Frasers Group plc intends to launch a voluntary offer for all of the shares in XXL ASA at NOK 10 per share

06 Dec 2024 08:19 CET

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Frasers Group plc intends to launch a voluntary offer for all of the shares in
XXL ASA at NOK 10 per share
6 December 2024 – Frasers Group plc (“Frasers”) intends, through a controlled
subsidiary, to launch a voluntary offer for all of the shares in XXL ASA
(“XXL”), which Frasers does not already own, at NOK 10 per share in cash.
Further to the announcement made by XXL on 28 November 2024 in relation to,
among other things, the shareholder vote against XXL’s proposed rights issue of
NOK 600 million, as announced on 6 November 2024 (the “Rights Issue”), and XXL’s
plan to proceed with the alternative transaction structure, as described in
XXL’s announcement on 19 November 2024 (the “Alternative Rights Issue”), Frasers
has taken quick action to consider and assess the possible options available to
it. We believe that the proposed Alternative Rights Issue is wrong, its legality
is questionable and its implementation will be extremely detrimental to both
Frasers and the other minority holders of XXL shares, who will be unfairly and
significantly diluted by the commission shares to be issued under the terms of
the Alternative Rights Issue. In addition, we do not believe that shareholders,
especially minority shareholders, should be asked to provide further funding to
XXL when it has not articulated any clear plan to address and resolve the root
causes of its persistent problems.

Frasers is XXL’s second largest shareholder, with c.32.5% of the voting rights
and c.25.8% of the issued share capital, and we have been supportive of the
commercial and brand opportunities available to XXL. With our leading retail
expertise, we believe Frasers has the relevant experience to have a chance at
saving XXL. Frasers is ready to support XXL and a summary of Frasers’ proposals
is set out below.

Accordingly, having carefully considered the options available to Frasers,
Frasers is announcing a voluntary offer for all of the shares in XXL, which
Frasers does not already own (the “Offer”).

“Our strategic vision and industry experience position us uniquely to help XXL
navigate its current challenges. We are committed to ensuring that XXL reaches
its full potential” says Michael Murray, CEO of Frasers.

About the Offer
The Offer includes a total consideration for all of the shares in XXL of
approximately NOK 246,357,450. The Offer price represents a premium of 25% over
the closing price of NOK 8.00 on 5 December 2024.

In comparison to the Rights Issue and Alternative Rights Issue, the Offer
represents an opportunity for shareholders in XXL to monetize their shareholding
rather than providing additional funding to XXL on a diluted basis, as follows:

• Under the Rights Issue, non-participating shareholders would have faced a
dilution of approximately 99% based on a subscription price of NOK 0.1 per new
share.

• Similarly, under the Alternative Rights Issue, non-participating shareholders
will face a potential dilution of approximately 99% based on a capital raise of
NOK 375 million assuming a subscription price of NOK 0.1 per new share.
Furthermore, shareholders who participate on a pro-rata basis, excluding those
in the underwriting consortium, will be diluted by approximately 15% due to the
proposed underwriting fee of 18% payable in shares at the assumed subscription
price of NOK 0.1 per new share.

Frasers confirms that it has the necessary funds available to cover the
consideration payable under the Offer in full without requiring additional
financing.

Interim financing solution
It is well reported that XXL is suffering from an inability to access adequate
levels of appropriate stock, in turn damaging sales volumes and therefore its
business. Frasers is willing to support XXL, if the Offer is successfully
completed, in order to: (i) address XXL’s stock shortage; (ii) provide XXL with
products and brands that will make XXL’s retail offering more attractive; and
(iii) ease XXL’s cash requirements.

As we understand XXL is short of sufficient funds to pay its suppliers, Frasers
has a solution for this cash shortage which also helps with the stock shortage.
Subject to satisfactory due diligence and completion of the Offer, Frasers is
willing to consign up to NOK 500 million of stock on a delayed payment basis
whereby XXL will not be required to repay Frasers until the stock is sold.

Frasers is open to discussing with XXL alternative means of providing liquidity,
such as the purchase and consignment of XXL’s existing stock orders from
suppliers.

Conditions to the Offer

Full details of the Offer, including all of its conditions, will be described in
an offer document (the “Offer Document”) that will be sent to all eligible XXL
shareholders, subject to review and approval by the Oslo Stock Exchange, if the
Offer is launched. Frasers expects that the Offer Document will be posted, or
otherwise made available, to XXL shareholders in January 2025. Completion of the
Offer will be conditional upon each of the following conditions being satisfied
or waived (each one of which may be waived by Frasers, in whole or in part, in
its sole discretion), and Frasers reserves the right not to launch the Offer if
it becomes clear that any of these conditions will not be met:

1. On completion of the Offer, a sufficient number of shareholders having
validly accepted the Offer such that Frasers will hold more than 50% of XXL’s
shares and votes, on a fully diluted and converted basis.
2. No material adverse change in XXL or its group occurs, including in respect
of the financial condition or operations of XXL as compared with the position
set out in the statements contained in XXL’s third quarter 2024 results.
3. Receipt of all consents and approvals required from applicable governmental,
regulatory and competition authorities, and any required third-party approvals,
in each case, on terms satisfactory to Frasers.
4. No legal action being taken or threatened that would restrain or prohibit the
consummation of the Offer or impose conditions upon Frasers or its affiliates,
XXL or any of its subsidiaries which are not acceptable to Frasers.
5. No changes to the share capital, or issuance of rights which entitle holders
to demand new shares or similar securities, in XXL or any of its direct or
indirect subsidiaries, nor any conversion of B shares to A shares, or dividends
or other distributions to XXL shareholders, taking place.
6. No material transactions occur with XXL or its group, including decisions to
merge, demerge, acquire, or sell significant assets, and the Alternative Rights
Issue does not proceed.
7. XXL continues its business as usual.
8. No event of default or acceleration occurring in respect of XXL’s financing
arrangements.
9. Completion of due diligence regarding XXL’s current and future cash flows, to
the satisfaction of Frasers, that the NOK 500 million of stock consigned to XXL
by Frasers, in combination with XXL’s available liquidity, will be sufficient to
satisfy XXL’s cash requirements over the next 12 months.

The Offer will not be subject to any other financing or due diligence
conditions.

It is expected that the Offer will be completed in the first quarter of 2025,
following receipt of regulatory approvals and satisfaction of all other Offer
conditions. The Offer may only be accepted based on the Offer Document.

For further information, please contact:
Investor Contact
Frasers Group plc
Robert Palmer, Company Secretary
T. +44 344 245 9200
E. company.secretary@frasers.group

Chris Wootton, Chief Financial Officer T. +44 344 245 9200
E. financial@frasers.group


Media Contact
Keith Bishop Associates, PR Advisors
Gary Thompson
T. +44 7881 952441
E. gary@kbapr.com


White & Case LLP and Advokatfirmaet Schjødt AS serve as legal advisers, and
Danske Bank A/S, Norwegian Branch serves as financial adviser and receiving
agent, to Frasers.

About Frasers

Frasers started as a small store in Maidenhead in 1982 and from there, grew to
become a global powerhouse. As the business evolved, 2019 saw the rebrand of
Sports Direct International to Frasers Group plc; a reflection of the group's
growth and change in market identity.

Led by Chief Executive Michael Murray, the business is set on a formidable
upwards trajectory as it continues to expand with its pioneering approach to
retail. Frasers provides consumers with access to the world's best Sports,
Premium and Luxury brands with a vision to build the planet's most admired and
compelling brand ecosystem.
As a leader in the industry, Frasers is committed to rethinking retail by
driving digital innovation and providing unique store experiences to its
consumers globally.

Important notice

The Offer and the distribution of this announcement and other information in
connection with the Offer may be restricted by law in certain jurisdictions. The
Offer and the Offer Document are not to be regarded as an offer, whether
directly or indirectly, in jurisdictions where, pursuant to legislation and
regulations in such relevant jurisdictions, such an offer would be prohibited.
Shareholders not resident in Norway wanting to accept the Offer must make
inquiries regarding relevant and applicable legislation, including but not
limited to whether public consent is required and any possible tax consequences.
The Offer will not be made to, either directly nor indirectly or on behalf of,
shareholders in any jurisdiction where presenting the Offer or acceptance
thereof would be in conflict with the laws of such jurisdictions including, but
not limited to, shareholders present in, with registered or mailing addresses
in, or who are citizens of Canada, Australia, New Zealand, South Africa, Hong
Kong and Japan and Frasers retains the right not to accept acceptances of the
Offer from such shareholders.

Each shareholder should study the Offer Document carefully in order to be able
to make an informed and balanced assessment of the Offer and the information
that is discussed and described therein. Shareholders should not construe the
contents of this announcement as legal, tax or accounting advice, or as
information necessarily applicable to each shareholder. Each shareholder should
seek independent advice from its own financial and legal advisors prior to
making a decision to accept the Offer.

This announcement is not intended to be and does not constitute or contain any
investment recommendation as defined by Regulation (EU) No 596/2014 (as it forms
part of the domestic law in the United Kingdom by virtue of the European Union
(Withdrawal) Act 2018).

No profit forecasts or estimates

No statement in this announcement is intended as a profit forecast or profit
estimate and no statement in this announcement should be interpreted to mean
that earnings or earnings per share for the current or future financial years
would necessarily match or exceed the historical published earnings or earning
per share.

Forward-looking statements

This announcement, oral statements made regarding the Offer, and other
information published by Frasers may contain statements which are, or may be
deemed to be, “forward looking statements”. Such forward looking statements are
prospective in nature and are not based on historical facts, but rather on
current expectations and on numerous assumptions regarding the business
strategies and the environment in which the XXL group will operate in the future
and are subject to risks and uncertainties that could cause actual results to
differ materially from those expressed or implied by those statements. The
forward-looking statements contained in this announcement relate to the XXL
group’s future prospects, developments and business strategies, the expected
timing and scope of the Offer and other statements other than historical facts.
In some cases, these forward looking statements can be identified by the use of
forward looking terminology, including the terms “believes”, “estimates”, “will
look to”, “would look to”, “plans”, “prepares”, “anticipates”, “expects”, “is
expected to”, “is subject to”, “budget”, “scheduled”, “forecasts”, “synergy”,
“strategy”, “goal”, “cost-saving”, “projects” “intends”, “may”, “will” or
“should” or their negatives or other variations or comparable terminology.
Forward-looking statements may include statements relating to the following: (i)
future capital expenditures, expenses, revenues, earnings, synergies, economic
performance, indebtedness, financial condition, dividend policy, losses,
contract renewals and future prospects; (ii) business and management strategies
and the expansion and growth of XXL’s operations; and (iii) the effects of
global economic and political conditions and governmental regulation on XXL’s
business. By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on circumstances that will
occur in the future. These events and circumstances include changes in the
global, political, economic, business, competitive, market and regulatory
forces, future exchange and interest rates, changes in tax rates and future
business combinations or disposals. If any one or more of these risks or
uncertainties materialises or if any one or more of the assumptions prove
incorrect, actual results may differ materially from those expected, estimated
or projected. Such forward looking statements should therefore be construed in
the light of such factors. Frasers nor any member of its group, nor any of its
respective members, associates or directors, officers or advisers, provides any
representation, assurance or guarantee that the occurrence of the events
expressed or implied in any forward-looking statements in this announcement will
actually occur. Given these risks and uncertainties, potential investors should
not place any reliance on forward looking statements. The forward-looking
statements speak only at the date of this document. All subsequent oral or
written forward looking statements attributable to any member of the XXL group,
Frasers or any member of their respective group, or any of their respective
members, associates, directors, officers, employees or advisers, are expressly
qualified in their entirety by the cautionary statement above. Frasers and each
member of its group expressly disclaim any obligation to update such statements
other than as required by law or by the rules of any competent regulatory
authority, whether as a result of new information, future events or otherwise.

Notice to United States

U.S. Holders (as defined below) are advised that the shares of XXL are not
listed on a U.S. securities exchange and that XXL is not subject to the periodic
reporting requirements of the U.S. Securities Exchange Act of 1934, as amended
(the “U.S. Exchange Act”), and is not required to, and does not, file any
reports with the U.S. Securities and Exchange Commission (the “SEC”) thereunder.
The Offer will be made to holders of XXL shares resident in the United States
(“U.S. Holders”) on the same terms and conditions as those made to all other
holders of shares of XXL to whom an offer is made. Any information documents,
including this announcement, are being disseminated to U.S. Holders on a basis
comparable to the method that such documents are provided to the Company’s other
shareholders to whom an offer is made. The Offer is being made by Frasers and no
one else.

The Offer relates to shares of a Norwegian company listed and trading on Oslo
Børs and is subject to the legal provisions of the Securities Trading Act
regarding the implementation and disclosure requirements for such an offer,
which differ substantially from the corresponding legal provisions of the United
States. For example, the financial statements and certain financial information
in this announcement have been determined in accordance with the International
Financial Reporting Standards (“IFRS”) and may therefore not be comparable to
the financial statements or financial information of U.S. companies and other
companies whose financial information is determined in accordance with the
Generally Accepted Accounting Principles of the United States.

The Offer is being made to U.S. Holders in compliance with section 14(e) and
Regulation 14E under the U.S. Exchange Act, including available exemptions
thereunder, and otherwise in accordance with the requirements of Norwegian law.
Accordingly, the Offer is subject to disclosure and other procedural
requirements, including with respect to the offer timetable, that are different
from those would be applicable under U.S. domestic tender offer procedures and
law. Furthermore, the payment and settlement procedure with respect to the Offer
will comply with the relevant rules of the Securities Trading Act, which differ
from payment and settlement procedures customary in the United States,
particularly with regard to the payment date of the consideration.

Pursuant to an exemption from Rule 14e-5 under the U.S. Exchange Act, Frasers
and its affiliates or brokers (acting as agents for Frasers or its affiliates,
as applicable) may from time to time, and other than pursuant to the Offer,
directly or indirectly, purchase or arrange to purchase, shares or any
securities that are convertible into, exchangeable for or exercisable for such
Shares outside the United States during the period in which the Offer remains
open for acceptance, so long as those acquisitions or arrangements comply with
applicable Norwegian law and practice and the provisions of such exemption. To
the extent information about such purchases or arrangements to purchase is made
public in Norway, such information will be disclosed by means of a press release
or other means reasonably calculated to inform U.S. Holders of such information.
In addition, the financial advisors to Frasers may also engage in ordinary
course trading activities in securities of the Company, which may include
purchases or arrangements to purchase such securities.

Canada

Neither this announcement or the Offer Document nor any copy of thereof may be
taken or transmitted into Canada or distributed or redistributed in Canada or to
any individual outside Canada who is a resident of Canada, except in compliance
with applicable rules.

Australia

The Offer will not be made directly or indirectly in or into and may not be
accepted in or from Australia. Accordingly, if any copies of this announcement
or the Offer Document (and any accompanying documents) are mailed or otherwise
distributed or sent in or into Australia, that action does not constitute an
offer and any purported acceptance by or on behalf of an Australian resident
will be invalid.
No document in connection with the Offer has been lodged with the Australian
Securities & Investments Commission (“ASIC”) and ASIC has not approved the Offer
in Australia.

Japan
Neither this announcement or the Offer Document nor any copy of it may be taken
or transmitted into Japan or distributed or redistributed in Japan or to any
resident thereof for the purpose of solicitation of subscription or offer for
sale of any securities or in the context where its distribution may be construed
as such solicitation or offer.

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