place, unless an exemption from the applicable registration requirement is available, or the offer or sale of the Shares occurs in connection with a transaction that is not subject to these provisions. In addition, there can be no assurances that shareholders residing or domiciled in the United States will be able to participate in future capital increases or exercise subscription rights. Certain shareholders will control a substantial shareholding in the Company going forward and the interests of these shareholders could conflict with those of the Company s other shareholders After completion of the conversion of debt to equity, certain former bondholders will hold 973,367,160 of the Shares, which corresponds to approximately 96.7% of the Company's issued shares. Particularly, Merckx AS, which holds approximately 69% of the Shares. 15

17 As a result of this substantial ownership interest in the Company, the former bondholders, particularly Merckx AS, will have the ability to exert significant influence over most actions requiring shareholder approval, including, but not limited to, increasing or decreasing the authorised share capital of the Company (and waiving pre-emptive rights), the election of Board of Directors, distribution of dividends, the appointment of management and other policy decisions. While transactions with a controlling shareholder could benefit the Company, the interests of the former bondholders, particularly Merckx AS, could at times conflict with the interests of other holders of the Company s Shares. Although the Company has in the past sought and continues to seek to conclude all related party transactions on an arm s-length basis, and the Company has adopted procedures for entering into transactions with related parties, conflicts of interest may arise between the Company and the Company s principal shareholders or their respective affiliates, resulting in the conclusion of transactions on terms not determined by market forces. Any such conflicts of interest could adversely affect the Company s business, financial condition and results of operations, and therefore the value of its Shares. 16

18 3 STATEMENTS 3.1 RESPONSIBILITY FOR THE PROSPECTUS We, the Board of Directors of Blom, hereby declare that, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of our knowledge, in accordance with the facts and contain no omissions likely to affect its import. 19 November 2013 The Board of Directors of Blom Siv Staubo Chair Tore Hopen Board member Kristian Gjertsen Lundkvist Board member Birgitte Askjem Ellingsen Board member 17

19 3.2 INFORMATION SOURCED FROM THIRD PARTIES In certain sections of this Prospectus information sourced from third parties has been reproduced. In such cases, the source of the information is always identified. Such third party information has been accurately reproduced. As far as the Company is aware, and is able to ascertain from information published by the relevant third party, no facts have been omitted which would render the reproduced information inaccurate or misleading. 3.3 NOTICE REGARDING FORWARD-LOOKING STATEMENTS This Prospectus includes forward-looking statements, including, without limitation, projections and expectations regarding the Company s future financial position, business strategy, plans and objectives. All forward-looking statements included in this document are based on information available to the Company, and views and assessment of the Company, as of the date of this Prospectus. The Company expressly disclaims any obligation or undertaking to release any updates or revisions of the forward-looking statements contained herein to reflect any change in the Company s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based, unless such update or revision is prescribed by law. When used in this document, the words anticipate, believe, estimate, expect, seek to, may, plan and similar expressions, as they relate to the Company, its subsidiaries or its management, are intended to identify forward-looking statements. The Company can give no assurance as to the correctness of such forwardlooking statements and investors are cautioned that any forward-looking statements are not guarantees of future performance. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements of the Company and its subsidiaries, or, as the case may be, the industry, to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company s present and future business strategies and the environment in which the Company and its subsidiaries are operating or will operate. Factors that could cause the Company s actual results, performance or achievements to materially differ from those in the forward-looking statements include, but are not limited to, those described in Section 2 Risk Factors and elsewhere in this Prospectus. Given the aforementioned uncertainties, readers are cautioned not to place undue reliance on any of these forward-looking statements. 18

20 4 CONVERSION OF DEBT TO EQUITY AND LISTING OF THE NEW SHARES 4.1 INTRODUCTION In connection with the interim financial report for the second quarter of 2013, Blom announced that the Company had reduced its operations over several years through sale and downscaling of several subsidiaries and that Blom intended to further reduce its geographic exposure and risk. Additionally, the Company was making an active effort to adapt its structure, cost base and product portfolio in order to improve the company's earning capacity. Since Blom's cashflows were not sufficient to service its existing debt financing Blom entered into a dialogue with a majority of the bondholders for the Company's bond loans. The bondholders approved an extension of the maturity of the loan ISIN NO until 26 September 2013 at the bondholder meeting of 26 June Additionally, the term of a short-term liquidity loan of EUR 2.5 million from Hexagon AB agreed on in December 2012 was extended until 24 September Following these extensions, the Company continued the dialogue with its principal creditors with a view to finding a final and permanent solution for the Company's debt that matured at the end of September On the basis of the above the Company went into negotiations with representatives of the bondholders with a view to restructure the Company s debt facilities. These discussions resulted in an agreement which included the following key elements (the Financial Restructuring ): NOK 36 million of the 15 per cent Blom ASA Senior Secured Bond Issue 2012/2013 with ISIN NO is converted into equity in Blom NOK 51 million of the FRN Blom ASA Senior Bond Issue 2011/2012 with ISIN NO is converted into equity in Blom NOK 11 million of the 2 per cent Blom ASA subordinated Convertible Callable Bond Issue 2012/2017 with ISIN NO is converted into equity in Blom The Financial Restructuring was approved by the three bondholders meetings held on 19 September 2013, while the Extraordinary General Meeting in Blom held on 27 September 2013 passed the following resolutions: (i) to reduce Blom s share capital by NOK 15,163, by way of a reduction of the nominal value of the Company's shares from NOK 0.50 to NOK (ii) to increase Blom s share capital by NOK 18,025, through the issuance of 360,500,000 New Shares by converting NOK 36,050,000 (principal, including capitalised interest, and accrued, uncapitalised interest for the period up to, and including, 27 September 2013) of the 15 per cent Blom ASA Senior Secured Bond Issue 2012/2013; and (iii) to increase Blom s share capital by NOK 25,261, through the issuance of 505,228,601 New Shares by converting NOK 50,522, (principal, including capitalised interest, and accrued, uncapitalised interest for the period up to, and including, 27 September 2013) of the FRN Blom ASA Senior Bond Issue 2011/2012; and (iv) to increase Blom s share capital by NOK 5,381, through the issuance of 107,638,559 New Shares by converting NOK 10,763, (principal, including capitalised interest, and accrued, uncapitalised interest for the period up to, and including, 27 September 2013) of the 2 per cent Blom ASA subordinated Convertible Callable Bond Issue 2012/2017; and (v) subsequent combination of shares, where 100 shares with a nominal value of NOK 0.05 shall be combined to one new share with a nominal value of NOK 5.00 Prior to the combination of shares set forth in (v) above, the Company issued 15 shares to Merckx AS at a subscription price of NOK 0.05 per share to facilitate the combination of shares. The conversion of debt into New Shares in Blom was carried out at a conversion price of NOK 0.10 per share. The conversion price is equal to the offer price of the mandatory offer on all the shares of Blom by Merckx AS announced 18 September The share capital increases described above were registered with the Norwegian Register of Business Enterprises on [ ] November