Position regarding the invitation to subscribe for the sale of shares of PEPEES S.A.
The Board of Directors of PEPEES S.A. with its registered office in Łomża hereby presents its position regarding the invitation to subscribe for the sale of shares of PEPEES S.A. announced on 21 September 2016 by EPSILON Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych with its registered office in Warsaw, pursuant to Article 72 Clause 1 item 1 of the Act of 29 July 2005 on the public offer and the conditions for introducing financial instruments to an organised trading system, and on public companies.
POSITION OF THE BOARD OF DIRECTORS REGARDING THE INVITATION TO SUBSCRIBE FOR THE SALE OF THE SHARES OF PEPEES S.A.
The Board of Directors of PEPEES S.A. with its registered office in Łomża ('the Company') hereby publishes its position regarding the invitation to subscribe for the sale of the Company’s shares ('Shares') announced on 21 September 2016 ('Invitation') by EPSILON Fundusz Inwestycyjny Zamknięty Aktywów Niepublicznych with its registered office in Warsaw ('Inviting Party' or 'EPSILON'), pursuant to Article 72 Clause 1 item 1 of the Act of 29 July 2005 on the public offer and the conditions for introducing financial instruments to an organised trading system, and on public companies ('Offer Act'). Despite the fact that the obligation to publish a position concerning the announced invitation resulting from Article 80 of the Offer Act applies only to invitations referred to in Article 73 or Article 74 of the Offer Act, having in mind the interests of the Shareholders, the Company’s Board of Directors decided to publish their position relating to the Invitation by analogy to Article 80 of the Offer Act.
According to the Invitation, EPSILON intends to acquire 24,951,269 (twenty four million nine hundred and fifty one thousand two hundred and sixty nine) Shares, representing 26.26 % of the Company’s share capital and corresponding to 24,951,269 (twenty four million nine hundred and fifty one thousand two hundred and sixty nine) votes at the Company’s General Meeting of Shareholders constituting 26.26 % of the total number of votes, for the price of PLN 0.73 (seventy three grosz) per Share.
As a result of the Invitation, the Inviting Party intends to hold 33 % of the total number of votes at the Company’s General Meeting of Shareholders, i.e. 31,350,000 (thirty one million three hundred and fifty thousand) Shares of the Company.
I. Grounds for the position of the Board of Directors:
In order to express their position, the Company’s Board of Directors assessed the following documents and circumstances:
• the information provided by EPSILON in the Invitation;
• the review of the market prices of the Company’s shares in the period of six months preceding the announcement of the Invitation, in comparison to the contents of the Invitation;
• the Company’s current report No. 10/2016 “The Annual General Meeting of Shareholders held on 19 May 2016 — adopted resolutions” with the appendix;
• the Company’s financial documents;
• the review and assessment of publicly available information on the activities and financial situation;
• economic and actual factors affecting the Company’s operations and results;
• the opinion of Rubicon Partners Corporate Finance S.A. on financial conditions of the Invitation (attached to this position).
For the purpose of preparing this position, subject to any review of the information and data referred to above, the Board of Directors have not taken any measures to obtain, collect or analyse any data not originating from the Company. The Board of Directors is not responsible for the accuracy, reliability, completeness or adequacy of the information originating from external sources of information and data that have been used for the purpose of preparing this position.
II. The Board of Directors’ position presented below is subject to the following conditions:
1. In connection with the preparation of this position, neither the Company nor the persons signing this position on behalf of the Company, have taken any special measures to search for, collect, systematise or verify the information not originating from the Company. None of such persons have hired any other entities to take such or similar measures for them.
2. Except for the information concerning the Company, the Company and the persons signing this position of the Board of Directors concerning the Invitation, are not responsible for the accuracy, completeness or adequacy of the information on the basis of which this position of the Board of Directors concerning the Invitation has been formulated.
3. The persons signing this position of the Board of Directors concerning the Invitation are not in possession of any unpublished confidential information within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 14 April 2014 on market abuse.
4. This position of the Board of Directors does not constitute any recommendation regarding the purchase or sale of financial instruments referred to in Article 42 of the Act of 29 July 2005 on trading in financial instruments. Each investor taking any investment decision in relation to the following position of the Board of Directors is obliged to assess, on their own, the investment risk associated with the sale or acquisition of the Shares, on the basis of the entire set of the information made available by the Company, as part of satisfying the Company’s disclosure obligations, and also to obtain individual advice or recommendation of authorised advisers to the extent necessary to take an appropriate decision. Each of the Company’s shareholders should make their own assessment of the conditions of the Invitation, and obtain advice from their own advisers with appropriate qualifications, in order to decide whether to respond to the Invitation. The decision to sell the Company’s shares in response to the Invitation should be an independent decision of each shareholder of the Company.
III. The impact of the Invitation on the Company’s interest, including the employment in the Company, strategic plans of EPSILON concerning the Company and their impact on the employment and location of the Company’s business.
When assessing the impact of the Invitation on the Company’s interests and strategic plans of the Inviting Party in relation to the Company, the Company’s Board of Directors have paid attention to the fundamental contradiction between the declarations of EPSILON presented in the Invitation: “The Inviting Party perceives the investment in the Shares as a strategic and long-term investment. The Inviting Party’s intention is to have an impact on the strategic development of the Company and support it in the process of raising additional capital. Raised capital, originating from external sources and generated by the Company, may be used for investments in organic growth, for acquisitions and investments in production capacities,” and the attitude presented at the Annual General Meeting of Shareholders held on 19 May 2016 (“AGM 2016”), where EPSILON voted against and objected to the adoption of, among others, Resolution No. 13 on the allocation of the net profit of Przedsiębiorstwo Przemysłu Spożywczego Pepees S.A. for the financial year 2015, according to which the profit for the financial year 2015 amounting to PLN 5,916,739.03 was transferred to reserve capital to be allocated for investments. It should be emphasised that EPSILON challenged all substantive resolutions adopted at AGM 2016. In addition, EPSILON did not make any attempt to contact the Company’s Board of Directors to discuss their plans concerning the Company or to present their business vision for the Company.
As a result, the Company’s Board of Directors is of the opinion that the Invitation may have negative impact on the Company’s interests and, thus, on the interests of its shareholders.
EPSILON’s intentions towards the Company, described briefly and laconically in the Invitation, are not sufficient to assess the impact of the Invitation on the employment and location of the Company’s business.
IV. Determining whether the price proposed in the Invitation corresponds to the fair value of the Company.
Following a detailed analysis of the contents of the Invitation, bearing in mind the Company’s financial condition and the possibility of its further development in the light of the current market situation, and having read the opinion on the fair value of the Shares prepared by a third-party company, the Board of Directors confirms that, in the opinion of the Board of Directors, the price of the Shares specified in the Invitation of PLN 0.73 does not correspond to the fair value of the Shares. The opinion prepared by an independent entity attached to this position states that the price offered by the Inviting Party in the Invitation is substantially below the estimated range of the fair value of a single Share.
Signatures of the Company’s representatives
President of the Board of Directors Wojciech Faszczewski 2016-10-07