Embracer Group announces intention to carry out a directed share issue

The Company announced initiatives and a comprehensive restructuring program on June 13, 2023, where a net debt target of SEK 10 billion at the end of FY 2023/24 was communicated. The Company intends to use the net proceeds received from the Share Issue to further strengthen the Company's financial position, improving financing costs and operational flexibility on top of the announced initiatives. Following the completion of the Share Issue, the Company will revise the net debt target to SEK 8 billion at the end of FY 2023/24, in line with the mid-point of its adjusted EBIT guidance of SEK 7-9 billion, hence also meeting the net debt target of 1.0x adjusted EBIT on a 12-month forward-looking basis.

"The operational and financial performance of the business remains on track according to the management expectations driven by a strong performance of the Dead Island 2 during the first quarter of 2023. The execution of the restructuring program communicated on June 13, 2023 goes according to plan. The company hereby reiterates its full year Adjusted EBIT forecast of SEK 7-9 billion."
Lars Wingefors, Group CEO

The subscription price in the Share Issue will be determined through an accelerated bookbuilding procedure, which will commence immediately after publication of this announcement and end before the commencement of trading on Nasdaq Stockholm on July 06, 2023. The bookbuilding procedure may, at the discretion of the Company, be shortened or extended and may be cancelled at any time. The Company will communicate the result of the Share Issue in a press release following the completion of the bookbuilding procedure.

The Board of Directors has carefully considered the possibility to raise capital through a rights issue and makes the assessment that there are currently several reasons why it is more beneficial for the shareholders to raise capital through a directed share issue. A rights issue in the current market would entail a risk that the Company cannot provide for its capital needs while maintaining its desired optimal capital structure. This is particularly key in light of the restructuring program. A rights issue would also expose the Company's shareholders to a risk of a significant depressed share price, especially in this market with very high discounts in rights issues and expensive guarantee compensation being paid to guarantors. To that end, since the Share Issue (i) may provide the Company with new institutional owners, (ii) will provide a buffer in addition to the already announced initiatives as part of the Company's comprehensive restructuring program while giving additional flexibility in carrying out, and thereby improving the outcome of, the restructuring program, and (iii) will be conducted in a more time efficient way and at a lower cost and with less complexity than a rights issue, the Board of Directors' overall assessment is that the reasons for carrying out the Share Issue with deviation from the shareholders' preferential right in a clear way and with sufficient strength overweigh the reasons that motivate the main rule that share issues are to be made with preferential rights for the shareholders. Therefore, the Board of Directors considers that a share issue with deviation from the shareholders' preferential rights is in the best interest of the Company and all shareholders and thereby the most suitable alternative. Since the subscription price in the Share Issue will be determined through a bookbuilding procedure the Board of Directors assesses that the subscription price will reflect market conditions and demand.

In connection with the Share Issue, the Company has agreed, with certain exceptions and under condition that the Share Issue is carried out, not to issue additional shares for a period of 90 calendar days after the settlement date. In addition, Lars Wingefors AB has agreed, with certain exceptions and under condition that the Share Issue is carried out, not to sell any shares in Embracer Group for a period of 180 calendar days after the settlement date of the Share Issue.

The Company has 66,798,274 A shares and 1,192,443,893 B shares outstanding.

Advisers

Goldman Sachs Bank Europe SE, Nordea Bank Abp, filial i Sverige and Skandinaviska Enskilda Banken AB are acting as Global Coordinators and Joint Bookrunners and Swedbank AB (publ) (jointly referred to as "Managers") is acting as Joint Bookrunner. Baker & McKenzie Advokatbyrå KB acts as legal counsel to the Company. Gernandt & Danielsson Advokatbyrå KB acts as legal counsel to the Managers in connection with the Share Issue.

 

About Embracer Group

Embracer Group is a global group of creative and entrepreneurial businesses in PC, console, mobile and board games and other related media. The Group has an extensive catalog of over 850 owned or controlled franchises.

With its head office based in Karlstad, Sweden, Embracer Group has a global presence through its twelve operative groups: THQ Nordic, PLAION, Coffee Stain, Amplifier Game Invest, Saber Interactive, DECA Games, Gearbox Entertainment, Easybrain, Asmodee, Dark Horse, Freemode and Crystal Dynamics - Eidos. The Group has 138 internal game development studios and is engaging more than 16,600 employees in more than 40 countries.

Embracer Group's shares are publicly listed on Nasdaq Main Market Stockholm under the ticker EMBRAC B.

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[1] Lars Wingefors AB is owned by Lars Wingefors, founder and CEO of Embracer, Erik Stenberg, Mikael Brodén, Klemens Kreuzer and Reinhard Pollice, co-founders of Embracer.