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International Financing Review April 4 2020 103

EQUITIES AMERICAS

Danske resolves Bavarian Nordic stick for

Citi and Nordea

„ DENMARK Banks held stock after 68% take-up for DKr2.82bn rights issue

The first major stick position to result from a

European rights issue in the current crisis has

been resolved quickly and efficiently, with an

unusual and opportunistic transaction carried

out by Danske Bank last week in Danish biotech

BAVARIAN NORDIC.

On Monday, Bavarian Nordic reported take-up

of 68% for its fully underwritten DKr2.82bn

(US$419.3m) rights issue, leaving Citigroup and

Nordea with a residual holding worth around

US$135m at the time.

Danske was co-lead manager on the rights

issue, and Needham & Company a co-manager,

with neither underwriting.

In a move described as opportunistic

by several sources, Danske scouted out

appetite among investors for the stock on

Wednesday and then approached Citigroup

and Nordea with an offer of DKr104.50 per

share. The 6.4m shares were then placed

with investors, most of whom were already

shareholders.

At DKr104.50 per share, pricing was a 2.3%

discount to Wednesday’s close and the trade

totalled around DKr668.8m (US$96.5m). The

rights issue pricing was DKr109 per share.

While large institutional investors showed

up for the rights issue, the disappointing

result of 68% take-up was blamed on private

investors’ standing by as equity markets

plummeted.

In line with Danish regulations, both banks

were obliged to publicly disclose they had

holdings in excess of 5% and have since said

their holdings are now below 5%.

QUICK RESOLUTION

It is a positive and collaborative conclusion to

the first major rights issue stick in a European

company that got caught up in the Covid-19

pandemic, having been in the planning since

September.

Sticks are often a sensitive topic, with banks

unnatural shareholders placing an overhang on

the underlying stock and unwelcome publicity

for the company concerned.

“From the company perspective we are

more than happy that this block trade was

orchestrated so rapidly and at such a good

price so we have no overhang in our stock,” a

spokesperson for Bavarian Nordic said. He also

praised the banks for working together.

Bavarian Nordic shares soared as much as

16% on Thursday following the disposal. As the

shares were mostly placed with shareholders the

surprise sale was particularly painful for those

that had shorted the stock.

Clearly Citigroup and Nordea had their own

plans for how to unwind their stakes but it was

perhaps helpful that a third-party was able to

effect the exit.

Banks are naturally cautious about

coordinating to manage sticks since there is an

ongoing criminal case in Australia that centres

on the legality of this standard market practice.

And as Danske was not sitting on stock it may

have found it easier to solicit interest.

Bavarian Nordic’s main shareholder ATP,

Denmark’s state pension fund, declared an

increase in its stake to 11.12% on Thursday

following the trade.

The biotech firm first announced the

planned fundraising in October, well before the

coronavirus crisis came into sight. The proceeds

will repay a €185m bridge loan used to acquire

the manufacturing and global rights to two

commercial vaccines.

Lucy Raitano

10 IFR Equities and SE 2327 p 95 - 106 .indd 103 03 / 04 / 2020 20 : 40 : 34