EQS-Adhoc: ams-OSRAM AG: ams OSRAM to secure long-term stable financial base for structural growth

Ad hoc Announcement pursuant to Art. 53 Listing Rules of SIX Swiss Exchange
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Not for distribution or release, directly or indirectly, in or into the United States, Australia, Canada or Japan or any other jurisdiction in which such distribution or release would be unlawful

ams OSRAM to secure long-term stable financial base for structural growth

• Combination of a rights issue, senior unsecured notes and other financial instruments, in total EUR 2.25bn, covering all expected financing needs until 2025/26.
• Financing of around EUR 1.9bn (out of total EUR 2.25bn) in fall/winter 2023/24:
  • a rights issue of EUR 800m, for approval at Extraordinary General Meeting (EGM) on 20-Oct-2023,
  • a new issuance of senior unsecured notes of around EUR 800m, and
  • asset-level financings of around EUR 300m.
• Additional debt instruments of around EUR 350m will complete the package in 2024 in a mix subject to market conditions.
• Comprehensive financing plan to increase equity ratio to approx. 30% and to reduce debt, with the aim of achieving investment grade profile by 2026.
• Q3 profitability expected to reach the upper end of the guided range of 5% - 8% adjusted EBIT, Q3 guidance for revenues of EUR 840m to 940m reconfirmed.

Premstaetten, Austria, and Munich, Germany (27 September 2023) -- ams OSRAM (SIX: AMS) plans to strengthen its balance sheet for structural growth targeting investment grade profile.
The company plans to secure a total of EUR 2.25 billion through the combination of a capital increase, new corporate bonds, and other financing instruments.
“Step by step we deliver what we have outlined. Firstly, we have sharpened our strategy towards structural growth. Secondly, we are cleaning-up our semiconductor portfolio by exiting non-performing businesses. Thirdly, we are making our organization efficient and accountable. The foundation for ‘re-establishing the base’ of ams OSRAM is having a solid and sustainable capital structure. With the holistic financing plan we present today, we aim to put our balance sheet on a solid footing, such that we can fully concentrate on executing our strategy for growth, higher profitability and monetizing innovation”, says Aldo Kamper, CEO of ams OSRAM.
The comprehensive financing follows a multi-stage plan: A proposed rights issue in the amount of EUR 800 million will be combined with an issuance of senior unsecured notes in EUR and USD, which are expected to raise a total of around EUR 800 million. The volume of the capital increase, which is scheduled for approval at an Extraordinary Shareholders meeting on October 20^th, 2023, is underwritten by the banks HSBC, Morgan Stanley and UBS. In addition, ams OSRAM expects to execute certain asset transactions, such as sale and lease backs of corporate assets to keep overall borrowing cost lower in a high interest environment, in winter 2023/24. The total financing package is expected to be completed next year with an additional EUR 350 million in a mix of debt instruments, such as unsecured notes, bi-lateral debt facilities, or other instruments – the mix will be subject to market conditions.
“The multi-element financing plan is designed to strengthen the balance sheet of ams OSRAM. Our comprehensive plan consists of new equity to reduce gross and net debt as well as new senior notes to refinance additional outstanding debt with a well-balanced maturity profile. We will also use additional financing instruments, such as sale & lease back transactions, with the aim of bringing the company on track to reach a healthy investment grade leverage.”, said Rainer Irle, CFO of ams OSRAM.
The financing plan creates a solid base for the strategic realignment of ams OSRAM. The company is focusing its semiconductor portfolio on its profitable core business with intelligent sensor and emitter components. In doing so, the company aims to expand its leading position in the relevant automotive, industrial, and medical sectors. This will be complemented by selected, highly innovative offerings for the consumer electronics markets, such as micro-LED. The Automotive & Specialty Lamps segment continues to be an important part of the Group after its portfolio was cleaned up and is delivering sustainable double-digit adj. EBIT margins.
The new strategy and the associated efficiency program ‘Re-establish the Base’ aim to align the Group with the focused semi-conductor portfolio and to strengthen profitability with expected run-rate savings of around EUR 150 million by end of 2025. ams OSRAM is well on the track for achieving this. The organizational adjustments to strengthen accountability and to make the set-up leaner (e.g. reducing from 4 to 3 business units) are close to being fully implemented. Preparations are progressing for the exit of the passive optical components business, which is no longer part of the core business. Initial talks with interested parties are promising. Potential proceeds from a sale of the non-core semiconductor portfolio could also be used to reduce leverage.

Details of the financing plan fall/winter 2023/24 - Extraordinary General Meeting for Rights Issue
ams OSRAM invites its shareholders to an Extraordinary General Meeting in Premstaetten, Austria, on October 20, 2023, to ask its shareholders for approval to increase the capital (link to EGM details). By issuing subscription rights, shareholders will have the opportunity to buy additional shares at a discount, preserving their value share in ams OSRAM, or sell their respective rights. The proceeds from the Rights Issue are designated primarily for reduction of gross debt.


Placement and later repurchase of treasury shares
ams OSRAM intends to sell its entire self-held 12.86 million of treasury shares prior to the start of the rights issue. Under Austrian corporate law, the company’s treasury shares are not entitled to subscription rights in the event of a capital increase. Essentially, the sale is a technical measure to avoid automatic dilution. Consequently, ams OSRAM intends to repurchase treasury shares in the market after successful execution of the rights issue to cover outstanding obligations under its long-term incentive programs. Details of this public share buyback program will be determined by the Management and the Supervisory Board and communicated in due time.
Senior unsecured notes
The company plans to issue senior unsecured notes (mix of EUR, USD and potentially staggered maturities) with a total volume of around EUR 800 million in 2023. The new issuance is interlinked with the Rights Issue. Any new bond issuance could also be combined with a tender offer for the outstanding senior notes to optimize the debt structure and interest costs and allow existing bondholders to roll over their risk exposure.
Assets transactions to optimize borrowing cost
In view of the increased interest rate level compared to 2020, the company plans asset transactions, including, for example selling certain company assets and subsequently leasing them back. The implicit borrowing costs of such transactions are typically lower compared to straight debt financing and thus be designed to optimize overall borrowing costs under the planned financing package. These transactions are planned to be of the order of EUR 300 million and further details will be published once contracts have been signed.
Extension of the Revolving Credit Facility (RCF) and OSRAM Licht AG minority share holdings
ams OSRAM’s core relationship banks are expected to extend the currently undrawn EUR 800 million RCF by one year to September 2026. The RCF mainly serves as a backstop for the outstanding put options of the OSRAM Licht AG minority shareholders. The put options (including compounded interest) stood at EUR 748 million as of 30 June 2023, representing around 17% of total shares outstanding. 
State funding or grants
The company has received confirmation for grants and support by state entities showing confidence in its innovation and industrialization power (e.g. IPCEI link and MIDA link) and will continue to apply under eligible schemes globally. All governmental grants combined, the company expects a high triple digit million EUR amount of support until 2033. Such support is typically tied to certain milestones that need to be achieved per scheme. These fundings allow the company to accelerate the related technology developments as they typically support research & development expenditures or partially cover investments in property, plant & equipment and are reflected in the company’s business plans.

Pro-forma Equity Ratio at approx. 30% after implementing complete financing plan
Upon completion of all financing measures, ams OSRAM will have strengthened the balance sheet, with an expected pro-forma equity ratio of approximately 30% (compared to 18 percent in June 2023) and a smoother debt maturity profile. The equity ratio is defined as equity to total assets ratio. The financing would result in a pro-forma group leverage ratio as of Q2 2023 below 2x, defined as net debt / adjusted EBITDA. The company will work towards fulfilling all requirements for achieving investment grade over time.

Change in Supervisory Board
The EGM will also be asked to elect Arunjai Mittal to the Supervisory Board of the company in a by-election after Dr Wolfgang Leitner resigned from the board in early September 2023 due to personal reasons. Arunjai has over 30 years of experience in the industry (link to CV). He will further strengthen the technology and industry expertise of the Supervisory Board.

Conference calls for Investors, Analysts and Press
ams OSRAM will host a conference call for analysts and investors as well as a press call on the announced holistic financing plan on Thursday, 28 September 2023. The conference call for analysts and investors will start at 9.00am CEST and can be joined via webcast. The press call will take place at 10.15am CEST, journalists who would like to join the press call can register here.

Disclaimer
This announcement constitutes neither an offer to sell nor a solicitation to buy securities. Any offer regarding any publicly offered securities of ams-OSRAM AG (“ams-OSRAM AG” or the “Company,” and together with its subsidiaries, the “Group”) in Austria will be made solely by means of, and on the basis of, a securities prospectus (including any supplements thereto, if any) to be approved by the Austrian Financial Market Authority (Finanzmarktaufsichtsbehörde, the “FMA”) and to be published in accordance with the Regulation (EU) 2017/1129 (the “Prospectus Regulation”) on the website of the Company (www.ams-osram.com). An investment decision regarding any publicly offered securities of ams-OSRAM AG should only be made on the basis of a prospectus. Any orders relating to securities of ams-OSRAM AG received prior to the commencement of a public offering will be rejected. If a public offering is to be made in Austria, a securities prospectus will be published promptly upon approval by FMA in accordance with the Prospectus Regulation and will be available free of charge from ams-OSRAM AG during usual business hours, or on the ams-OSRAM AG website.
This announcement is not a prospectus according to Articles 35 et seqq. of the Swiss Financial Services Act (the “FinSA”) and as such does not constitute an offer to sell nor a solicitation to buy securities of ams-OSRAM AG or any other company. This announcement is made for information purposes only and shall not constitute investment advice. Any offer regarding any publicly offered securities of ams-OSRAM AG in Switzerland will be solely made by means of, and on the basis of, a prospectus (including any supplements thereto, if any) that is deemed approved in Switzerland without additional approval procedure in accordance with the FinSA, which will be made available free of charge from ams-OSRAM AG and UBS AG during regular business hours, or on the ams-OSRAM AG website prior to the public offering. An investment decision regarding any publicly offered securities of ams-OSRAM AG should only be made on the basis of the prospectus published for such purpose.
This announcement is not for distribution or release, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia), Australia, Canada, Japan or any other jurisdiction in which such distribution or release would be unlawful. This announcement does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States, Australia, Canada or Japan, or any other jurisdiction in which such offer or solicitation may be unlawful. Any failure to comply with these restrictions may constitute a violation of United States, Canadian, Australian, Japanese or other applicable securities laws. The securities mentioned herein have not been, and will not be, registered under the US Securities Act of 1933, as amended (the “Securities Act”).  The securities may not be offered or sold in the United States, absent registration or an exemption from the registration requirements of the Securities Act. There will be no public offer of the securities in the United States.
This announcement is not a prospectus for the purposes of Prospectus Regulation or Regulation (EU) 2017/1129 as it forms part of domestic law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018 (the “UK Prospectus Regulation”) but an advertisement for the purposes of the Prospectus Regulation and the UK Prospectus Regulation, and as such does not constitute an offer to sell or the solicitation of an offer to purchase securities of ams-OSRAM AG. Investors should not subscribe for any securities referred to in this document except on the basis of the information contained in any prospectus relating to the securities, the former of which may be published by the Company in final form on its website (www.ams-osram.com). Any such prospectus would include a description of risk factors in relation to an investment in the Group. You should conduct your own independent analysis of all relevant data provided in any prospectus and you are advised to obtain independent expert advice as to the legal, tax, accounting, financial, credit and other related aspects before making any investment decision.
The information set forth in this announcement is only addressed to and directed at persons in member states of the European Economic Area (each a “Relevant State”) who are “qualified investors” within the meaning of Article 2(e) of the Prospectus Regulation (“Qualified Investors”). In the case of the United Kingdom, such information is only addressed to and directed at and is only being distributed to "qualified investors" within the meaning of the UK Prospectus Regulation who are (i) ”investment professionals” within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); (ii) high net worth companies, and other persons to whom it may otherwise lawfully be communicated falling within Article 49(2)(a) to (d) of the Order, or (iii) persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as “Relevant Persons”). The information in this announcement must not be acted on or relied on (i) in the United Kingdom, by persons who are not Relevant Persons, and (ii) in any Relevant State, by persons who are not Qualified Investors. Any investment or investment activity to which the information in this announcement relates is available only to or will be engaged in only with, (i) Relevant Persons in the United Kingdom, and (ii) Qualified Investors in any Relevant State.
No representation, warranty or undertaking, express or implied, is made by the Group, its shareholders, HSBC, Morgan Stanley or UBS (the “Banks”) or any of the Group’s, its shareholders’ or the Bank’s respective affiliates or any of its or their respective directors, officers, employees or agents (the “Representatives”) or any other person as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information set forth in this announcement or the opinions contained therein or any other statement made or purported to be made in connection with the Company or the Group, for any purpose whatsoever. No responsibility, obligation or liability whatsoever, whether arising in tort, contract or otherwise, is or will be accepted by the Group, the Company, its shareholders or the Banks or any of their respective Representatives or any other person for any loss, cost or damage howsoever arising from any use of the information contained in this announcement, or for information or opinions or for any errors, omissions or misstatements contained therein or otherwise arising in connection therewith.
The information in this announcement is of an abbreviated nature and is subject to updating, revision, amendment, verification, correction, completion and change without notice. None of the Group, the Company, its shareholders, the Banks or any of their respective Representatives or any other person undertakes any obligation to provide the attendee or recipient with access to any additional information or to update the information in this announcement or to correct any inaccuracies in any such information, including any financial data or forward-looking statements. Such information should be considered in the context of the circumstances prevailing at the time and has not been, and will not be, updated to reflect material developments which may occur after the date thereof. None of the Group, the Company, its shareholders, the Banks or any of their respective Representatives have independently verified any of the information in this announcement.
This announcement may contain statements about ams-OSRAM AG or the Group that are or may constitute or include forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as “plans”, “targets”, “aims”, “believes”, “expects”, “anticipates”, “intends”, “estimates”, “will”, “may”, “continues”, “should” and similar expressions. These forward-looking statements reflect, at the time made, the Group’s beliefs, intentions and current targets/aims concerning, among other things, the Company’s or the Group’s results of operations, financial condition, liquidity, prospects, growth and strategies. Forward-looking statements include statements regarding: objectives, goals, strategies, outlook and growth prospects; future plans, events or performance and potential for future growth; economic outlook and industry trends; developments of the Company’s or the Group’s markets; and the strength of the Company’s or any other member of the Group’s competitors. Forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. The forward-looking statements in this announcement are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in the Group’s records and other data available from third parties. Although the Group believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies and other important factors which are difficult or impossible to predict and are beyond its control. Forward-looking statements are not guarantees of future performance and such risks, uncertainties, contingencies and other important factors could cause the actual outcomes and the results of operations, financial condition and liquidity of the Company and other members of the Group or the industry to differ materially from those results expressed or implied in this announcement by such forward-looking statements. No assurances can be given that the forward-looking statements will be realized. The forward-looking statements speak only as of the date of this announcement. The Group expressly disclaims any obligation or undertaking to release any updates or revisions to any forward-looking statements to reflect any change in the Group’s expectations with regard thereto or any changes in events, conditions or circumstances on which any forward-looking statements are based. No representation or warranty is made that any of these forward-looking statements or forecasts will come to pass or that any forecast result will be achieved. Undue influence should not be given to, and no reliance should be placed on, any forward-looking statement.
The Banks are acting only for the Company and no one else, will not regard any person (whether or not a recipient of this announcement) other than the Company as a client,  and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, and will not be responsible for providing advice to anyone in relation to the transactions described herein, or other matter or arrangement referred to in this document.


About ams OSRAM
 
The ams OSRAM Group (SIX: AMS) is a global leader in intelligent sensors and emitters. By adding intelligence to light and passion to innovation, we enrich people’s lives.

With over 110 years of combined history, our core is defined by imagination, deep engineering expertise and the ability to provide global industrial capacity in sensor and light technologies. We create exciting innovations that enable our customers in the automotive, industrial, medical and consumer markets maintain their competitive edge and drive innovation that meaningfully improves the quality of life in terms of health, safety and convenience, while reducing impact on the environment.

Our around 21,000 employees worldwide focus on innovation across sensing, illumination and visualization to make journeys safer, medical diagnosis more accurate and daily moments in communication a richer experience. Our work creates technology for breakthrough applications, which is reflected in over 15,000 patents granted and applied. Headquartered in Premstaetten/Graz (Austria) with a co-headquarters in Munich (Germany), the group achieved over EUR 4.8 billion revenues in 2022 and is listed as ams-OSRAM AG on the SIX Swiss Exchange (ISIN: AT0000A18XM4).

Find out more about us on https://ams-osram.com

ams is a registered trademark of ams-OSRAM AG. In addition many of our products and services are registered or filed trademarks of ams OSRAM Group. All other company or product names mentioned herein may be trademarks or registered trademarks of their respective owners.
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