By Porter Anderson, Editor-in-Chief | @Porter_Anderson
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Some 400 Million Swedish KronaAs it has reported in media messaging dated Wednesday (November 9), the Stockholm-based Storytel has concluded a directed issue of 8,791,209 Class B shares.
The company reports that those shares are worth approximately 400 million Swedish krona (US$38.6 million), the notice—Storytel warrants—having been published Thursday (November 10).
In its information for the news media, the international audiobook and ebook subscription platform writes for the record, “7,586,879 class B shares were resolved by the board of directors, based on the authorization granted by the annual general meeting on May 4 (tranche 1), and 1,204,330 class B shares were resolved by the board of directors subject to the approval of an extraordinary general meeting (tranche 2, the ‘directed issue’).
“The subscription price in the directed issue was set at 45.50 Swedish krona per class B share and was determined through an accelerated bookbuilding procedure performed by ABG Sundal Collier AB and Swedbank AB (publ),” Storytel is quoted announcing.
“The directed issue was significantly oversubscribed. A number of Swedish and international institutional investors participated, including both new and current owners.
“Storytel’s two largest shareholders, EQT Public Value Investment Sàrl (‘EQT’) and Roxette Photo NV (‘Roxette’), together with the Finnish strategic investor Otava Ltd (‘Otava’), have undertaken to subscribe for all shares in tranche 2.”
That extraordinary general meeting the company mentions is expected to be held on November 28, for final approval.
In a prepared statement from Storytel CEO Johannes Larcher, we read, “We are thankful for the support and trust in Storytel’s performance and business plans expressed by our investors and new shareholders via this financing.
“We are particularly pleased to add as shareholder Otava Ltd, owner of leading Finnish publishers and media companies,” Larcher says, “and we look forward to exploring opportunities to deepen our relationship in the fast growing Finnish audiobook market.”
If the name Otava is ringing a bell, Publishing Perspectives readers are familiar with it thanks to multiple mentions in our Rights Roundup series of coverage of international translation rights sales activity.
Storytel reports that the Otava Group “ranks third among media and communications publishers in Finland and includes the current Finnish market leader in general literature, Otava Publishing Company, with a roster of leading Finnish and international authors.”
‘The Most Favorable Alternative for Storytel’
As Michael Cader has written this week at Publishers Lunch, “While the recent quarter showed improvement in moving toward profitability” at Storytel, “the stock has fallen dramatically and the company carries significant debt, due in part to acquisitions, even as they continue to grow revenues.”
And in its own messaging, the company—now standing with operations in more than 25 international markets—writes this rationale as part of its media messaging on the topic of the shares issue:
“The company’s board of directors has made an overall assessment and carefully considered the possibility of a rights issue to raise the required equity, but believes that this would, inter alia, entail a risk that the company would not be able to meet its capital needs, while maintaining an optimal capital structure.
“Prior to the directed issue, the board of directors has concluded that a rights issue would entail significantly longer execution time and thereby increased market-risk exposure compared to a directed share issue.
“In addition, given the market volatility observed in 2022, which is still ongoing, the board of directors has assessed that a rights issue would also require significant underwriting by a syndicate of underwriters, which would entail additional costs and/or additional dilution, depending on the type of consideration paid for such underwriting commitments. Moreover, unlike a rights issue, the directed issue has broadened the shareholder base and provided the company with new reputable institutional owners and strategic investors, which the board of directors believes will strengthen the liquidity of the shares and be beneficial to the company.
“Furthermore, the board of directors considers that an additional reason for the deviation from the shareholders’ preferential rights is to ensure a strong balance sheet and a balanced general level of risk in the current market situation.
“In light of the above, the board of directors has made the assessment that the directed issue with deviation from the shareholders’ preferential rights is the most favorable alternative for Storytel and in the best interest of the company’s shareholders.”
More from Publishing Perspectives on Storytel is here, more from us on Frankfurter Buchmesse is here, more on book fairs is here, more on digital publishing is here, and more on audiobooks is here.
More on the coronavirus COVID-19 pandemic and its impact on international book publishing is here.-