Adcore: Invitation to press conference

2001-06-12

Time:

2001-06-12, 09.30 CET (GMT +1)

Venue:

Nybrokajen 11, Stockholm

Speakers:

Göran Wågström (CEO Adcore), Lars Evander (Chairman of the Adcore Board), Ole Oftedal (Board member and CEO i2i venture)

Language:

The presentation will be held entirely in English

Internet, live webcast (web-TV):

Go to http://www.adcore.com/webcast.html

The webcast (streaming video on the web) will be made available at 09.30 CET, (GMT+1). Rerun with index and PowerPoint-slides will available from June 13 or earlier at the same link provided. You’ll need RealPlayer (plugin for your browser) to participate. Download the free RealPlayer 8 Basic from:

http://proforma.real.com/real/player/player1.html?src=homeintl_se,010605rpchoice_c1&dc=612611610

More information:

Besides the attached press release, further information, such as a PowerPoint-presentation-file, will be available at http://www.adcore.com

Adcore focusing on Swedish operations

· The conditions for international expansion have changed dramatically

· In current market conditions, Adcore lacks sufficient resources to attain profitability rapidly enough in its international operations

· Adcore disposes of its international operations and focuses on Sweden

· Göran Wågström leaves the position as CEO

· Ole Oftedal appointed new CEO

The negative development in profit and cash flow has continued in the second quarter of 2001. The measures that were taken during the first quarter will not be sufficient to regain profitability and additional restructuring is required. Adcore is therefore focusing on the Swedish market and disposes of its international operations. Concurrently, the Board of Directors of Adcore and Göran Wågström, CEO, have jointly agreed that Göran Wågström leaves the position as CEO. Ole Oftedal, presently a member of the Board of Adcore and CEO of i2i Venture, is appointed new CEO.

Since the second half of 1999 an extensive expansion strategy has been followed. In addition to organic growth, a large number of companies have been acquired. The rapid change in market conditions has prevented the strategy from being completed and has prevented the company from creating a sufficiently broad mix of competencies and delivery capacity in its international operations. In this situation, Adcore lacks the ability to complete the international expansion. The Board of Directors has therefore decided to focus the resources of the company to the market where Adcore has been, and is, the most successful, Sweden.

“The international expansion has been a failure for Adcore. The company has not had the capacity to manage and develop its international operations, which has made it necessary to dispose of the international units and concentrate operations to Sweden. The Swedish operations have proved to be strong and have good abilities to create long-term value for the shareholders’, says Lars Evander, Chairman of the Board of Adcore.

“The international strategy we decided to adopt when Adcore was formed was based on then prevailing market conditions. In today’s environment, it is no longer possible to complete this strategy. I have pushed for the sale of the international operations and I am convinced the decision is right and will create higher value for the shareholders in the long run’ says Göran Wågström, leaving CEO and President of Adcore. “Of course, I am disappointed at the development and that we are forced to take this measure. As Adcore enters a new phase it is natural to hand over the leadership to someone else. I am very pleased that Ole Oftedal will accept this position. He has the knowledge and the experience that Adcore needs in this situation’, concludes Göran Wågström.

Development after the first quarter 2001

Profits and cash flow in primarily the international operations have showed a continued weak development during the second quarter. The profit in the consulting operations for April was SEK -0.8 million and SEK -12 million for Adcore Sweden and the international operations, respectively. The profit in the consulting operations for May is estimated to be approximately the same as for April. Adcore expects a weak market during the remainder of 2001, with a possible improvement during the fourth quarter at the earliest.

Transaction structure and pro forma financials

Adcore disposes of all operations outside Sweden apart from the interest held in the Japanese operations. The acquirer is a newly founded company, separate from Adcore, mainly owned by the current CEO of Adcore’s operations in Denmark, Martin S. Hauge, and senior consultants in Adcore’s current international operations. The consideration amounts to SEK 30 million in cash, resulting in a capital loss of approximately SEK 1,150 million. The disposal is contingent on approval at an EGM in Adcore, as well as on the acquirer ultimately securing the necessary financing.

In the conditions for the transaction Adcore has committed to cover the needs for working capital in the disposed operations until August 15, 2001 through a credit facility. Such credit facility shall amount to a maximum of SEK 35 million. The loan is to be repaid on August 15, 2001. For the period August 15 – December 31, 2001, Adcore has committed to provide a new credit facility of a maximum of SEK 30 million to cover potential continued needs for working capital in the disposed operations. The amount potentially outstanding under this facility as of December 31, 2001 shall be converted to a loan at market conditions.

Further, the terms of the transaction, include an option for Adcore to acquire a maximum of 20 percent of the shares in the disposed operation, to be exercised no later than 18 months after the disposal.

Pro forma financial effects

Below, the pro forma financial effects of the transaction described above, as well as the disposals that were decided and communicated in connection with the AGM in April, 2001 are described. In addition, shareholders’ equity has been negatively affected by, in addition to the capital loss mentioned above, SEK 200 million mainly related to write-down of goodwill. Further, pre-paid expected proceeds from a rights issue, in an amount of SEK 60 million, have been taken into account in the form of a loan (see “Adcore after the disposal’ below).

Adcore will attain a pro forma profit before restructuring items and capital loss of SEK 19 million for the first quarter 2001.

Adcore after the disposal

In Sweden, Adcore provides a full range of services and has professional employees. In addition, Adcore has a very good reputation among its clients. Many accounts stem from long relationships within industries such as Telecom, Financial institutions, Manufacturing and Retail. This creates good possibilities to grow with profitability in the Swedish market.

The Board of Directors of Adcore estimates there will be a need to improve liquidity in order for the remaining operations to develop satisfactorily. Adcore therefore intends to complete a new issue with preferential rights for the shareholders of Adcore. The total issue will amount to at least SEK 60 million. A group of creditors including IT Provider B.V. and Christer Jacobsson has, through a company under formation, committed, conditional upon the EGM in Adcore to be held on July 9 approving the disposal of the international operations, to subscribe for shares corresponding to a maximum of SEK 60 million in the share issue, to the extent the shareholders do not use their preferential rights. This group has pre-paid expected proceeds from the issue through a loan of SEK 60 million. The loan shall be repaid after the expected completion date of the issue. After the Board has analysed the capital requirements in more detail, the size of the new issue will be established and hence the total issue size may be greater than SEK 60 million.

In conclusion, the decision to concentrate operations to Sweden is considered to be necessary to stop the negative development in profits and cash flow caused by the international operations. It is also considered to constitute the best alternative to create long-term value for the shareholders of Adcore.

Other information

The transaction is contingent upon a decision at an EGM in Adcore that is scheduled for July 9, 2001. Information regarding the transaction will be sent to the shareholders of Adcore around June 25, 2001.

In connection with the transaction above, the Board of Directors of Adcore intends to propose to the EGM a decision to issue warrants to the new CEO, Ole Oftedal. The proposed number of warrants to be issued shall correspond to a maximum dilution of 5%, after full dilution from existing convertibles and warrants. The warrants shall be acquired at market price, set through a valuation by an external party. The conditions for the warrants will be presented in the notice to the EGM at the latest.

Göran Wågström will resign from the Board of Directors of Adcore in connection with the EGM.

The Board of Directors of Adcore has, as part of the decision process for this transaction, obtained a valuation of the operations proposed to be disposed of, from Pareto Securities ASA, which acted as financial adviser to Adcore in connection with the transaction.

Enskilda Securities has advised Adcore in matters related to the transaction.

Stockholm, Sweden, 12 June 2001, Adcore AB (publ).

The complete press release including tables is available to download from the enclosed link.