TALLINN - Despite the recent controversy involving its shareholders, the Tallink Group went ahead with its initial public offering this week, offering 25 percent of its equity capital to Estonian and Finnish investors. The preliminary offer price range is 73.50 's 92.0 kroons (4.7 's 5.9 euros) per share. The final price will be decided by Tallink's supervisory council after the bookrunning process for institutional investors has finished.
Shares on offer include 26,500,000 new shares issued by Tallink Group and 7,590,909 existing shares that will be sold by existing owners, the company reported.
The offer price will be the same for all investors, including institutional and private.
The offer began on Nov. 21 and ends Dec. 1. The company said it would announce the results on Dec. 2.
IPO managers said that if investor interest turned out to be significantly higher than originally expected, managers may raise the upper margin of the offer range.
However, Henrik Igasta, head of corporate finance at Suprema Securities, a co-lead manager, said there was little likelihood that the offer price would be raised, as potential over-subscription has been taken into account.
The Tallinn Stock Exchange has decided to list the shares conditionally on the main list of the exchange. Trading on Tallink stock is expected to begin about Dec. 9, the company reported.
The Tallink Group said it expected net proceeds of 2.09 billion kroons (132 million euros). The company based its calculation of the net profit on the average value of the offer price range, 73.5 to 92 kroons.
Tallink is planning to use capital raised to repay debts and bolster financial resources so that it can implement its investment plan and renew its fleet.
As a result of the IPO, the holding of Infortar, the current majority owner, will fall from 55.53 percent to 44.8 percent (if it does not sell own stock) or as low as 36.7 percent (36.7 percent).
Other than Infortar, the largest shareholders are Enn Pant, Kalev Jarvelill and Ain Hanschmidt.
Hanschmidt, former CEO of Uhispank, a leading Estonian bank, came under intense scrutiny in recent weeks after it was reported that he obtained a large stake in a small firm that owns a significant stake in Tallink. He apparently bought the stake in an option deal several years ago while still at Uhispank, which immediately gave rise to suspicions of ethical violations.
Tallink's sales grew last year by 19 percent to 4.1 billion kroons. Operating profit increased more than threefold to 629 million kroons and net profit by 51 percent to 472 million kroons.