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All is not lost on Utfors

Two months after filing for financial restructuring Utfors, the Swedish telecoms company, has been bought by Norwegian communications operator Telenor for SEK264 million (EURO30 million). Finnmezzanine Fund II, managed by CapMan, had written off its EURO13.4 million investment in the company but will now recover six per cent of its capital.

Telenor has reached an agreement with the Utfors’ board, bank consortium, restructuring committee and shareholders representing 34.4 per cent of the shares in Utfors, which is listed on the O list of the Stockholm Exchange. The company will be integrated with Telenor Business Solutions AB.

The transaction is dependent on the agreement of the company’s principle creditors and court approval of a proposed debt settlement of 25 per cent. Telenor Business Solutions will buy the lenders’ debt then convert it into shares as well as making a cash payment to Utfors, which will be forwarded to creditors. The combination of converted debt and cash payment will give the acquirer a 90 per cent stake as well as two per cent in convertibles.

Founded as a spinout of Uppsala University in 1995 Utfors provides broadband communication services to the corporate market in the Nordic countries. The company was listed in December 2000, providing early VC investors such as Litorina Kapital with an exit. During the first half of 2002, Utfors’ net sales grew to SEK 307.1 million. However, the company’s financial results remained negative. Utfors started to seek new sources of financing earlier this year after its banks announced the company no longer had access to financing due to a breach of covenants.

The total investment in Utfors accounts for about 15 per cent of the total capital of Finnmezzanine Fund II and 1.2 per cent of the total capital managed by CapMan.