Bittnet Group announces buyback of the BNET22 bond issue
Bittnet (BNET), a group of IT companies listed on the Main Market of the Bucharest Stock Exchange, announces the early buyback of the BNET22 corporate bonds issue. The total value of the BNET22 issuance is 4.5 million lei. The bonds had a 5-years maturity and were due in September 2022.
“After early redemption of BNET19 shares in 2019, we decided to repay in May 2021 the BNET22 issuance. Between 2015 and 2018, corporate bonds were an ideal option for financing the accelerated development of Bittnet Group. However, considering the solid financial situation of the Group and the requests received from shareholders to bring the net profit closer to the operational one, last year we proposed at the annual GSM to issue preferential shares and, with the money raised, to repurchase all corporate bond issuances. This approach will greatly increase the business’s profitability by reducing the financing costs. This, in turn, will have a positive effect on the evaluation of Bittnet Group, benefiting all the shareholders,” said Cristian Logofatu, co-founder at Bittnet Group
BNET22 was the second corporate bonds issuance of Bittnet Group, which floated on the SMT AeRO market of the Bucharest Stock Exchange in November 2017. According to Bittnet’s 2018 annual report, the company had borrowed capital, through bonds or loans, in the amount of 32 million lei and equity of 14 million lei. As of April 2021, Bittnet has equity of almost 38 million lei and borrowed capital of approximately 37 million lei. After the repurchase of the BNET22 issue, the capital borrowed by Bittnet Group will decrease to 32.5 million lei.
In line with the information included in the listing memorandum, Bittnet will buy back the BNET22 issue at 100% of the nominal value, which is 100 lei. Together with the nominal value’s repayment, the bondholders will also receive a fraction of the coupon. The coupon fraction will include the period between March 15th, 2021 (payment date for previous coupon) and May 13th, 2021 – the date of payment of the nominal value back to the bondholders. The registration date for identifying the bondholders who will benefit from the early redemption is May 6th, 2021. In line with the Bucharest Stock Exchange Code, the last trading day for BNET22 bonds will be May 4th, 2021.
Bittnet used the 4.5 million lei raised in 2017 by issuing BNET22 bonds to acquire GECAD NET, which rebranded in April 2018 to Dendrio. Between 2017 and 2020, Dendrio’s revenues grew from 20 to 90 million lei as the company became a significant player on the Romanian IT&C integration market.
Following the callback of BNET22 bond issuance, Bittnet will still have three other bond issuances – BNET23, BNET23A and BNET23C, all listed on the SMT-Aero Bonds market. The total value of the remaining three corporate bonds issued by Bittnet is 24,4 million lei. These issuances are amongst the most traded bonds on the Bucharest Stock Exchange AeRO market.
In the General Meeting of Shareholders of Bittnet Group from November 2020, investors have voted in favor of Bittnet Group issuing preferential shares. The management intends for the preferential shares to replace the existing corporate bonds issuances. Preferential shares are hybrid instruments that combine the benefits of bonds with those of shares. Preferential shares do not offer voting rights, but in turn, they offer a priority dividend – similar to an annual interest paid on bonds. Preferential shares have added benefits as the dividend tax in Romania is 5%, while the interest on corporate bonds rate is subject to 10% tax. Consequently, preferential shares financially advantage the investors.