Volvo Cars, the premium car maker, has announced it is seeking to raise €500m from a bond issue, its first foray into the global corporate bond markets in its 89 year history. The Swedish company will begin a roadshow for potential investors on Monday next week.
Volvo Cars has secured corporate credit ratings from Standard & Poor’s (S&P) of BB with a positive outlook.
S&P said in its analysis: “The company's business risk profile is supported by a well-established market position as a mid-sized car manufacturer, being active in Western Europe, Asia, and North America, helped by a track record of safety, reliability, innovation, and technological expertise.
“We expect Volvo's strategy will enable the company to benefit from stronger market demand, higher pricing and wider profit margins, which will improve its competitive position. We also envisage that the transition to more flexible and cost-efficient manufacturing platforms, which is currently underway, will support profitability and product quality.”
The proceeds from the bond issue are being raised for general corporate purposes and are aimed at increasing the company’s financial flexibility and diversifying its funding sources.
Earlier this week Volvo Cars announced a robust start to 2016 with revenues for the quarter up 24 per cent year-on-year to SEK41.7bn, generating an operating profit of SEK3.1bn and an operating profit margin of 7.5 per cent.
Håkan Samuelsson, president and chief executive of Volvo Cars, said: “Volvo’s global transformation is gathering pace. After a strong first three months of the year, both sales and profitability are expected to increase in FY2016 compared to last year.”
The Notes will be offered pursuant to Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). There is no assurance that the offering will be completed or, if completed, as to the terms on which it is completed. The Notes to be offered have not been registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or unless pursuant to an applicable exemption from the registration requirements of the Securities Act and any other applicable securities laws. This press release is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy the Notes, nor shall it constitute an offer, solicitation or sale in any jurisdiction in which, or to any person to whom, such offer, solicitation or sale would be unlawful.
This announcement does not constitute and shall not, in any circumstances, constitute a public offering nor an invitation to the public in connection with any offer within the meaning of Directive 2003/71/EC of the Parliament and Council of November 4, 2003, as implemented by the Member States of the European Economic Area (the “Prospectus Directive”). The offer and sale of the Notes will be made pursuant to an exemption under the Prospectus Directive, as implemented in Member States of the European Economic Area, from the requirement to produce a prospectus for offers of securities.
In the United Kingdom, this announcement is being distributed to, and is directed at, only (a) persons who have professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”); (b) 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 (c) persons to whom an invitation or inducement to engage in an investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as “relevant persons”). The investments to which this announcement relates are available only to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such investments will be available only to or will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents. Persons distributing this announcement must satisfy themselves that it is lawful to do so.
Volvo Car Group in 2015
For the 2015 financial year, Volvo Car Group recorded an operating profit of 6,620 MSEK (2,128 MSEK in 2014). Revenue over the period amounted to 164,043 MSEK (137,590 MSEK). For the full year 2015, global sales reached a record 503,127 cars, an increase of 8 per cent versus 2014. The record sales and operating profit cleared the way for Volvo Car Group to continue investing in its global transformation plan.
About Volvo Car Group
Volvo has been in operation since 1927. Today, Volvo Cars is one of the most well-known and respected car brands in the world with sales of 503,127 in 2015 in about 100 countries. Volvo Cars has been under the ownership of the Zhejiang Geely Holding (Geely Holding) of China since 2010. It formed part of the Swedish Volvo Group until 1999, when the company was bought by Ford Motor Company of the US. In 2010, Volvo Cars was acquired by Geely Holding.
As of December 2015, Volvo Cars had almost 29,000 employees worldwide. Volvo Cars head office, product development, marketing and administration functions are mainly located in Gothenburg, Sweden. Volvo Cars head office for China is located in Shanghai. The company’s main car production plants are located in Gothenburg (Sweden), Ghent (Belgium), Chengdu and Daqing (China), while engines are manufactured in Skövde (Sweden) and Zhangjiakou (China) and body components in Olofström (Sweden).