Ams wins approval to issue new shares to pay for Osram (UPDATED)

Austrian sensor company ams today took a big step toward getting the financial injection it needs to fund its acquisition of Osram, as shareholders approved management's proposal to issue new stock and use the proceeds to pay off a loan that is backing the deal.

The shareholder approval was not a certain outcome, even though, as LEDs Magazine reported, Premstaetten-based ams was confident it would happen.

Earlier this month, ams scheduled an urgent “Extraordinary General Meeting” (EGM) of shareholders for today to pass the measure, which required a simple majority of just over 50%. It sought to raise €1.65 billion ($1.82B) to help pay off part of a €4.4B ($4.95B)** bridge facility that three banks provided.

The company's confidence proved to be well-founded, as the rights issue won almost unanimous support.

“Today's Extraordinary General Meeting has approved the capital increase in form of an up to EUR 1,649m rights issue with an overwhelming majority of 99.6% of votes present,” ams said late in the day.

For the issue to succeed, the company will have to find buyers for the shares, which it is offering to existing shareholders. Those shareholders will also have the opportunity to sell their right to buy the shares, ams said.

The company said its management board has yet to establish the timing, price, and volume of the issue. It intends to avoid diluting the value of existing shares.

Ams is taking the share approach because it did not gain enough ownership of Munich-based Osram to control Osram's cash flow, which would have helped provide funds to pay the loan. In a roughly six-week campaign of buying Osram shares through the public market, it acquired 59.9% of Osram, which gave it governing control of the company but not cash control, for which it needed 75%.

The €1.65B rights issue is to be underwritten by two financial companies, HSBC Trinkaus & Burkhardt AG, and UBS AG, according to ams’ 78-page takeover document.

Ams’ re-financing plan for the remaining €2.76B ($3.08B) of the €4.4B bridge loan calls for issuing debt.

The entire €4.4B bridge facility was provided by three banks: Bank of America Merrill Lynch International Designated Activity Company based in Dublin; HSBC Bank plc based in London; and UBS Europe SE based in Frankfurt, according to the takeover document.

AMS intends to emphasize the photonics strength of Osram while de-emphasizing general illumination. Osram employee groups have opposed the ams acquisition.

MARK HALPER is a contributing editor for LEDs Magazine, and an energy, technology, and business journalist ([email protected]).

*Editor’s note: ams reports financials in USD while Osram reports in EUR; currency is provided in both EUR and USD for consistency and rounded up as appropriate except where directly quoted. Currency is provided at the latest valuation as of time of publication.

**Correction notice, Jul. 1, 2020: Earlier LEDs Magazine stories have reported the €4.4B as €3.97B, for reasons possibly related to how much of the loan had been drawn down. While we have been reporting the parts correctly at €2.76B and €1.65B, we have been misstating their sum. We apologize for the error, which we have now spotted in articles on May 14, Jan. 29, Jan. 24, Jan. 13, and Jan. 3.

Updated Jul 1, 2020.