Softline to split Russian and international businesses by selling former to founder for $1
MOSCOW. Oct 10 (Interfax) - Information technology company Softline has disclosed the details of the division of its business into two independent companies by demerging its Russian and international businesses.
The business in Russia will be sold to group founder Igor Borovik for $1, but after the sale his stake in the business outside of the country, Softline Global, will be diluted to 44%, the company said in a press release. The deal is expected to be finalized in November.
"The Transaction reflects a relative valuation ratio of 1:3 as between the Softline Group's Russian and non-Russian businesses," the company said.
Borovik's stake in Softline Global will be diluted by issuing bonus securities to all other Softline securityholders to compensate them for the loss of value in their securities arising from the sale of Softline Russia for $1.
Unlike the demerger of the business, the bonus issue will require shareholder approval, so the company has called a shareholder meeting for October 25. The date of record for the meeting is October 23.
This group selected this structure for the demerger transaction in part because "EU asset freezing sanctions on the NSD, which has effectively blocked the operations between Euroclear and NSD, made it impossible to effect any distribution of Russian shares to Softline Securityholders who hold their securities through the clearing systems," the company said.
After the demerger, the group's international business will operate under the name Softline Global, but the company does not rule out rebranding the international company in future. The company also plans to retain its listing on the London Stock Exchange.
"Ongoing geopolitical events have had a disproportionate impact on Softline's market value, and the separation of its Russian and international businesses is designed to support a path to a more rational valuation for Softline Global that reflects the strong profitable growth, portfolio, capabilities, and fundamental value," the company said.
Softline's principal beneficiary at the moment is Borovik with 53% of shares.
Softline, which has offices in about 60 countries, raised $400 million in an IPO in late October 2021.