I.A. HEDIN BIL AKTIEBOLAG (PUBL) Prospectus

Transcription

1 I.A. HEDIN BIL AKTIEBOLAG (PUBL) Prospectus Senior Unsecured Callable Floating Rate Bonds 2017/2022 UP TO SEK 2,000,000,000 ISIN: SE Issuing Agent and Sole Bookrunner DNB Markets 30 November 2017

2 IMPORTANT INFORMATION This prospectus (the Prospectus ) has been prepared by I.A. Hedin Bil Aktiebolag (publ), corporate registration number ( Hedin Bil or the Company ), in relation to the application for listing of the up to SEK 2,000,000,000 senior unsecured callable floating rate bonds (the Bonds ) on Nasdaq Stockholm Aktiebolag, corporate registration number , ( Nasdaq Stockholm ). DNB Bank ASA, Sweden Branch, corporate registration number , has acted as financial advisor to the Company in relation to the listing of the Bonds on Nasdaq Stockholm. This Prospectus has been prepared in accordance with the rules and regulations of the Swedish Financial Instruments Trading Act (Sw. lag (1991:980) om handel med finansiella instrument) and Commission Regulation (EC) no 809/2004 of 29 April 2004 implementing Directive 2003/71/EC of the European Parliament and of the Council. This Prospectus has been approved by and registered with the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) in accordance with the provisions in Chapter 2, Section 25 and 26 of the Swedish Financial Instruments Trading Act. It should be noted that such approval and such registration does not constitute any guarantee from the Swedish Financial Supervisory Authority that the information in this Prospectus is accurate or complete. This Prospectus is not an offer for sale or a solicitation of an offer to purchase the Bonds in any jurisdiction. It has been prepared solely for the purpose of listing the Bonds on Nasdaq Stockholm. This Prospectus may not be distributed in any country where such distribution or disposal requires additional prospectus, registration or additional measures or is contrary to the rules and regulations in such country. Persons into whose possession this Prospectus comes or persons who acquire the Bonds are therefore required to inform themselves about, and to observe, such restrictions. This Prospectus will be available at the Swedish Financial Supervisory Authority's website ( and the Company's website ( Paper copies may be obtained from the Company. This Prospectus may contain forward-looking statements and assumptions regarding future market conditions, operations and results. Such forward-looking statements and information are based on the beliefs of the Company's management or are assumptions based on information available to the Company or its subsidiaries (the Group ). The words consider, intends, deems, expects, anticipates, plans and similar expressions indicate some of these forward-looking statements. Other such statements may be identified from the context. Any forward-looking statements in this Prospectus involve known and unknown risks, uncertainties and other factors which may cause the actual results, performances or achievements of the Group to be materially different from any future remits, performances or achievements expressed or implied by such forward-looking statements. Further, such forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future. Although the Company believes that the forecasts of or indications of future results, performances and achievements are based on reasonable assumptions and expectations, they involve uncertainties and are subject to certain risks, the occurrence of which could cause actual results to differ materially or completely from those predicted in the forward-looking statements and from past results, performances or achievements. Further, actual events and financial outcomes may differ significantly from what is described in such statements as a result of the materialisation of risks and other factors affecting the Company's operations. Such factors of a significant nature are mentioned in the section Risk Factors. This Prospectus shall be read together with all documents which have been incorporated by reference (see Documents incorporated by reference and documents available for inspection ) and any supplements to this Prospectus. Unless otherwise explicitly stated, no information contained in this Prospectus has been audited or reviewed by auditors. This Prospectus has been produced in an English only and is governed by Swedish law and the courts of Sweden have exclusive jurisdiction to settle any dispute arising out of or in connection with this Prospectus. The District Court of Stockholm (Sw. Stockholms tingsrätt) shall be the court of first instance. This Prospectus may not be distributed in any jurisdiction where such distribution would require additional prospectus, registration or other measures than those required by Swedish law or otherwise would conflict with regulations in such jurisdiction. Holders of the Prospectus or Bondholders must therefore inform themselves about, and observe, any such restrictions. The Bonds have not been and will not be registered under the U.S. Securities Act of 1933 as applicable at any time, or under any U.S. state securities legislation. Furthermore, the Company has not registered the Bonds under the securities legislation of any other country. The Bondholder may be subject to purchase or transfer restrictions with regards to the Bonds, as applicable, under local laws to which a Bondholder may be subject. 2

3 TABLE OF CONTENTS RISK FACTORS... 4 RISKS RELATED TO THE COMPANY... 4 RISKS RELATED TO THE BONDS STATEMENT OF RESPONSIBILITY INFORMATION REGARDING THE BOND ISSUE INFORMATION REGARDING HEDIN BIL INTRODUCTION BUSINESS OVERVIEW ORGANISATIONAL STRUCTURE CORPORATE GOVERNANCE LEGAL STRUCTURE SHARE CAPITAL, SHARES AND OWNERSHIP STRUCTURE FINANCIAL INFORMATION HISTORICAL FINANCIAL INFORMATION AUDITING OF THE HISTORICAL FINANCIAL INFORMATION SIGNIFICANT CHANGES AND TRENDS LEGAL CONSIDERATIONS AND OTHER INFORMATION MATERIAL AGREEMENTS DISPUTES INTERESTS RELATED TO THE BOND ISSUE DOCUMENTS INCORPORATED BY REFERENCE AND DOCUMENTS AVAILABLE FOR INSPECTION TERMS AND CONDITIONS OF THE BONDS ADRESSESS Agent means Nordic Trustee & Agency AB (publ), corporate registration number Bond or Bonds mean the senior unsecured callable floating rate bonds issued under the Bond Issue. Bond Issue means the bond issue with ISIN SE Bondholder means a person who is registered on a Securities Account as direct registered owner (Sw. ägare) or nominee (Sw. förvaltare) with respect to a Bond. DNB Bank means DNB Bank ASA, Sweden Branch, corporate registration number Euroclear means Euroclear Sweden AB, corporate registration number Hedin Bil or the Company means I.A. Hedin Bil Aktiebolag (publ), corporate registration number , or the Group, depending on the context. Issuing Agent means DNB Markets, or another party replacing it, as Issuing Agent, in accordance with Terms and Conditions. Miklagruppen means Miklagruppen AS, Norwegian corporate registration number , including its subsidiaries (apart from Burlingruppen AB). Nasdaq Stockholm means Nasdaq Stockholm Aktiebolag, corporate registration number , or the regulated market Nasdaq Stockholm, depending on the context. Prospectus means this prospectus, including any documents incorporated by reference. SEK means the lawful currency of Sweden. Swedish Companies Act means the Swedish Companies Act (Sw. aktiebolagslagen (2005:551)). Terms and Conditions mean the terms and conditions for the Bonds. the Acquisition means the Company s acquisition of Mikla, which will be partly financed by the proceeds of the Bond Issue. the Group means the group in which Hedin Bil is the parent company. the Prospectus Directive means Directive No 2003/71/EG of the European Parliament and of the Council of 4 November the Prospectus Regulation means Regulation (EC) No 809/2004 of the Commission of 29 April 2004 implementing the Prospectus Directive. 3

4 RISK FACTORS Investing in the Bonds involves inherent risks. The financial performance of the Company and the risks associated with the Company s business are important when making a decision on whether to invest in the Bonds. A number of risk factors and uncertainties may adversely affect the Company. If any of these risks or uncertainties actually occur, the business, operating results and financial position of the Company could be materially and adversely affected, which ultimately could affect the Company's ability to make payments of interest and repayments of principal under the Terms and Conditions. In this section, a number of risk factors are illustrated, both general risks pertaining to the Company s business operations and material risks relating to the Bonds as financial instruments. The risks presented herein are not exhaustive and other risks not known to the Company or risks arising in the future may also adversely affect the Company, the price of the Bonds and the Company's ability to service its debt obligations. Further, the risk factors herein are not ranked in order of importance. Potential investors should carefully consider the information below and make an independent evaluation before making an investment decision. Risks related to the Company Market trends Demand for the Company s products and services are influenced by fluctuations in the business cycle. In recessionary periods, there is a risk that some customers choose to postpone their car purchase and diminished demand for cars can also affect the value of stock in hand and guaranteed residual values. Factors that influence the market trend include for example the labour market situation, stock market performance, opportunities for customers to obtain financing, interest rates and fuel prices. Cars require service and repairs regardless of the state of the economy. However, a recession also affects the service business. There is a risk that a recession could have a material negative impact on the Company s business, results and financial situation. Basis of representation The Company s core business consists of distribution and servicing of cars and commercial vehicles and trucks across southern, western and eastern Sweden and areas in Norway. Brands offered are Mercedes- Benz, Jeep, Dodge, Smart, Nissan, Mitsubishi, Citroën, DS, Fiat, Lancia, Cadillac, Corvette, Chevrolet, KIA, Opel, Dacia, Renault, Abarth, Honda, Jaguar, Alfa Romeo, Subaru, Isuzu, Range Rover, Land Rover, Ford, Toyota, Lexus, BMW, MINI and Porsche. Changes in the relationship between the Company or any of its subsidiaries and the brands can have an influence on the Company s business. There is always a risk that a manufacturer or a general agent will decide to revoke the authorization, terminate the agreements or become insolvent, with loss of income for the Company as a result. If so, it could have a material negative impact on the Company s business, results and financial situation. Development of own services In order for the Company to uphold and strengthen its competitiveness it is necessary that the Company develops new services that appeal to the customers. The Company s ability to do so also strengthens the supplier s brands. The development of such services is costly. Should the Company not be able to quickly and cost-efficiently adapt to the development of new services, there is a risk that the Company loses competitiveness and market shares which could have a material negative impact on the Company s business, results and financial situation. 4

5 Premises The Company and its subsidiaries leases virtually all its premises. Regarding such premises the tenant always runs the risk of not having its lease renewed at the end of the rental period, which could lead to loss of strategic business locations and additional costs. In the event contamination should be discovered at any of the Company s premises, the Company may be held responsible for decontamination of the premise. Decontamination may be associated with considerable costs. If any of the risks should materialise, the result could have a material negative impact on the Company s business, results and financial situation. Environment The Company conducts business which is subject to authorization according to the Swedish Environmental Code. The business that requires authorization includes handling of fuels, oils and chemical products as well as sale of fuels, car washes and other establishments with emission of solvents in to the air or water. There is a risk that the environmental legislation will change and that more stringent environmental requirements will come into force, which could entail higher costs for the Company and, in turn, have a material negative impact on the Company s business, results and financial situation. Negative publicity The Company s reputation is important for its business. Should the Company s reputation be damaged, the Company s stakeholders could lose confidence in the Company. For instance, should the Company or any of its board members or other senior executives take an action that conflicts with the Company s values, or should any of the Company s investments not meet the market s expectations, the Company s reputation could be at risk. Also, unjustified negative publicity could damage the Company s reputation. The Company could also be affected by negative publicity concerning suppliers and partners. There is a risk that reputation damage will have a material negative impact on the Company s business, results and financial situation. Key employee dependency The Company has a number of key employees in leading positions. They contribute with expertise and long experience, which is important for the development of the Company s operations. If one or more of these key employees leave the Company, there is a risk this could have a material negative impact on the Company s business, results and financial situation. Several employees of the Company are directly or indirectly involved in the development of new services and products. If the Company fails to attract and/or retain qualified employees it could have a material negative impact on the Company s business, results and financial situation. The relationship to the unions Parts of the Company s workforce are members of, and represented by, various trade unions. Although the Company has and has had a good relationship with employees and trade unions, there is a risk that problems arise in the future. Should such problems results in a strike or a lockout it could have a material negative impact on the Company s business, results and financial situation. 5

6 The Acquisition On 6 September 2017, the Company entered into a transfer agreement with Camar AS and Verket Investering AS to acquire all the shares in Miklagruppen. Prior to the Acquisition, the Company conducted a limited due diligence to identify and examine the risks that Miklagruppen is subject to. There is a risk that the conducted due diligence was too limited, inadequate or defective. Subsequently, there is a risk that the Company s assumptions about Miklagruppen are inaccurate, which could have a negative impact on the anticipated yield. Inaccuracies could also result in the Company needing to take costly development and adaptation measures. In the transfer agreement, the Company obtained certain guarantees regarding Miklagruppen. However, this guarantee protection is not comprehensive and there is a risk that significant portions of Miklagruppen are not covered by any guarantees. Should it transpire that such a significant portion is defective, the Company, in such a case, would be unable to make any claims and therefore suffer damage that is not compensable. The guarantees are also restricted in time and subject to various threshold amounts and other qualifications. Thus, there is also a risk that damage, is not compensable, or only partially compensable, on the grounds of such qualifications. Should any of the above risks materialize, this could have a material negative impact on the Company s business, results and financial position. The Company is operating in a competitive market The Company is dependent on the ability of the Company s business partners to develop competitive products. Should the products not meet the requirements of the market, or if the business relationship with one or more of the Company s business partners should cease, or the preferences among the Company s customers should change, there is a risk that the Company would have to search for new business partners, which could lead to an increased risk for the Company and negative financial effects for the Company. Some of the Company s current or future competitors may have greater resources than the Company and may use these to increase their market share through aggressive pricing strategies. This could force the Company to lower its prices to remain competitive and not lose market shares. If the Company is exposed to increased price competition or loses market shares, it could have a material negative impact on the Company s business, results and financial situation. Dependence on suppliers The Company uses external suppliers. Damaged goods and delays, or failure to deliver goods by such suppliers may have adverse consequences on the Company s distribution chain, which can lead to additional costs, disruptions in the Company s operations and loss of confidence in the Company among customers. Furthermore, the Company is dependent upon several dealers to supply the Company with automobiles. Loss of important suppliers could have a material negative impact on the Company s business, results and financial situation. The EU block exemption on motor vehicle distribution and repair agreements, valid from June 2013 through May 2023, has granted considerable power to car manufacturers at the expense of car retailers, such as the Company. According to the EU block exemption manufacturers may demand retailers of making investments in premises and staffing under current retail and service agreements, and, if such demands are not met, the manufacturers may also terminate the agreements. Consequently, there is a risk that the Company incurs cost or loss of income relating to such demands, or, if such demands cannot be 6

7 satisfied and the manufacturer terminates the agreement, the Company could be left without a reliable source of sellable products. There is a risk that such demands could have a material negative impact on the Company s business, results and financial situation. Leasing and repurchase agreements Some automobiles distributed to customers by the Company are subject to leasing agreements. The Company assumes a credit risk should a customer fail to meet its obligations under a leasing agreement, which could have an adverse effect on the Company s earnings. Part of the Company s sales of automobiles are based on repurchase agreements, whereby the Company undertake to repurchase the automobile at a predetermined residual value. This mainly applies to automobiles sold by way of private leasing. The repurchase agreements imply a risk as the Company may be obliged to sell second hand automobiles at a loss, which could have a material negative impact on the Company s business, results and financial situation. Acquisitions A part of the Company s strategy is to work actively with the acquisition of companies and businesses. Strategic acquisitions will continue to be a part of the growth strategy in the future. However, there is a risk that the Company will not be able to identify suitable acquisition targets. Furthermore, there is a risk that the necessary funding for future acquisitions will not be available to the Company on acceptable terms, which may lead to an adverse effect on the Company s growth rate and profitability. Integration of acquired business There is a risk that the Company will not be able to integrate acquired businesses or that acquired businesses do not meet performance expectations. Furthermore, there is a risk that synergies achieved between the Company and the acquired business or businesses are insufficient or not meet the Company s expectations, which could have a material negative impact on the Company s business, results and financial situation. IT infrastructure The Company s ability to efficiently manage its operations and maintain good internal controls depends on a smoothly functioning IT environment and operation, as well as control systems that are integrated into the entire organization. Faults or disruptions in the Company s IT systems or control systems could also affect its ability to produce accurate financial reports or to produce such reports on time, both internal and external reports. To the extent that the Company experiences a serious fault or disruption in any of its systems or in another technology, the Company could become unable to efficiently run and manage its operation. Serious faults or disruptions in the Company s IT systems or control systems may affect its customer relationships, reputation, risk management and profitability which could, in turn, have a material negative impact on the Company s business, results and financial position. Warranty obligations The Company is exposed to notices of defect in the event that the Companies delivered products are faulty. In such cases, the Company is generally obligated to remedy or replace the faulty products. Furthermore, there is always a risk that the Company s customers require the Company to additional costs beyond costs of replacing the product, such as dismantling, assembly and other such peripheral costs. The Company is also exposed to product recalls, product liability, warranty claims and is responsible for 7

8 product defects if such products cause damage to person or property, e.g. if a product due to improper construction or fitting causes damage, or if delivered products are faulty. Notices of defects, product recalls and product liability may have a material negative impact on the Company s business, results and financial position. There is a risk that the Company s allocation of funds regarding remedies for warranty defaults and product defects prove to be insufficient. If so, this may have a material negative impact on the Company s business, results and financial position. Insurance risks There is a risk that the Company s insurance does not provide adequate coverage in certain circumstances and is subject to certain deductibles, exclusions, local insurance lack of capacity, no or inadequate local insurance-related estimated maximum loss reporting and limits on coverage. Furthermore, the Company may not be able to maintain its insurance cover on acceptable terms, or at all. As a result of the above, the Company may have to bear the full or partial amount of losses, damages and liabilities because of insufficient or deficient insurance coverage, which may in turn have a material negative impact on the Company s business, results and financial position. Legislation and regulation The Company s main markets are subject to extensive regulation. The Company endeavour to follow applicable laws, rules and regulations in each market. Although, there is a risk that the Company s operations are affected by changes in regulations, taxes, custom duties, tariffs, charges and subsidies, price and currency controls, and public law regulations and restrictions in the countries where the Company operates which may lead to increased costs, influence both demand for and the valuation of cars in stock and cars sold with guaranteed residual values and other aspects of the business. In turn, it could have material negative impact on the Company s business, results and financial position. Disputes The Company is not party to any legal procedures or arbitration proceedings that have or have recently had a significant impact on the Company's financial position or profitability. Nor is the board of directors of the Company aware of any circumstances that might lead to such legal procedures or arbitration proceedings. However, there is a risk that the Company, or its trading partners, in the future becomes involved in legal processes with a negative outcome for the Company which could have material negative impact on the Company s business, results and financial position. Tax risks The Company s business, including transactions between Group Companies, is conducted in accordance with the Company's understanding, awareness or interpretation of current tax laws and tax authorities. There is a risk that the Company s interpretation of applicable laws, regulations or the relevant authorities interpretation thereof may be wrong, or administrative practice is wrong, or that such rules may change, possibly with retroactive effect. Group Companies could be subject to a tax audit. Through a decision from a tax authority a Group Company s previous or current tax situation may deteriorate, which could have material negative impact on the Company s business, results and financial position. 8

9 Currency risk The Company s functional currency is SEK and its revenues and costs are primarily denominated in SEK. However, the Company may have costs that are not denominated in SEK. Furthermore, the functional currency of the Company s Norwegian business is NOK and revenues and costs from such business are primarily denominated in NOK. Consequently, the Company is exposed to fluctuations in currency exchange rates and there is a risk that such exposure could have material negative impact on the Company s business, results and financial position. Changed accounting rules The Company s business is affected by the accounting rules that, from time to time, are applied in Sweden, including for example IFRS and other international accounting rules. This means that the Company s, or its associated entities accounting, financial reporting and internal control, may in the future be affected by and may have to be adapted to changed accounting rules or a changed application of such accounting rules. Consequently, there is a risk that this will entail uncertainty regarding the Company s and its associated entities accounting, financial reporting and internal control and that this will also affect the Company s and the associated entities accounted earnings, balance sheet and equity. Further, there is a risk that such uncertainties will have a material negative impact on the Company s business, results and financial position. Interest rate risks Interest rate risk is defined as a decrease in profits caused by a change in market interest rates. The Company s sources of funds are primarily equity, cash flow from operating activities and borrowings. Currently all of the Company s borrowings have floating rate which means that the Company is exposed to interest rate risk. Higher interest rates could have material negative impact on the Company s business, results and financial position. Credit risk and counterparty risk The risk that the Company s customers will default on their obligations, in other words that payment will not be received for trade receivables, constitutes a customer credit risk. There is a risk that the Company s customers do not fulfil their obligations towards the Company, which could have material negative impact on the Company s business, results and financial position. Liquidity and refinancing There is a risk that the Company is unable to obtain sufficient finance, or that existing finance is not renewed at the end of its term, or that such finance can only be obtained or renewed at substantially higher costs or on unfavorable terms for the Company. The Company is exposed to requirements in the credit agreements it has entered into concerning the general economic climate or disruptions in the capital and credit markets, and if these requirements are not fulfilled, the consequences could include a sharp restriction in the Company s ability to utilize its existing credits. The Company s credit agreements also expose the Company to counterparty risks. A decline in the general economic climate or disruptions in the capital and credit markets could also result in a restriction of the Company s access to financing. Should the Company fail to obtain the necessary financing, not have sufficient liquidity to meet its obligations, be unable to refinance its loan agreements or fulfil its acquisition strategy due to lack of liquidity, or only be able to refinance its loan agreements on unfavorable terms for the Company, this could have a material adverse effect on the Company s business, results and financial position. 9

10 Risks related to the Bonds Credit risks An investment in the Bonds carries a credit risk relating to the Company. The Bondholder s ability to receive payment under the Terms and Conditions is therefore dependent on the Company s ability to meet its payment obligations, which in turn is largely dependent on the performance of the Company s operations and financial positions. The Company s financial position is affected by several factors, a number of which has been discussed above. An increased credit risk could cause the market to charge the Bonds a higher risk premium, which would have an adverse effect on the value of the Bonds. Another aspect of the credit risk is that any deterioration in the financial position of the Company may reduce the possibility for the Company to receive financing and therefore affect the ability to meet interest payments or redemption of the Bonds. Refinancing risk There is a risk that the Company will be required to refinance its outstanding debt, including the Bonds. The Company s ability to successfully refinance its debt obligations is dependent upon the conditions of the capital markets and the Company s financial position at such time. Even if the markets and the Company s financial position improve, the Company s access to financing sources may not be available on acceptable terms, or at all. The Company s inability to refinance its debt obligations on acceptable terms, or at all, could have a material adverse effect on the Company s operations, results and financial position and on the Bondholders recovery under the Bonds. Ability to comply with the Terms and Conditions The Company is required to comply with Terms and Conditions. Events beyond the Company s control, including changes in the economic and business condition in which the Company operates, may affect the Company s ability to comply with, among other things, the undertakings set out in the Terms and Conditions. A breach of the Terms and Conditions could result in a default under the Terms and Conditions. Interest rate risks The Bonds value depends on several factors, one of the most significant over time being the level of market interest rates. As the market rate of interest is largely dependent on the Swedish and international economic development and the actions of central banks, this is a risk factor which the Company cannot control. Hence, investments in the Bonds involve a risk that the market value of the Bonds may be adversely affected by changes in market interest rates. Liquidity risk The Company has undertaken to list the Bonds on the corporate bond list of Nasdaq Stockholm. However, there is a risk that the Bonds will not be admitted to trading. Further, even if securities, including the Bonds, are admitted to trading on a regulated market, there is not always active trading in the securities and there is a risk that there will not be a liquid market for trading in the Bonds or that this market will not be maintained even if the Bonds are listed. This may result in the Bondholders being unable to sell their Bonds when desired or at a price level which allows for a profit. Lack of liquidity in the market may have a negative impact on the market value of the Bonds. Furthermore, the nominal value 10

11 of the Bonds may not be indicative of the market price of the Bonds if the Bonds are admitted to trading on Nasdaq Stockholm. It should also be noted that during a given time period it may be difficult or impossible to sell the Bonds, at all or on reasonable terms, due to, for example, severe price fluctuations, the relevant market being shut down or trade restrictions imposed on the market. The market price of the Bonds may be volatile The market price of the Bonds could be subject to significant fluctuations in response to actual or anticipated variations in the Company s operating results and those of its competitors, adverse business developments, changes to the regulatory environment in which the Company operates and the actual or expected sale of a large number of Bonds, as well as other factors. In addition, in recent years the global financial markets have experienced significant price and volume fluctuations, which, if repeated in the future, could adversely affect the market price of the Bonds without regard to the Company s operating results, financial condition or prospects. Currency risk The Bonds will be denominated and payable in SEK. If investors measure their investment return by reference to a currency other than SEK, an investment in the Bonds will entail foreign exchange-related risks. For example, possible significant changes in the value of the SEK relative to the currency by reference to which investors measure the return on their investments could cause a decrease in the effective yield of the Bonds below their stated coupon currency by reference to which the investors measure the return on their investments. If government and monetary authorities imposes exchange controls it could adversely affect an applicable exchange rate or the ability of the Company to make payments in respect of the Bonds. As a result, there is a risk that investors receive less interest principal than expected, or no interest or principal. Dependence on subsidiaries A significant part of the Company s assets and revenues relate to the business of the Company s subsidiaries. Accordingly, the Company is dependent upon receipt of sufficient income related to the operation of and the ownership in such entities to enable it to make payments under the Bonds. The subsidiaries are legally separate and distinct from the Company and have no obligation to pay amounts due with respect of the Company s obligations and commitments, including the Bonds, or to make funds available for such payments. The ability of the subsidiaries to make such payments to the Company is subject to, among other things, the availability of funds, corporate restrictions and the terms of each operation s indebtedness. Should the Company not receive sufficient income from the subsidiaries, the Bondholder s ability to receive payment under the Terms and Conditions may be adversely affected. Structural subordination and insolvency of subsidiaries In the event of insolvency, liquidation or similar event relating to one of the Company s subsidiaries, all creditors of such company would be entitled to payment in full out of the assets of such company before the Company, as shareholder, would be entitled to any payments. Thus, the Bonds are structurally subordinated to the liabilities of such subsidiaries. There is a risk that the Company and its assets would not be protected from action by the creditors of a subsidiary, whether under bankruptcy law, by contract or otherwise. In addition, defaults by, or the insolvency of, certain subsidiaries of the Company may result in the obligation of the Company to make payments under financial or performance guarantees in 11

12 respect of such companies obligations or the occurrence of cross defaults on certain borrowings of the Company, which could have a material adverse effect on the Company s business, financial position and results of operations and on the bondholders recovery under the Bonds. Unsecured obligations The Bonds represent an unsecured obligation of the Company. This means that in the event of the bankruptcy, reconstruction or winding-up of the Company, the holders of the Bonds normally receive payment after any priority creditors have been paid in full. Each investor should be aware that there is a risk that investors in the Bonds may lose all or part of their respective investment if the Company is declared bankrupt, carries out a reconstruction or is wound-up. Risks related to early redemption, equity claw back and put option Under the Terms and Conditions, the Company has reserved the possibility to redeem all outstanding Bonds before the final maturity date. If the Bonds are redeemed before the final maturity date, the Bondholders have the right to receive the nominal amount together with accrued but unpaid interest plus an applicable premium. The Company may also at one occasion, in connection with an initial public offering of shares in the Company, repay up to 35 per cent of the Outstanding Nominal Amount, in which case all outstanding Bonds shall be partially repaid by way of reducing the Outstanding Nominal Amount of each Bond pro rata (the Equity Claw Back ). The percentage repaid of each individual Bond shall equal the percentage repaid of the Outstanding Nominal Amount together with accrued but unpaid interest on the repaid amount, plus an applicable premium. However, there is a risk that the market value of the Bonds is higher than the redemption amount or the Equity Claw Back and that it may not be possible for Bondholders to reinvest such proceeds at an effective interest rate as high as the interest rate on the Bonds and may only be able to do so at a significantly lower rate or higher risk. According to, and as defined in, the Terms and Conditions, the Bonds are subject to prepayment at the option of each Bondholder (put option) upon the occurrence of a change of control of the Company, a delisting of the Bonds or a failure to list the Bonds. There is, however, a risk that the Company does not have sufficient funds at the time of such prepayment to make the required prepayment of the Bonds which could adversely affect the Company, e.g., by causing insolvency or an event of default under the Terms and Conditions, and thus adversely affect all Bondholders and not only those that choose to exercise the option. No action against the Company and Bondholders representation In accordance with the Terms and Conditions, the Agent will represent all Bondholders in all matters relating to the Bonds and the Bondholders are prevented from taking actions on their own against the Company. Consequently, individual Bondholders do not have the right to take legal actions to declare any default by claiming any payment from the Company and may therefore lack effective remedies unless and until a requisite majority of the Bondholders agree to take such action. However, there is a risk that a Bondholder, in certain situations, could bring its own action against the Company (in case of breach of the Terms and Conditions), which could negatively impact an acceleration of the Bonds or other action against the Company. To enable the Agent to represent Bondholders in court, the Bondholders may have to submit a written power of attorney for legal proceedings. The failure of all Bondholders to submit such a power of attorney could negatively affect the legal proceedings. 12

13 Under the Terms and Conditions, the Agent will in some cases have the right to make decisions and take measures that bind all Bondholders. Consequently, the actions of the Agent in such matters could impact a Bondholder s rights under the Terms and Conditions in a manner that would be undesirable for some of the Bondholders. Bondholders meeting The Terms and Conditions includes certain provisions regarding Bondholders meeting. Such meeting may be held in order to resolve on matters relating to the Bondholders interests. The Terms and Conditions will allow for stated majorities to bind all Bondholders, including Bondholders who have taken part in the meeting and those who have voted differently to the required majority at a duly convened and conducted Bondholders meeting. Consequently, the actions of the majority in such matters could impact a Bondholder s rights in a manner that would be undesirable for some of the Bondholders. The Company and the Agent (acting on behalf of the Bondholders) may agree to amend the Terms and Conditions or waive any provision in the Terms and Conditions, provided such amendment or waiver is made solely for the purpose of rectifying obvious errors and mistakes. Risks relating to clearing and settlement in Euroclear s book-entry system The Bonds are affiliated to Euroclear account-based system, and no physical notes have been, or will be, issued. Clearing and settlement relating to the Bonds is carried out within Euroclear s book-entry system, as are payment of interest and repayment of principal. Investors are therefore dependent on the functionality of Euroclear s account-based system for timely and accurate payment, which is a risk factor that the Company cannot control. Amended or new legislation This Prospectus and the Terms and Conditions are based on Swedish law in force at their respective date of issuance. There is a risk that there will be future legislative measures or changes or modifications to administrative practices. Amended or new legislation and administrative practices may adversely affect the Bondholder s ability to receive payment under the Terms and Conditions. Conflict of interests The Issuing Agent has engaged in, an may in the future engage in, investment banking and/or commercial banking or other services for the Company in the ordinary course of business. Accordingly, conflicts of interest may exist or may arise as a result of the Issuing Agent having previously engaged, or will in the future engage, in transactions with other parties, having multiple roles or carrying out other transactions for third parties with conflicting interests. 13

14 STATEMENT OF RESPONSIBILITY The Company issued the Bonds on 5 October 2017 based on a resolution taken by the board of directors of the Company on 28 September This Prospectus has been prepared in relation to the Company applying for admission to trading of the Bonds on the corporate bond list of Nasdaq Stockholm, in accordance with the Prospectus Regulation and the rules and regulations in Chapter 2 of the Swedish Financial Instruments Trading Act, each as amended. The Company is responsible for the information given in this Prospectus. The Company confirms that, having taken all reasonable care to ensure that such is the case, the information contained in this Prospectus is, to the best of the Company s knowledge, in accordance with the facts and contain no omissions likely to affect its import. The board of directors is responsible for the information given in this Prospectus only under the conditions and to the extent set forth in Swedish law. The board of directors confirms that, having taken all reasonable care to ensure that such is the case, the information in this Prospectus is, to the best of the board of directors knowledge, in accordance with the facts and contains no omissions likely to affect its import. Mölndal on 30 November 2017 I.A. HEDIN BIL AKTIEBOLAG (PUBL) The Board of Directors 14

15 INFORMATION REGARDING THE BOND ISSUE This section contains a general and broad description of the Bonds. It does not claim to be comprehensive or cover all details of the Bonds. Potential investors should therefore carefully consider this Prospectus as a whole, including documents incorporated by reference, before a decision is made to invest in the Bonds. For a more complete understanding of the Bonds, including certain definitions of terms used in this section, see the section Terms and Conditions of the Bonds. Terms defined in the Terms and Conditions are used with the same meaning in this section unless it is otherwise explicitly understood from the context or otherwise defined in this Prospectus. The Issuer: I.A. Hedin Bil Aktiebolag (publ), corporate registration number , P.O. Box 2114, SE Mölndal, Sweden. Operational objective: The company shall conduct business in the automotive industry, including commerce, manufacturing, garage and workshop business, as well as related activities. The company shall also own and manage real estate. Furthermore, the company shall conduct certain financing business with regard to leasing and credit sales, concerning products the company normally offers for sale, though excluding such activities referred to in the Swedish Banking and Financing Business Act (Sw. lag (2004:297) om bank- och finansieringsrörelse). The company shall also conduct commerce with financial securities. The Bonds: The Bonds constitute debt instruments (Sw. skuldförbindelser) of the type set forth in Chapter 1 Section 3 of the Financial Instruments Accounts Act (Sw. lagen (1998:1479) om kontoföring av finansiella instrument) and which have been issued by the Issuer under the Terms and Conditions. ISIN: SE Listing: The Issuer shall use all reasonable efforts to ensure (i) that within ninety (90) days after the First Issue Date, the Initial Bonds are listed on the corporate bond list of Nasdaq Stockholm or, if such admission to trading is not possible to obtain or maintain, admitted to trading on another Regulated Market, and (ii) that, upon any Subsequent Bond Issue, the volume of Bonds listed on Nasdaq Stockholm or such other Regulated Market promptly, but not later than fifteen (15) days after the relevant date on which such Subsequent Bond Issue is made is increased accordingly. Nominal amount: The nominal amount of each Bond is SEK 1,000,000 and all Bonds are issued on a fully paid basis at an issue price of 100 per cent. of the nominal amount. Total nominal amount: The total nominal amount of the Bonds is SEK 2,000,000,000. First Issue Date: 5 October The maximum aggregate nominal amount of the Bonds as of the First Issue Date is SEK 1,500,000,000 15

16 Subsequent Bond Issue: The Issuer may, on one or several occasions issue Subsequent Bonds. Subsequent Bonds shall benefit from and be subject to the Finance Documents and have the same rights as the Initial Bonds. For the avoidance of doubt, such Subsequent Bonds may be admitted to trading pursuant to this Prospectus within one year after the approval of this Prospectus by the Swedish Financial Supervisory Authority. Denomination: The Bonds are denominated in SEK. Status of the Bonds: The Bonds constitute direct, general, unconditional, unsubordinated and unsecured obligations of the Issuer. The Bonds shall rank at least pari passu with all other obligations of the Issuer, except those obligations which are mandatorily preferred by law, and without any preference among them. The Bonds are freely transferable. Interest: Each Bond carries an interest at STIBOR 3 months plus 3.65 percentage units per annum from the First Issue Date, or the date of a Subsequent Bond Issue, up to the relevant Redemption Date. Interest is paid quarterly in arrears on each Interest Payment Date and calculated on the basis of the actual number of days in the Interest Period in respect of which payment is being made divided by 360 (actual/360-days basis). Interest Payment Date means 5 January, 5 April, 5 July and 5 October of each year or, to the extent such day is not a Business Day, the Business Day following from an application of the Business Day Convention. For a historic development of STIBOR, please see ( Early redemption by the Bondholders (put option): Upon the occurrence of a Change of Control Event or a Listing Failure Event, each Bondholder shall have the right to request that all, or some only, of its Bonds be repurchased at a price per Bond equal to one hundred and one (101) per cent. of the Nominal Amount, together with accrued but unpaid Interest. Voluntary total redemption by the Issuer (call option): The Issuer may redeem all, but not some only, of the Bonds on any Business Day falling before the Final Maturity Date having given notice to the Bondholders and the Agent. The bonds shall be redeemed at a price corresponding to the applicable Call Option Amount together with accrued but unpaid interest (if any). Equity Claw Back: The Issuer may on one occasion, in connection with an Equity Listing Event, repay up to thirty-five (35) per cent of the Outstanding Nominal Amount, in which case all outstanding Bonds shall be partially repaid by way of reducing the Outstanding Nominal Amount of each Bond pro rata. The repayment must occur on a Business Day within one hundred and eighty (180) days after such Equity Listing Event. 16

17 Final Maturity Date: The Final Maturity Date of the Bonds is 5 October Yield: The yield of the Bonds is a function of the price for which the Bonds have been acquired, the interest rate applicable to the Bonds together with any brokerage fees or other cost relating to the acquisition of the Bonds. Agent: Nordic Trustee & Agency AB (publ), corporate registration number Issuing Agent: DNB Bank ASA, Sweden Branch, corporate registration number Account-based system: The Bonds will be connected to Euroclear Sweden s account-based system, why no physical bonds have been or will be issued. Clearing and settlement at trading with the Bonds, as well as payment of interest and redemption of principal amounts will be performed within Euroclear Sweden s account-based system and made to each Bondholder s securities account. Jurisdiction: The Terms and Conditions, and any non-contractual obligations arising out of or in connection therewith, shall be governed by the laws of Sweden. Any dispute or claim arising in relation to the Terms and Conditions shall be determined by Swedish courts. The Bonds have been issued in accordance with applicable provisions of the Swedish Companies Act (Sw. aktiebolagslagen (2005:551)) and the Financial Instruments Trading Act (Sw. lagen (1991:980) om handel med finansiella instrument). Costs: The Issuer shall cover all expenses relating to the listing of the Bonds, including, inter alia, expenses attributable to the execution of the Prospectus, the listing process of Nasdaq Stockholm, documentation and fees to Euroclear Sweden. The total expenses of the aforementioned actions are estimated to amount to SEK Prescription: The right to receive repayment of the principal of the Bonds is prescribed and becomes void ten (10) years from the Redemption Date. The right to receive payment of Interest (excluding any capitalised Interest) is prescribed and becomes void three (3) years from the relevant due date for payment subject to the provisions of Clause 7 (Payment in respect of the Bonds) of the Terms and Conditions. Advisers: Advokatfirman Glimstedt Stockholm KB, corporate registration number , has acted as legal counsel and DNB, as sole bookrunner and issuing agent, have advised the Company in connection with the Bond Issue. 17