IPO M&T 1997, as on the START market of the Prague Stock Exchange – Case study
Czech society M&T 1997, as (originally Material & Technology sro), a manufacturer of door handles and fittings from Dobruška, has decided to enter the START market of the Prague Stock Exchange through a public offering of shares.
The offer of M&T shares was made by a 100% shareholder, who placed a total of investors 35% of the company’s shares.
The funds obtained from the sale of shares in the amount of CZK 112 million were indirectly used for early repayment on the M&T listed bond exchange in the amount of CZK 100 million. This procedure occurred reducing the cost of external financing.
The issue of shares was doubly rewritten as part of the public offering on the START BCPP market. Thus, investors’ orders were reduced. The public offering of shares resulted in the great success of the main shareholder and issuer, which in this way obtained the expected capital for the further development of the company.
The following activities were provided for the issuer by the law firm SCHEJBAL & PARTNERS:
1. Transformation of legal form into as creation of statutes
In the first step, the legal form of the company was changed from a limited liability company to a joint stock company. Along with the change in the legal form of the company, there was a change in business companies at M&T 1997, as ke capital increase. The share capital increased to CZK 128 million, based on the underlying expert opinion for the conversion.
To change the legal form of the company it was necessary to develop transformation project, which included, among other things, the wording of the new statutes compiled by us. The articles of association included the book-entry of shares and the decisive days for participation in general meetings and for performance from shares.
2. EU growth prospectus for public offering of shares
The EU Prospectus for Growth (https://akschejbal.cz/unijni-dluhopisovy-prospekt-pro-rust) was prepared in accordance with the Regulation on the Prospectus for the purposes of the public offering of M&T shares.
We have provided for the issuer turnkey stock prospectus processing and then we got him represented in administrative proceedings before the CNB. Due to the experience of our law firm, he was a joint-stock company prospectusapprovedandvery short time.
The approval of the prospectus was a necessary precondition for the launch of a public offer on the START market.
3. Legal due diligence before entering the stock exchange
Before entering the stock exchange, the issuer had to go through legal due diligence. The legal DD was performed in accordance with the stock exchange rule of the START market. The output was a report for the issuer, which described the audited facts and legal risks. The report forms one of the annexes to the application for admission to the stock exchange.
4. Redemption of M&T bonds and their delisting from the PSE
Based on the issuer’s request, we processed it legal analysis for the procedure in case of early redemption of bonds of M&T.
We have now secured all the necessary legal steps to withdraw the listed M&T bonds from the main PSE market.
5. Book-entry of shares
We represented the issuer at book-entry of shares in the Central Securities Depository. At CDCP, we communicated the settings, completion and signature of all documents. Based on them, the shares were book-entry, which is a necessary step for their admission to the stock exchange.
6. Admission of shares to the stock exchange
We prepared for the issuer applications and annexes related to the entry of shares on the START BCPP market and the RM-S market, organized by RM-SYSTÉM, the Czech Stock Exchange.
On the basis of these documents, the issuer applied for admission to the said markets and its shares were admitted there.
7. Final
On June 21, 2022, the company successfully subscribed for its shares as part of a public offering. The subscription price of the shares was CZK 30,000,000 per share, ie in the middle of the price range of CZK 25,000 – 35,000. The company was thus valued by investors at CZK 384 millionkoruna at a multiple of net profit P / E 12.7 and a multiple of operating profit EBITDA 9.1.
On June 27, 2022, the shares began trading successfully.
8. Conclusion
The START BCPP market is an ideal place for small and medium-sized businesses to enter firefighters:
- which require capital for their further development or refinancing of their liabilities;
- incoming owners are considering a partial exit, but want to continue to operate in the company.
SCHEJBAL & PARTNERS
We provide legal services specializing in corporate law, securities and financial services. We can set up a payment institution, a securities dealer, a non-bank loan provider, an investment company or a fund, a so-called turnkey CNB license. We provide issuers with public and non-public issues of securities, including a prospectus. Comprehensive legal support in the field of corporate law.
More information at: www.akschejbal.cz