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International Internet Magazine. Baltic States news & analytics Wednesday, 21.08.2019, 21:29

Novalpina files application for squeeze-out of shareholders in course of merger

BC, Tallinn, 06.08.2018.Print version
After a court had barred the listed casino group Olympic Entertainment Group (OEG) from increasing its share capital in the interest of Novalpina Capital, which has bid for all shares in OEG, Novalpina filed an application for merging Olympic with their subsidiary, which would mean a buyout of minority holdings by means of a squeeze-out procedure, report LETA/BNS.

The management board of OEG on Monday notified the stock exchange of the receipt of an application from its shareholder Odyssey Europe AS for the takeover of shares belonging to the minority shareholders of OEG in return for a monetary compensation of 1.40 euros per share in connection with the planned merger of OEG as transferring company with and into the majority shareholder as acquiring company.

The offered price is lower than the price of 1.9 euros previously offered to minority shareholders in the voluntary takeover offer.

In accordance with the so-called squeeze-out provision set out in the Commerial Code, if the acquiring public limited company holds at least nine-tenths of the share capital of the public limited company being acquired, the general meeting of the public limited company being acquired, on the application of the majority shareholder, may decide within three months as of the entry into the merger agreement on the takeover of the shares held by the minority shareholders of the public limited company being acquired by the majority shareholder.

According to the information available on the website of Nasdaq Tallinn, Odyssey Europe controls 89.46 percent of the shares of OEG. The press release by OEG however states that "the Majority Shareholder holds 136,630,452 shares in OEG representing more than 9/10 of the share capital of OEG."

The difference between the number of shares mentioned as held by Odyssey Europe AS in the press release of OEG, 136,630,452, and the 135,788,459 shares belonging to the same company in accordance with the share register is 841,993, which is equal to the number of shares belonging to a client account of Nordea Bank in accordance with the share register.

It also says that the application was accompanied in accordance with the provisions of the Estonian Commercial Code with the takeover report prepared by the majority shareholder and the auditor's report prepared by an independent third auditor.

"The management board of OEG is currently in the process of preparing the extraordinary general meeting of shareholders of OEG to decide on the squeeze-out in the course of the merger. The notice calling for an extraordinary general meeting of shareholders together with other documents required under the law will be published shortly," the notice to the stock exchange said.

The merger agreement between OEG as transferring company and the majority shareholder as acquiring company is planned to be concluded on Aug. 6, 2018, the notice added.

OEG informed the stock exchange on Friday evening that the Harju County Court by a ruling dated Aug. 3, 2018 banned increasing the share capital of OEG on the basis of a decision adopted at a general meeting of shareholders on June 29, 2018 and registration of share capital increases of OEG on the basis of decisions of the supervisory board. According to the court, the injunction was decided on the basis of an action from AS Trigon Asset Management against OEG seeking to establish the nullity of the resolutions of the general meeting of shareholders or alternatively to revoke the resolutions.

The general meeting of OEG decided at the end of June to change the company's articles of association in order for the supervisory board to have the right to increase the share capital of the company in three years by up to 2.8 mln euros against contributions by issuing up to seven million new ordinary shares of the company to the members of the management board or supervisory board or to any other directors or employees of the company or its direct or indirect subsidiaries.

The general meeting also gave the supervisory board the right to increase the share capital of the company by up to 10 mln euros against contributions in kind by issuing up to 25 mln new ordinary shares with the goal of acquiring the company, a business division or a participation in a business or other assets, in each case under exclusion of the pre-emptive right of the shareholders to subscribe to the new shares.

The Listing and Surveillance Committee of the Tallinn stock exchange on May 31 did not approve an application by OEG to delist its shares before the takeover of the shares. Considering the structure of shareholders of the company and the size of their total stake, as well as the planned transactions, the stock exchange is of the opinion that investors' interests can be considered sufficiently protected if investors are adequately informed and if they have the opportunity to turn to court for the protection of their rights, the stock exchange said at the time.

OEG said it would contest the decision of the stock exchange.

Delisting is necessary in connection with the takeover of OEG by the investment company Novalpina Capital, which intends to merge OEG with Odyssey Europe, a company established for the takeover of OEG.

Several minority shareholders, who consider the price of 1.9 euros per share offered for OEG shares to be too low, have said they are against the delisting and want to receive 2.3-2.5 euros per share. The minority shareholders have also previously promised to use all legitimate means to prevent the delisting.

OEG provides gaming services in six EU member states, including the Baltic countries Estonia, Latvia and Lithuania, and Slovakia, Italy and Malta. The company was founded by Armin Karu and Jaan Korpusov in 1993. As at Dec. 31, 2017, OEG owned altogether 115 casinos and 27 betting points, including 24 casinos in Estonia, 53 in Latvia, 17 in Lithuania, six in Slovakia, 14 in Italy and one in Malta. OEG employs a workforce of approximately 3,000 people.

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