Vend Marketplaces ASA (VENDA) Earnings Call Transcript & Summary

Yes. I think it's a bit after 2:00. So welcome, everyone to the call with Schibsted today. We just wanted to give you a possibility to address some questions after the transactions yesterday. With me today is Ragnar, our CFO; and Marlin also on my Investor Relations team. And before we start, just a little bit of housekeeping. So Ragnar will start with a very short introduction with the comment on yesterday. And then please feel free to raise -- use the raise-hand function in Zoom to ask questions. [Operator Instructions] So with this, I think we can hand over to Ragnar.

Thank you, Jann-Boje. I will be short, but I guess I surly will say that we are, of course, pleased with the successful placement and entering of the TRS yesterday. So the reason behind and the purpose of the 2 [Technical Difficulty]

Guys, I think you've flipped to mute.

Sorry, I had some technical problem. So I think I sort of muted at the start. So I am sort of start up again. I am -- start by saying that we are, of course, pleased by the successful placement and entering of the TRS that we did yesterday. The 2 transactions enable us to reduce our financial leverage, which is currently above our target range. And secondly, it will also have been [ loss to ] put us in a position where we are going to do share buybacks, which we sort of given the present valuation of chipset, I think it's accretive to our shareholders. And third is also that the TRS will give us financial flexibility, while we, at the same time, maintain our exposure to [indiscernible] price development, showcasing that we are still supportive of the strategy and further value creation potential of Adevinta. So I think that is important to say. And then I expect us to come back to questions around more of the technicalities around the transactions that happened yesterday. So I think we'll open up for questions.

[Operator Instructions] I think you're first in line Peter. The floor is yours.

So I was curious, you mentioned -- I'd love to just understand a little bit more the details of how the -- exactly how the swap works.

Yes, I can go a little bit more detail into that. We haven't reached what we call a total [ return shop ], meaning that we have sold 3% of shares in Adevinta to Danske Bank, but we are through this instrument, maintaining or keeping the financial exposure to the 3%, meaning that we are also then sort of -- it's supporting [ underlining ] and that continue to support the [indiscernible] further value development of Adevinta's company. So as I sort of for, let's say, having -- for doing so, we are technically paying sort of -- we have a cost on that, which is very much comparable to having an interest on a loan. So we are paying a certain margin on the 3%, the value of the contract as from the start of the [indiscernible] yesterday. The contract runs for 12 months. We can terminate the contract prior to that. And we also have the opportunity to ask Danske for an extension of the contract, meaning that it's not sort of fixed 100% in time, but the shares will be sold in exactly 12 months.

And right now, can I just repeat back what I think I'm hearing. So essentially, you sold the 3%, you've gotten cash for that 3%. You've entered simultaneously into a swap. So you are essentially saying, we're taking the cash now for the 3%. We're still exposed to the upside or downside on those shares and then you will choose to unwind the swap. So essentially, you will set the price effectively on the shares you sold at some point in the future when you unwind this swap, but you've taken the cash and maintain the exposure?

That's correct. And from a cash perspective, there will not be any cash, let's say, sort of going between us and Danske unless we prolong the contract or when we -- or until we terminate the contracts or...

Did the choice to go in swap have anything to do with the lockup terms? Or is it -- like was this a way around the lockup? Or is this entirely separate just...

It's far or less separate. It's more sort of what we saw feasible up against what we sort of -- what kind of position we would like to continue to have in Adevinta and also up against sort of the let's say, the total amount of liquidity that we were able to obtain by this.

And I think also there were some people who were asking what is happening with the shares which Danske holds, and basically Danske is holding these shares until the TRS expires. And when the TRS expires or is terminated, basically Danske, in a normal case, selling these shares via an ABB in the market. So that is normally how the process works in such transaction. Was that fine for you, Peter?

Yes, that was good. I'll go with another question if no one else has one.

Sure. Please go ahead.

I'm just curious -- I think historically, you said you wanted to hold all the shares, waiting to see if there'd be some sort of larger transaction for the full [ stake ]. With this transaction, it's -- I'm reading something into this transaction. I'm just curious if there's any message on your current plans for the 28% you still hold? If there's any...

It should not be any into this beyond the fact that we have seen it as valuable for us and our shareholders to sort of strengthen the financial capacity so at this point in time, and that this was sort of an efficient way of doing it. And so it balance the fact that we still are exposed to the share price development of Adevinta because we wanted to and we think that this is a good thing. And if you look at, let's say, the overall position of our [indiscernible] 28%, and if we also combine that with sort of the 2 of the main shareholders, of course, 3 of us still have the controlling stake in the company, [ Permira ] and eBay also has sort of above [ 50% ], 2 of those altogether. So it shouldn't change anything around the what sort of going into -- sort of what kind of options then they have for the longer-term ownership in Adevinta.

Next in line, I think, is Silvia. Silvia, please go ahead.

I actually have come up with a follow-up question. Just to clarify, what happens when the swap expires? Is that a project that you have no exposure to the share price of Adevinta at that point? I'm just wondering if the ownership has passed to Danske, it will be Danske doing the ABB?

It will be Danske controlling the ABB, but Schibsted will sort of have the financial exposure. So the plus or the minus compared to yesterday's share price and which was then the level which the contract was entered into. So we have the financial exposure, but it's Danske that will sort of do the ABB. And, of course, now -- so that is...

For the financial exposure you're including the final disposal of the shares in the market?

It's...

The final price that they are going to achieve?

Yes. The financial exposures is related to this, but yesterday's closing price NOK 77.25. And then depending like what kind of a price is achieved by the ABB. [Operator Instructions] Yes, I think next in line is PV from Morgan Stanley.

I'm kind of in a tough spot form -- but one question. So what kind of discussions have you had with eBay or Permira regarding this transaction? And what is the kind of feedback been from both of them or one of them if you have only talked with one?

I do not want to sort of give a specific comment on the discussions that we have had with either with the [ children ]. I think we have a pretty close relationship and a good dialogue with both. And normally, of course -- so these transactions are primary transactions. Then let's say, given the present terms and agreements that we have, we have been in a position whereby we could sell 3% without actually having any sort of [indiscernible] 33% without any sort of near dialogue with others, except for closely informing that we are doing it. But then we had a good dialogue with eBay, in which we had to tell them [indiscernible] on sell-downs beyond 3%, but it was okay for us to do this, this time.

Yes, next in line is Nick. Nick, please go ahead.

So just wanted to ask what does this mean for the Lendo sale process? Should we assume that this sale was done because the Lendo deal is looking unlikely? Or is there still a good chance that it gets sold in the next few months?

The Lendo process is still ongoing. But it's also, I think it's correct to say that given the present, let's say, sort of financial market sort of -- then talking both on the debt market and the equity market, it's sort of -- we are in a situation where we see that things take a little bit more time than we have actually hoped for. So we expect to continue the process, so sometime into Q1 as well, but it's still ongoing.

Yes. Here's a question from the chat. So someone is asking if you can provide more information on the buyback program. And if you think you should just buy B shares, so was it A B together? Or will the decision be based on liquidity? If you can comment on that.

The plan is that we will sort of come back with more information on the share buyback program probably early next week. And it's intention also to sort of start the program as soon as possible. Normally, of course, we will sort of buy the shares at the lowest price. And for the time being, if you look at the spread between A and B, that favors purchase of B shares. But it's also so that the liquidity in total in Schibsted is not higher. So -- and then sort of for us to keep a certain momentum on the share buyback. I think also we're in a positive situation where we can also buy A shares. But we are looking a bit more into the details for what we can say about this we'll comment when we are formalizing the program. So you'll hear from us next week on that.

Yes, I think PV you're next in line. So please go ahead.

Yes. So maybe one question. Like would you consider continuing on this type of strategy where you sell like low single-digit stakes of Adevinta to the market and do a buyback? Or do you think that at some point, there might be like a larger movement in shares? I know until October, you can't go below 25%, but there's still some room to do that. So would you kind of consider continuing down this route that you have in a way how it started?

This is sort of a decision we have taken based on the circumstances as of today or as of yesterday, to be emphasized, and it's not as a part of our strategy that we will sort of plan to commit to further sell-downs. We have done this. We have a 90 days, 3 months lockup on further sell-downs due to the transactions yesterday. And then also, of course, valid up until October next year, we have a tag-along arrangement with eBay for further sell-downs. But I would say that I think we have done this. We are now with a -- we have a solid balance sheet. We are in a position that we can do what we -- sort of do the share buy-backs. And then also, we will continue to work with, let's say, the longer-term ownership of Adevinta and there are other strategy for that sort of moving into the -- going into Q1 next year. And of course, getting closer to the end of the lock-up in October next year. It's not [indiscernible] clear on what we think will happen then.

Yes, we had like a first call this morning with almost 60 people joining. Maybe we cleared most questions in the morning, but I'm going to just wait a couple of seconds to see if anyone hear has a question, raise their hands or if you have something in the chat. Nothing at this stage, we don't have -- no more questions. So a short call, but thank you for joining. And of course, if you have questions and want to take it offline, please send an e-mail to Marlin or myself or give us a call and then we will take it from there. So thank you.

Thank you. Thank you for participating.