Fugro announces a comprehensive refinancing

• Fugro announces its intention to raise EUR 250 million in an equity offering consisting of a c. EUR 53.3 million private placement with a number of cornerstone investors (the "Cornerstone Placement") and a c. EUR 196.7 million rights issue (the “Rights Issue”). The cornerstone investors have further irrevocably committed to take up their rights under the Rights Issue in full, which means that they have committed EUR 113 million to the EUR 250 million equity offering. The portion of the equity raise that is not committed by the cornerstone investors is underwritten 

• The net proceeds of the equity offering will be used to reduce Fugro’s debt and to provide sufficient liquidity to address the upcoming maturity of its convertible bonds maturing in 2021, the convertible bond maturing in 2024 is envisaged to remain outstanding

• Fugro’s pro-forma net leverage  based on total debt (including subordinated debt) will be reduced from 4.2 to 2.0 times  (pre-IFRS16) and from 4.0 to 2.4 times (post-IFRS 16)

• Fugro and its lenders have agreed, conditional upon the equity offering proceeding, a new EUR 225  million revolving credit facility and a EUR 200 million term loan, both maturing in December 2023

• Fugro will convene an Extraordinary General Meeting of shareholders (the “EGM”) to be held on 30 November 2020, for the purpose of approving the Cornerstone Placement and the Rights Issue. Materials related to the EGM are available through the website of the Company.

Fugro announces a comprehensive refinancing of its existing EUR 575 million revolving credit facility (“Existing Bank Facility”) with a new EUR 225 million revolving credit facility and a EUR 200 million term loan as well as a proposed equity offering of EUR 250 million, which is subject to shareholders’ approval. The equity offering comprises a c. EUR 53.3 million private placement of new shares to a number of cornerstone investors and a c. EUR 196.7 million rights issue. The net proceeds of the equity offering will be used primarily to reduce Fugro’s debt and will also provide sufficient liquidity to address the upcoming maturity of its convertible bonds in 2021. Through the refinancing, Fugro’s balance sheet will be significantly strengthened with a reduced net leverage (pre-IFRS16) of 2.0 times. Fugro will convene the EGM to approve the Cornerstone Placement and the Rights Issue on 30 November 2020.

Mark Heine, CEO, comments: “This comprehensive refinancing will provide us with increased financial flexibility to deliver on our Path to Profitable Growth strategy. To enable our refinancing in light of today’s market environment, we need to strengthen our balance sheet by issuing new equity. This is supported by a substantial cornerstone commitment from a number of top tier investors. We are very pleased that these cornerstone investors have shown belief in our business and strategy, which is illustrated by NN Investment Partners who will increase its holding by more than 50% to c. 17.3% following the completion of the equity offering. NN Investment Partners will be joined by ASR asset management and Sterling Strategic Value as new shareholders who will own c. 7.9% and c. 2.1% of Fugro, respectively, following the completion of the equity offering. Moreover, the cornerstone investors explicitly encourage our continued diversification towards markets where we can both support and benefit from the energy transition, climate change adaptation and sustainable infrastructure development. 

Fugro is transitioning towards being the world’s leading Geo-data specialist in the areas of sustainable energy, infrastructure and water. In that capacity, we provide our clients with essential insights and services to help them design, build and maintain their assets safely and sustainably. Population growth and urbanisation in combination with the need for carbon dioxide reductions are driving increased spending on renewable power and electricity networks, subsea cables, coastal defense, hydrography and freshwater projects. This creates ample opportunities for Fugro, across the world. With our leading market positions, versatile asset base, specialist workforce, innovative digital solutions and resilient operating model, we are well positioned to benefit from these opportunities. Fugro already plays an important role in the energy transition with innovative services for the development of offshore windfarms, and mapping solutions to protect coast lines in light of rising sea levels. In the third quarter of 2020, already two-thirds of our revenue was generated in non-oil and gas related activities.

The strengthening of our balance sheet helps to position us for future success.”

Details of the envisaged refinancing

During the past months, together with its financial advisor Perella Weinberg Partners, Fugro has evaluated all possible refinancing alternatives to address the balance sheet and believes that an equity offering in an amount of EUR 250 million is in the best interests of Fugro, its shareholders and its other stakeholders. In this process Axeco Corporate Finance has acted as advisor to the Supervisory Board.

Fugro has had constructive discussions with a select number of cornerstone investors and, subject to customary conditions and shareholder approval in relation to the Cornerstone Placement and the Rights Issue to be obtained at the EGM, anticipates a comprehensive refinancing of its balance sheet consisting of a EUR 250 million equity raise and a refinancing of its existing bank facility.

EUR 250 million equity raise

The equity raise of EUR 250 million consists of: 

• Cornerstone Placement of c. EUR 53.3 million committed by a number of top tier investors, including NN Investment Partners B.V. (acting in its capacity as asset manager for and on behalf of its affiliated clients in the Netherlands (all entities part of NN Group N.V.)), ASR asset management (on behalf of a.s.r. Insurance companies and a.s.r. policyholders) and Sterling Strategic Value Fund SA, SICAV-RAIF (together the “Cornerstone Investors”), pre rights at a price of EUR 2.60 per share

• Irrevocable commitment of c. EUR 59.7 million by the Cornerstone Investors to take up their rights under the Rights Issue in full; and

• The balance of the Rights Issue (EUR 137 million) is underwritten by a consortium of banks through a volume underwriting commitment, subject to customary conditions.

Both the Cornerstone Placement and the Rights Issue will be submitted for shareholder approval at the EGM to be held on 30 November 2020, with the intention to complete the refinancing by year end. The terms of the Rights Issue (including the issue price for the new shares) will be announced following the EGM and set forth in a prospectus (which will be made available free of charge through the website of the company) and the Rights Issue is expected to be announced and launched shortly following the EGM. Fugro has entered into a volume underwriting commitment with Barclays, ING and Rabobank (in cooperation with its partner Kepler Cheuvreux) (the “Joint Global Coordinators”), and ABN AMRO, BNP Paribas, Credit Suisse and HSBC (the “Joint Bookrunners”), subject to customary conditions. ABN AMRO will act as the Subscription, Paying and Listing Agent for the Rights Issue.

Refinancing of the existing bank facility 

• Replacement of the Existing Bank Facility with a new EUR 225 million revolving credit facility and a EUR 200 million term loan, both with a maturity of December 2023, arranged by the existing bank group: ABN AMRO, Barclays, BNP Paribas, Credit Suisse, HSBC, ING and Rabobank 

• The completion of the refinancing of the Existing Bank Facility is conditional upon the completion of the proposed Rights Issue and Cornerstone Placement

Key terms and conditions

• The new revolving facility and term loan are backed by a comprehensive security package 

• The revolving credit facility is expected to have an initial coupon of EURIBOR+4.25% and depending on leverage can vary between EURIBOR+2.75% and EURIBOR+5.50%. The term loan has an initial coupon of EURIBOR+5.50% and will gradually increase in bi-annual steps in the second and third year towards EURIBOR+8.00%  

• Dividend payments are restricted. Until mid-2022 no dividends will be paid. After that date, dividends may only be paid if net leverage is equal to or less than 2 times (post-IFRS 16)

• Covenants  apply on solvency ratio (>=33.33%), net leverage (equal to or less than 3.25:1) and interest coverage (at least 2.50:1) 

As a result of the proposed refinancing Fugro’s pro-forma net leverage will be reduced to 2.0 times (pre-IFRS16) and 2.4 times (post-IFRS16) and its maturity profile extended, whilst maintaining significant liquidity and financial flexibility to benefit from future growth opportunities. The new capital raised will also provide sufficient liquidity to address the upcoming convertible bonds maturing in 2021. From time to time Fugro may seek to retire or repurchase outstanding convertible bonds through cash purchases, in open market purchases, privately negotiated transactions or otherwise. Such repurchases if any, will depend on market conditions, the Company’s liquidity requirements, contractual restrictions and other factors.

Shortly following the completion of the various transactions, the ordinary shares (and certificates) will be combined based upon a ratio to be determined by the Board of Management. This will result in fewer outstanding ordinary shares (and certificates) and a higher trading price per certificate. For technical reasons, approximately 2 months after completion of the Cornerstone Placement and the Rights Issue, the nominal value of the ordinary shares will be reduced to ensure that all shares in the capital of Fugro will have the same nominal value of EUR 0.05. The share consolidation and reduction of the nominal value of the ordinary shares will need to be approved by the EGM to be held on 30 November 2020.

Amendment of Fugro’s protective measures

Fugro proposes to make two changes to its corporate governance structure, as set out below. These will result in the Company complying with the principles of the Dutch corporate governance code.

The Foundation Continuity Fugro (Stichting Continuiteit Fugro) has agreed to terminate the call option agreements which provide the Foundation with a right to exercise a call option on preference shares in relation to Fugro's Curacao based subsidiaries, Fugro Consultants International N.V. and Fugro Financial International N.V. in certain specific circumstances. The termination is subject to the Rights Issue being completed. For more information on the call option arrangement Fugro refers to its 2019 annual report, ‘protective measures’ on pages 82-83. 

Furthermore, in connection with its refinancing, Fugro has the intention to terminate the certification of its shares. Termination of the certification of the shares will be subject to, amongst others, completion of the Cornerstone Placement, the receipt of certain approvals and a resolution of Fugro's general meeting at the 2021 annual general meeting to amend the Fugro articles of association. Fugro aims to complete this process in H1 2021. For more information on the certification of shares Fugro refers to its 2019 annual report, 'protective measures' on pages 82-83.

Cautionary Statement

Neither this announcement nor any part of it is an offer to sell or a solicitation of any offer to buy any securities issued by Fugro N.V. (the “Company”) in the United States of America, Canada, Japan, Australia or any other jurisdiction.

In any EEA Member State, other than the Netherlands, and the United Kingdom, this communication is only addressed to and is only directed at qualified investors in that Member State or the United Kingdom within the meaning of the Prospectus Regulation (EU) 2017/1129, as amended.

Neither this announcement nor any part of it is for publication or distribution, directly or indirectly, in whole or in part, in or into the United States of America, (including its territories and possessions, any state of the United States and the District of Columbia) (the “United States”). The information in this announcement does not contain or constitute an offer to acquire, subscribe or otherwise trade in shares, subscription rights or other securities of the Company in any jurisdiction. Any securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”), and may not be offered, sold, pledged, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, in or into the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States. There is no intention to register any securities referred to herein in the United States or to make a public offering of such securities in the United States.

This document does not constitute a prospectus within the meaning of the Prospectus Regulation (EU) 2017/1129, as amended, and does not constitute an offer to acquire securities. Any offer to acquire the securities referred to herein will be made, and any investor should make his investment, solely on the basis of information that will be contained in the prospectus to be made generally available in the Netherlands in connection with such offering. When made generally available, copies of the prospectus may be obtained free of charge through the website of the Company.

In the United Kingdom, this document and any other materials in relation to the securities described herein is only being distributed to, and is only directed at, persons who are “qualified investors” (as defined in the Prospectus Regulation (EU) 2017/1129, as amended) who are (i) persons having professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the “Order”), or (ii) high net worth entities falling within Article 49(2)(a) to (d) of the Order or (iii) persons to whom it would otherwise be lawful to distribute them, all such persons together being referred to as “Relevant Persons”. Persons who are not Relevant Persons should not take any action on the basis of this document and should not act or rely on it.

This announcement contains forward-looking statements, which reflect the Company’s current views, expectations, assumptions and information regarding future events and financial and operational development. Without limitation, any statements including words such as “intend”, “expect”, “anticipate”, "target", “may”, “believe”, “plan”, “estimate” and other expressions which imply indications or predictions of future development or trends, and which are not based on historical facts, are forward-looking statements. Forward-looking statements inherently involve both known and unknown risks and uncertainties as they depend on future events and circumstances. Forward-looking statements do not guarantee future results or development and the actual results, performance or events may differ materially from those described in forward-looking statements. Neither the Company nor any of its affiliates assumes any obligations to update any forward-looking statements.

Barclays Bank Ireland PLC is regulated by the Central Bank of Ireland. ING Bank N.V., Coöperatieve Rabobank U.A. and ABN AMRO Bank N.V. are regulated by the Dutch Central Bank (De Nederlandsche Bank), BNP Paribas is lead supervised by the European Central Bank (ECB) and the Autorité de Contrôle Prudentiel et de Résolution (ACPR) (and its London Branch is authorised by the ECB, the ACPR and the United Kingdom Prudential Regulation Authority (the “PRA”) and subject to limited regulation by the Financial Conduct Authority (the “FCA”) and the PRA, Credit Suisse Securities (Europe) Limited is authorised by the PRA and regulated by the FCA and PRA in the United Kingdom and HSBC Bank plc is regulated by the FCA and the PRA.  . The Joint Global Coordinators and the Joint Bookrunners are acting exclusively for Fugro and no one else in connection with the equity offering or any other matters referred to in this document. The Joint Global Coordinators and the Joint Bookrunners will not regard any other person (whether or not a recipient of this document) as a client in relation to the equity offering or any other matters referred to in this document and will not be responsible to anyone other than Fugro for providing the protections afforded to their respective clients or for the giving of advice in relation to the contents of this document the equity offering or any transaction, matter, or arrangement referred to in this document