Daring and winning in uncertain times

When the pandemic struck, listed companies were put to the test. Equity markets were part of the solution, both for distressed companies and for those ready to take the plunge when the outlook was gloomiest. Thereafter everything turned green.

– The year got off to an ordinary start with high activity in January and February. Covid-19 then made its presence known in March and turned markets upside down. Transactions were put on the backburner or deferred. The focus of our clients and ourselves was on preserving value and providing markets with correct information in relation to the prevailing situation, potential effects and the future outlook, explains Lars Knem Christie, BAHR Partner. By the time the pandemic surged ahead, many companies had already published their dividend plans and updated short-term and long-term market guidance. Covid-19 forced market players back to the drawing board. The questions were piling up. Will our revenues disappear? Will we be in breach of loan covenants? Should we withhold dividends? How do we conduct our Shareholders’ Meeting when people are not permitted to get together?

– All of this also coincided with the completion of annual reports. The corona virus raised new and important questions just as this process was drawing to a close, for example in relation to risk factors and the future outlook. The situation evolved rapidly, and swift action was of the essence, adds

Camilla Iversen, BAHR Attorney. – It was a situation of unprecedented uncertainty and complexity. No one had empirical data or models that took account of the effects of a pandemic. The situation of working from outside the office also became an X factor. There is a reason why there is a statutory requirement for corporate bodies to get together to discuss major decisions. Both we and our clients

Attorney Camilla Iversen and Partner Lars Knem Christie.

were quickly up to speed on digital interaction, says Christie.

Norwegian was to be saved One of the major instructions for Christie, Iversen and their BAHR colleagues was the restructuring of the airline Norwegian.

– This is definitely one of the cases that will stay with us. Norwegian is a business that evokes strong feelings in many people, and a brand name with universal recognition. The company has tens of thousands of social media followers, and there was intense interest. We experienced massive goodwill from everyone involved, and there was amazing support for the equity issue. The target was to raise NOK 400 million in new equity, and the book was closed at NOK 3 billion. One should not underestimate the value of the goodwill developed by the company among stakeholders over many years, says Christie.

Camilla Iversen highlights the importance of providing existing and potential investors with comprehensive and relevant information, especially in a situation with many retail investors.

– The company did after all have about 60,000 shareholders, and there were large trading volumes and major price fluctuations in the share. Correct and reliable information to the shareholders was of decisive importance to the successful completion of this process. Some companies also took the plunge in the middle of the pandemic. With a strong belief in their own project and, not least, in the future.

– Salmon Evolution chose to go ahead with a private placement during the most turbulent period in March. They had the courage to look beyond the horizon, although uncertainty was at record levels. Now, after having completed another private placement in August, the company is listed on Merkur Market. An incredibly exciting company that we look forward to hearing more from, says Christie.

One of Norway’s largest transactions ever It would also take more than a pandemic to put paid to the divestment of Bay’s classifieds business. Schibsted and Adevinta participated in the process, which ended up with Adevinta acquiring eBay Classifieds Group in an agreement valued at USD 9.2 billion. This transaction was one of the largest ever in Norway.

BAHR assisted both Schibsted and Adevinta in this process.

– Completing a process like this during such a period of uncertainty is really quite sporting. It suggests that a bit of guts and independence of mind is a recipe for success, says Christie, before adding the following observation:

– The case is also fascinating inasmuch as it is a Norwegian acquisition of a US business. We are used to the reverse, but this is a transaction in which a Norwegian company captured the choiciest part of a US blue chip company in a competitive tender. An exciting development!

– The timing does in many ways also reflect the trend we observed this spring. A surprisingly short time after everything came to a standstill in March, we noted that market players were starting to get restless. We registered a distinct change of gear in June, and the period after that again saw very high activity and appetite for transactions and IPOs, says Iversen. Headed for Merkur at rocket speed The autumn of 2020 was coloured green; especially at Merkur Market. – ESG profile and substance have become truly important to investors, but this is not in itself unique to Norway. We have, however, come to appreciate the value of Merkur Market, which suddenly shot to prominence, especially when several major companies opted for a Merkur Market listing, including no less than three companies from the Aker system, says Christie. Merkur Market has become a highly attractive marketplace. Companies seeking a listing will typically conduct a private placement with professional investors before filing the listing application. Many of these companies are in a development and growth phase, and will be raising more money. This makes it a distinct advantage to have a shareholder base comprised of professional investors with financial muscle, rather than a broad shareholder base with many small shareholders.

– These companies benefit from a professional shareholder base, but those shareholders also have high corporate governance and transparency expectations. The companies often have limited experience with the type of corporate governance required for listed companies, thereby adding to our responsibilities as advisors – both during the process and in the form of follow-up after the first listing day. We cannot simply help a company get listed, refer it to the stock exchange regulations and bid it farewell. We need to make more of a commitment

than that, says Iversen. – A listing on the main list will typically take three to four months to complete. This time is spent on quality assurance of the product distributed to potential investors. A Merkur process lasts just over a month. There is no let-up. As advisors, we focus on hurrying slowly. This is of course out of consideration for the companies seeking a listing, but also out of consideration for investors. Right now, this marketplace represents a major competitive advantage for Norway over listings in other countries. We need to maintain this competitive advantage, concludes Christie.

From the opening bell ceremony when Aker Offshore Wind was listed on Merkur Market. The company’s CEO, Astrid Skarheim Onsum, is ringing the bell. Øivind Amundsen, CEO of the Oslo Stock Exchange, on the far left.

Photo: Terje Pedersen/NTB

From the listing of Aker Carbon Capture on Merkur Market. Aker Carbon Capture's CEO Valborg Lundegaard starts trading by ringing the traditional opening bell. Øivind Amundsen, CEO of the Oslo Stock Exchange (far left side of photo) keeps an eye on proceedings. Board Chair Henrik Madsen is second from the left.

A Merkur process lasts just over a month. There is no let-up. As advisors, we focus on hurrying slowly