CaseStudy:Frankis GroupBondOffering

NordicCapitalMarketsForumseminaronNonInvestmentGrade
CorporateBondsintheNordics

JohanWentzel,Partner

21.10.2013
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CaseStudy:Frankis GroupBondOffering
Sentica PartnersinBrief

IndependentFinnishprivateequitycompanyfocusedpurelyonacquiringanddevelopingFinnishsmallandmid
sizedcompanies

Sentica wasfoundedin2004byamergerbetweentworegionalFinnishVC/growthinvestors Teknia and

Sentia

Managementcompanyownedbysevenpartners

Investmentteamconsistingof14employeesandtwosenioradvisors

LocalpresenceinFinlandwithofficesinHelsinki,TampereandKuopio

Managesatotalof300millioninthreefundsandisbackedbywellrecognizedFinnishandEuropean
institutions

Currentportfolioof13companies

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 CaseStudy:Frankis GroupBondOffering
TransactionStructure

Frankisinbrief Transactionstructure
Finlandbasedgroupofcompaniesengagedinthefastfoodfranchise
Frakis Group Bond Issue
business,foundedin1987 (Issuer) EUR 30m

Thebrandportfolioisdominatedbytwobrands,Kotipizzawith284
100% 100% 100% 100%
restaurantsand55Burger,Cola,Frieswith36restaurants(12/2012)
Frankis Senhold 2
Domipizza Francount
Finland Oy Oy
Intermsofnumberofstores,FrankisGrouphasamarketshareof
34%inFinland 100% 100% 100%
Kotipizza
Foodstock Kotipizza
OOO
SalesofapproximatelyEUR54.0mandanadjustedEBITDAofEUR Oy Oyj
SPb LLC
5.7m(11%)in2012
Marketing
co-operative

Thetransaction Sourcesanduses
Thebondproceedswereusedtorefinanceexistingbankdebtand Sources (EURm) Uses (EURm)
Bond 30.0 Refinancing of bank debt 13.1
mezzaninedebt,repayshareholdersloans,paytransactioncostsand
Refinancing of mezzanine 6.2
foranincreasedcashposition
Repayment of shareholder loans 9.0
Issueoversubscribedandthebookwasclosedin7hours Transaction costs 0.7
Increased cash position 1.1
PermittedtoincurworkingcapitalfinancingamountingtoEUR1.0m Total 30.0 Total 30.0

Netdebt/EBITDAwasapproximately4.6xatissuance

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 CaseStudy:Frankis GroupBondOffering
BondIssue2013/2016 Summary

Comment Investordemand geographicsplit

Presounding roadshowinHelsinki,StockholmandOslo
10% 4%
Bookclosedafter7hours
Morethan50investorsintheoversubscribedbook
31% 55%
AverageordersizeofapproximatelyEUR0.6 millionwiththelargest
allocatedorderbeingEUR3.0million
Overallprojecttimetablefromkickofftosettlement8weeks

Sweden Finland Other Norway

Investors bysegment
11%

89%

Privatewealth Institutions

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CaseStudy:Frankis GroupBondOffering
Frankis Group TransactionStructure
Issuer FrankisGroupOyj

Instrument Seniorunsecuredbondloan

Volume MaximumEUR30,000,000

Coupon 8.00p.a.,semiannualinterestpaymentsinarrears

FinalMaturity 2April2016,3yearsafterIssueDateatapriceequalto100.00%ofparvalue

Maintenancetests:
NetInterestBearingDebttoEBITDA<5.50x
InterestCoverageRatio>1.75x
Incurrencetests:
NetInterestBearingDebttoEBITDA<4.00x
Financialcovenants InterestCoverageRatio>2.25x

Minimumcashposition:EUR2.0million
NegativepledgewithcarveoutforEUR1.0million
Changeofcontrol:putat101%
Nottodistributedividendsexceeding50%ofpreviousyearsnetprofit,subjecttoIncurrenceTestbeingmet

SubsequentIssues MaximumtotaladditionaltapissuesofEUR15,000,000subjecttoproformaIncurrenceTestbeingmet
CallStructure @104.00%after18months,@103.00%after24months,@102.00%after30months
(American)
Listing TheIssuerhascommittedtolisttheBondsonNASDAQOMXStockholmwithin1yearaftertheIssueDate

LeadManager Pareto

GoverningLaw Swedish

Agent SwedishTrusteeAB
CaseStudy:Frankis GroupBondOffering
Bondvs.Bank PrivateEquityPointofView

BondPros BankPros

Leverageamount Privatesetup
Flexibility terms Directpathtonegotiateandamendafterissue
Bulletstructure Prepaymentflexibility(atexit)
Efficiencytothecapitalstructure

BondCons BankCons

Cementedtermsandsetupafterissue Leverageratioinsomecircumstances
Publicreporting Typicallymorestringenttermsandsetup
Listing
Lackofexperience whattoexpect

FromSenticas pointofviewstabilityoftheunderlyingbusinesshasbeenakeycriteriawhencontemplatingthe
bondpath

Refinancingandinsomecasesgrowthfinancing notnecessarilyplatforminvestmentfinancing