Lehto Group Plc
28 April 2022 at 7.35 a.m. (EET)
Today, April 28, 2022, Lehto Group Oyj (“Lehto”) has announced its updated strategy, according to which Lehto will focus on operational operations and improving profitability, primarily by developing cost efficiency, in the early part of its strategy period. As part of the implementation of the updated strategy, Lehto is preparing a financing package consisting of the sale of the pipeline renovation business, issuance of a convertible bond, bank financing, outsourcing of land plots to partners and operational measures as follows:
Sale of pipeline renovation business
Today, April 28, 2022, Lehto announced the sale of its pipeline renovation business with a enterprise value of EUR 30 million. The proceeds from the sale are a key part of the financing package.
On April 11, 2022, Lehto announced that it was planning a financing arrangement with elements of equity financing estimated at EUR 15 million. The plans have been specified so that Lehto intends to issue a convertible bond of approximately EUR 15–20 million.
The main content of the package to be negotiated with the financier banks is related to the financing of individual projects, the new financing agreement replacing the current revolving credit facility (RCF), and the related security arrangement.
Outsourcing of land plots to the partners
Lehto is negotiating to outsource some of its land plots, ie to sell them to partners, with the aim of improving short-term cash flow. The sale of the land plots does not affect Lehto’s role as a project developer and builder.
Change negotiations with the personnel
Lehto has completed the change negotiations with the personnel. The target of the negotiations was to find ways to streamline Lehto’s operations and to reduce the cost pressure of rising construction costs. The company announced the start of negotiations in a stock exchange release on March 24, 2022. As a result of the negotiations, cost savings of approximately EUR 3 million will be achieved in 2022. The savings will be achieved through personnel reductions, redundancies and layoffs, with a combined effect of approximately 134 person-years.
The described measures are interdependent, and their implementation requires the contribution of different investors and partners. Lehto will announce the outcome of the negotiations on the financial package immediately after their completion, approximately by the end of the second quarter of 2022.
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