Banks, Estonia, Financial Services, Loan, Transport

"Tallink does not consider it right to discuss its management decisions or the content of various offers made to it in front of the public. For the first time in the history of our operations, one lender -- LHV, this time on April 16 at 4:49 p.m. -- decided to announce via the LETA/BNS news agency that it had made a financing offer to Tallink and thus start a discussion on the topic of the offer in the Estonian media and public. Prior to that, Tallink Grupp AS had given a negative response to the offer in writing at 4:31 p.m. on the same day," the group said.

According to the shipper, Tallink has held loan negotiations with several partners during the crisis, but, as is appropriate for a listed company, these negotiations have been confidential. The group also planned to announce any decisions in accordance with the stock exchange rules and normal business practices.

"The public debate on the loan offer was not planned by Tallink Grupp, but as the topic has now been thoroughly covered in the media by mostly not correctly highlighting all facts related to the offer and thus damaging Tallink Grupp's reputation, we consider the only right option to be to disclose the terms of the offer made and comment on them," Tallink said in its statement.

"In interviews given on Friday, April 17, both LHV Group supervisory board chair Rain Lohmus and LHV Group CEO Madis Toomsalu disclosed details of the offers made to our group, but this was done partially and, at times, factually incorrectly," Tallink said. "Due to the disclosure of inaccurate information to the public, AS Tallink Grupp has decided to explain the content of the offer made, which was signed by Madis Toomsalu on behalf of LHV Varahaldus and LHV Pank and by Stefan Kowski on behalf of Novalpina Capital and forwarded to Tallink by Novalpina Capital representative Kristjan Piilmann," the shipper added.

According to Tallink Grupp, the reporter of the "Aktuaalne kaamera" evening news program of the public ETV television aired on Friday evening said that according to Rain Lohmus, this was an entirely reasonable loan offer with an interest between 5% and 10 percent. The same claim was made by Rain Lohmus on the "Uudis+" radio program of the Vikerraadio radio channel on the same day. Also on the same day, Lohmus claimed in interviews that, after the conversion of the loan into shares, the participation of the offerers would be smaller than the participation of the current largest shareholder of AS Tallink Grupp. According to the shipper, this claim is not true and is also not in line with the offer made.

Tallink added that LHV Group CEO Madis Toomsalu claimed in interviews given to various media channels that this is essentially an unsecured loan -- the risk level of such loans is higher, especially given their non-depreciation and substantive subordination to other loans.

According to the shipper, calling the offer made an unsecured loan is also not true and is not in line with the offer made.

Based on the above, the shipping group has disclosed the main points of the loan offer of LHV Varahaldus, LHV Pank and Novalpina Capital together with the explanations of Tallink Grupp.

More specifically, the offers was made for a loan sum of up to 200 million euros with a deadline of up to four years. The loan could have been repaid both at the time of the deadline as well as earlier -- starting from one year after the conclusion of the loan agreement. However, on termination earlier than four years, a 2 percent surcharge would have been applied, which, for 200 mln euros, would have meant four million euros. The loan interest rate would have been 6% per annum and an additional 2 percent per annum for the capitalized part.

For a loan of 200 mln euros, this would mean at least 16 mln euros a year and a total of more than 64 mln euros over four years. The specification of "more than" is due to the cumulative change in capitalized interest expense.

The 3.5% fee for concluding the agreement would have totaled 7 mln euros for a 200 mln euro loan.

Option to convert the main part of the loan into shares, with the protection of dissolution of the weight of the security in case of additional capital investments, at the share price on the day of making the offer or concluding the agreement -10%.

On the day of making the offer, the closing price of AS Tallink Grupp was 0.666 euros on Nasdaq Tallinn.

"-10 percent would mean a price of 0.5994 euros. With the conversion of 200 mln euros, this means 333,667,000 ordinary shares. Tallink Grupp currently has 669,882,040 shares listed on the stock exchange," the shipper said.

After the exercise of the share option, the offerers' shareholding would have been 33.2%.

According to public data, as of Friday, LHV pension funds hold 9,904,158 Tallink Grupp shares. In total, the share ownership would be 34.2% if the option was exercised. The share ownership of the largest shareholder of the group, AS Infortar, would be 26.2% after the above.

"Possibility to exercise the option and convert the loan into shares at the discretion of the lender. The possibility to exercise the option at the request of the fund, as part of the offer, was confirmed by chairman of the supervisory board of AS LHV Group Rain Lohmus on the Vikerraadio 'Uudis+' program of the Estonian public broadcaster on April 17," Tallink said in its statement.

As guarantee, first-rank pledges would have applied to all of Tallink's existing tangible assets. Additional guarantees would have been specified in negotiations.

The volume of Tallink Grupp's assets is approximately 1.5 bn euros. In addition, the offer refers to the need for additional guarantees, the shipper said.

Proportional representation on the supervisory board with the right to protection of minority would have meant a right of veto in deciding certain issues in the group's supervisory board.

According to Tallink Grupp, LHV's offer does not protect the strategic interests of the shipper, more than 11,000 shareholders, approximately 7,300 employees, 6,800 cooperation partners or their employees and the Estonian state. Also, compliance with the conditions set by LHV and Novalpina would have required the consent of certain creditors of the company on the basis of previously concluded agreements, which the two-day deadline given by LHV and Novalpina for acceptance of the conditions would not have allowed.

Tallink Grupp emphasized that it does not consider it a good practice to disclose these terms and conditions, but an unprecedented step had to be taken to avoid misunderstandings due to false allegations that spread after the publication of LHV's financing proposal in the media and incompletely published terms and conditions.