| The Management Board of Work Service S.A. in Wrocław, ul. Gwiaździsta 66, 53 - 413 Wrocław, entered into the register of entrepreneurs of the National Court Register kept by the District Court for Wrocław Fabryczna in Wrocław, 6th Commercial Division of the National Court Register, under no. KRS 0000083941, holding tax identification number (NIP) 8971655469 ("Work Service" or the "Company"), present its position ("Position") on the Call for Subscription for shares ("Shares") of the Company ("Call for Subscription"), announced on 15 March 2021 by GI International societa a responsabilita limitata ("GI International s.r.l.") with its registered office in Milan, Italy, Piazza IV 20124 Milan, Italy, registered in Italy under fiscal code 06609080962 (“Caller”), presenting its own assessment regarding the Caller’s planned increase in its capital commitment to the Company. I. Information on the Call for Subscription On 15 March 2021, the Caller announced a Call for Subscription, the object of which is 49.41% of the Company's Shares, i.e., 32,492,878 (in words: thirty-two million four hundred and ninety-two thousand eight hundred and seventy eight) ordinary bearer shares, dematerialised, with a nominal value of PLN 0.10 (in words: ten grosz) each. The shares are dematerialised and bear the ISIN code PLWRKSR00019. They have been admitted and introduced to trading on the regulated market (main market) of the Warsaw Stock Exchange ("WSE") and on the main market of the London Stock Exchange. As a result of the Call for Subscription, the Caller intends to purchase up to 32,492,878 (in words: thirty-two million, four hundred and ninety-two thousand, eight hundred and seventy-eight) Shares, constituting 49.41% of the total number of the Company's shares, carrying up to 32,492,878 (in words: thirty-two million, four hundred and ninety-two thousand, eight hundred and seventy-eight) votes at the General Shareholders Meeting, constituting 49.42% of the total number of votes at the General Shareholders Meeting. All the Shares which are the subject of the Call for Subscription are dematerialised and carry one vote each at the General Shareholders Meeting. The party purchasing the Shares, i.e. the Caller, intends to achieve, following the Call for Subscription, up to 65,753,888 (in words: sixty-five million, seven hundred and fifty-three thousand, eight hundred and eighty-eight) votes at the General Shareholders Meeting, representing up to 100% of the total number of votes at the General Shareholders Meeting, which corresponds to up to 65,753,888 (in words: sixty-five million, seven hundred and fifty-three thousand, eight hundred and eighty-eight) shares in the Company, representing up to 100% of the total number of the Company's shares. II. Grounds for the Management Board's position The Management Board of the Company presents the following grounds on the basis of the analysis of these documents and information: a) content of the Call for Subscription, b) market prices of the Company's shares, resulting from the quotations of the shares on the regulated market, in the period of six months preceding the announcement of the Call for Subscription, c) publicly available information on the operation and financial condition of the Company, including the financial statements of the Company, d) internal information on the Company's operations and market data available to the Company's Management Board, III. The effect of the Call for Subscription on the Company's interest, including employment in the Company, the Callers plans for the Company and their likely effect on employment in the Company and the location of its operations i. The effect of the Call for Subscription on the Company's interest Pursuant to paragraph 29 of the Call for Subscription, the Caller treats the acquisition of the Company's Shares as a long-term strategic investment. The Caller's core business is activity on the employment agency market. The Caller does not intend to change the Company's core business. In the contents of the Call for Subscription, the Caller did not present detailed information on the probable effect of the Call for Subscription on the Company's employment and a change of the location of its business. In the opinion of the Management Board, based on the contents of the Call for Subscription and the above statements, there are no grounds to conclude that the Call for Subscription will have a negative impact on the Company's employment and a change of location of the Company's activity. On the contrary, in the opinion of the Management Board, a successful Call for Subscription could result in the Caller's increased involvement in the Company's activity, which could have a positive effect on the Company's financial standing and further prospect’s of its development considering its growing leadership in the market. As indicated below, the Caller's involvement to date has resulted in an improvement of the Company's financial standing and strengthening of its market position. The Company's management board hopes that these trends will continue and that the Caller will continue to support the Company in the process of improving its financial standing and market positioning, which may make the Call for Subscription a success. Due to success of the Call for Subscription, the Caller will increase its position in the Company's shareholder structure, which will translate into its stronger involvement in the Company's operations, the restructuring of its debt and an improvement of its financial standing. In this respect, in the opinion of the management board, the successful completion of the Call for Subscription should be intended as the Company's best interest. ii. Existing involvement of the Caller in the Company's activity Since the conclusion of the Investment Agreement between the Caller and the Company on 13 February 2020 (the "Investment Agreement"), the conclusion of which the Company made available information in its current report No. 12/2020 (with correction: 12/2020/K) published on 13 February 2020. , and subsequently informed of the conclusion of Annex 1, Annex 2 and Annex 3 to the Investment Agreement in current reports No. 40/2020, 47/2020 and 58/2020, respectively. The Caller played a key role in the process of restructuring the Company, stabilizing its financial position and enabling it to continue its operations. As key actions, it can be mentioned: a) Granting bridge financing to the Company ("Bridge Loan") in the total amount of PLN 20,000,000.00 (in words: twenty million zloty). These funds enabled the Company to meet the most urgent liabilities threatening its operations and, for the remainder, to provide working capital financing to increase the Company's liquidity, particularly needed during the COVID-19 pandemic. b) Support in the negotiation of repayment terms for the Company's key liabilities, with the aim of achieving a repayment schedule that is realistic to meet. As a result of the above actions, the Caller's involvement has led to a strengthening of the Company's market position in terms of its financial standing, which has significantly improved the perception of the Company on the market, which has been facing financial problems for a long time iii. Financing Agreement between the Caller and the Company As at the date of the Call for Subscription: a) Gi Group S.P.A., the parent company of the Caller, is the guarantor of the Company's obligations under the restructuring agreement entered into between the Company and the Company's creditor banks on 9 July 2020. (annexed twice). The Company informed about the conclusion of the Restructuring Agreement in current report No. 42/2020. The Company informed about the conclusion of Annex 1 and Annex 2 to the Restructuring Agreement in current report No. 46/2020 and 55/2020, respectively. b) The Caller is a party to a financing agreement entered into between the Company and the Caller on 10 August 2020 ("Financing Agreement"), which provides that the Company will be granted financing by the Caller in the total amount of PLN 210,000,000.00 (in words: two hundred and ten million zloty) (including the Bridge Loan) (the "Loan Amount") ("Financing"). The Company informed about the conclusion of the Financing Agreement with the Caller in current report No. 54/2020. Under the Financing Agreement, the Financing will be transferred to cover the Company's payment obligations, including inter alia the repayment of the existing reduced debt towards creditor banks and bondholders of the Company in amounts as indicated in the repayment schedule, as well as the repayment of the existing debt towards the Social Insurance Institution (ZUS), the Tax Office, PRON and ensuring the required working capital funding. The Loan Amount shall become due and payable as follows: a) part of the Financing Amount in the amount of PLN 19,200,000.00 (nineteen million two hundred thousand zloty) became due on 31 December 2020 and has already been repaid by the Company; b) part of the Financing Amount in the amount of 10,800,000.00 (ten million eight hundred thousand zloty) will become due on 31 July 2021; c) on 31 July 2021 a part of the Financing Amount in the amount of PLN 50,000,000.00 (in words: fifty million zloty) shall also become due and payable; d) the remainder of the Loan Amount will become due on 31 July 2025. Pursuant to the Financing Agreement, the Company undertakes to increase its share capital by at least PLN 30,000,000.00 (in words: thirty million zloty) to the maximum amount of PLN 105,000,000.00 (in words: one hundred and five million zloty) and to offer the newly issued shares to the Caller at the issue price of PLN 0.39 (in words: thirty nine grosz) per share. The Caller undertakes to subscribe for such number of shares under the planned share capital increase whose total subscription price will correspond to the portions of the Loan Amount that will become due on 31 July 2021. The funds received by the Company from the Caller under the Financing Agreement made it possible to restructure the Company's debt (described in point IV ii below), which improved the Company's financial situation. IV. Management Board's Position Concerning the Price of the Company's Shares Offered in the Call for Subscription i. Purchase price of the Company's Shares in the Call for Subscription and the statutory requirements The purchase price of the Company Shares in the Call for Subscription ("Call for Subscription Price") has been set at PLN 1.45 (in words: one zloty and forty-five grosz) per one Company Share. All the Shares covered by the Call for Subscription carry the same number of votes at the Company's General Shareholders Meeting. As stated in the Invitation: a) The Purchase Price is not lower than the minimum price determined in accordance with legal regulations and meets the criteria indicated in Article 79 of the Act of 29 July on Public Offering and the Introduction of Financial Instruments to Organised Trading and on Public Companies ("Act"). b) The arithmetic mean of the volume-weighted average daily prices from the six-month period preceding the Call for Subscription announcement, during which the Company shares were traded on the main market, amounts (rounded up to two decimal places) to PLN 1.08 (one zloty eight grosz) per Company share. c) The arithmetic mean of the volume-weighted average daily prices for the three months preceding the Call for Subscription announcement, during which the Company shares were traded on the main market, amounts (rounded up to two decimal places) to PLN 1.17 (in words: one zloty and seventeen grosz) per Company share. d) The Purchase Price is not lower than the highest price the Caller, its subsidiaries or its parent company have paid for shares of the Company in the period of 12 months immediately preceding the Call for Subscription announcement date. The highest price the Acquirer, its subsidiaries or parent company paid for the Company's shares in the 12-month period directly preceding the Call for Subscription announcement date was PLN 0.62 (sixty-two grosz) per one share of the Company. The Caller is not and has not been in the period of twelve months preceding the announcement of the Call for Subscription a party to the agreement referred to in Article 87 section 1 item 5 of the Act in relation to the Shares. Neither the Caller nor its subsidiaries or parent companies have issued any property or rights in exchange for shares in the Company in the 12 months immediately preceding the date of the Call for Subscription. In summary, the Call for Subscription Price is higher by: a) more than 34% from the arithmetic mean of the daily volume weighted prices of the preceding three months; b) more than 23% from the arithmetic mean of the daily volume weighted prices of the preceding six months; c) more than 133% of the price the Caller has paid for the Shares in the last 12 months. ii Other significant factors influencing the Management Board's position An additional important factor that the Company's Management Board considers in developing its Position is an analysis of the Company's long-term financial condition. The Company has been struggling with financial problems for a long time, the direct cause of which was the unsuccessful expansion into the Russian and German markets and the increasing demand for working capital financing due to the increase in the scale of operations. This has led to the Company's over-indebtedness and liquidity problems. In order to stabilise the Company's situation, restructuring activities have been carried out since 2017. The most important restructuring measures include: a) Divestments - the sale of the Company's assets and the use of proceeds from the sale to reduce the Company's debt, key divestments: IT Kontrakt - sale on 31 March 2017, proceeds from the sale of approximately PLN 147,000,000.00 (in words: one hundred and forty-seven million zloty), which allowed the redemption of bonds in the amount of approximately PLN 80,000,000.00 (in words: eighty million zloty); Exact Systems - sale on 31 October 2018, proceeds from the sale of approximately PLN 155,000,000.00 (in words: one hundred and fifty-five million zloty), from the proceeds of the transaction bank debt was reduced by approximately PLN 104,000,000.00 (in words: one hundred and four million zloty); Antal - sale of shares and trademark on 23 December 2019, proceeds from the sale of approximately PLN 10,400,000.00 (in words: ten million four hundred thousand zloty), funds from the transaction were used to repay the Company's non-banking liabilities and improve working capital; Work Service GmbH & Co. KG (German business) - sale on 27 July 2020, proceeds from the sale in the amount of PLN 4,500,000.00 (in words: four million five hundred thousand zlotys), proceeds from the transaction were used to partially repay the bridge financing from the Caller; b) Debt restructuring: Bank debt - extension of loan maturities (2018, 2020), aligned with the planned disinvestment schedule and the process of attracting an investor, which were intended to provide a source of debt repayment. Finally, on 9 July 2020, the Company entered into a cooperation agreement with banks for the restructuring of debt (current report 42/2020). The bank debt restructuring assumes a 50% reduction of the outstanding debt and repayment according to an agreed schedule - quarterly instalments payable by 30 June 2023. (3 repayment schedule). As part of the execution of the aforementioned Agreement, the Company entered into a bank debt repayment arrangement with the banks, which was accepted in the proceedings for approval of the partial arrangement. The decision on approval of the partial arrangement with the banks adopted in the proceedings for approval of the arrangement issued by the District Court for Wrocław - Fabryczna, 8th Commercial Division for bankruptcy and restructuring cases, became final on 22 January 2021. Bonds - rollover of a significant part of the bond debt (2018) and definition of new debt repayment terms (2020, current report 3/2020), assuming for series W, X and Z bonds a debt reduction of 70%, repayment of the remaining debt (30%) in the form of a one-off payment upon finalisation of the transaction with the Caller; Public law liabilities - the Company maintains a high level of tax and social security liabilities due. As a result of discussions with state institutions, instalment agreements were concluded, assuming that the repayment of liabilities in a schedule adapted to the Company's liquidity capabilities will be postponed; c) Investor acquisition process - The Company, in parallel with the divestment and debt restructuring processes, conducted an investor acquisition and new financing process. As part of the process, the Company has mandated several advisory firms to represent it in the process. Professional financial investors and HR companies investing / operating in the CEE region were invited to the process. Only a few entities from the broad list of institutions contacted proceeded to advanced analysis of the Company and discussions with the Management Board. However, all reliable entities with the exception of The Caller withdrew from the process due to the difficult situation of the Company and the related investment risks and funding requirements. Summarising the above description of the restructuring activities carried out in the Company, in formulating its opinion, the Management Board has in mind the difficult financial situation of the Company, which has been present for a long time. An additional aspect affecting the Company's financial condition is the current market situation, the global COVD pandemic, which has been affecting the Company's operations for several months. This unforeseen event has further negatively impacted the Company's ability to stabilise its results and the success of its ongoing operations V. Reservations a) Subject to the information originating from the Company and relating to its operations, the Management Board of the Company is not responsible for the truthfulness, reliability, completeness and adequacy of the information on the basis of which it is presented, in particular the information by presented the Caller in the Call for Subscription. b) The Management Board of the Company notes that there may be other opinions on the value of the Company than those presented. c) The Position does not constitute any recommendation to acquire or dispose of shares within the meaning of generally applicable legislation, including Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (Market Abuse Regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC, and constitutes only the performance of the Board's duty under Article 80 of the Act. d) A shareholder of the Company taking a decision whether to respond to the Call for Subscription should make an independent, unassisted assessment of the investment risk, in particular related to the Call for Subscription Price. This position should not constitute the exclusive basis for investment decisions taken by the Company's shareholders. In case of any doubts regarding such a decision, a shareholder of the Company should consult a professional advisor. e) The Position is not a position of the Management Board in the meaning of Article 80 of the Act, in the event of a Call for Subscription announced pursuant to Article 91 section 5 of the Act, which is connected with the intention to withdraw shares of a public company from trading on the regulated market, the management board of such a company is not obliged to present such a position. Podstawa prawna: Art. 17 ust. 1 MAR (Rozporządzenia Parlamentu Europejskiego i Rady (UE) NR 596/2014 z dnia 16 kwietnia 2014 r. w sprawie nadużyć na rynku (rozporządzenie w sprawie nadużyć na rynku) oraz uchylającego dyrektywę 2003/6/WE Parlamentu Europejskiego i Rady i dyrektywy Komisji 2003/124/WE, 2003/125/WE i 2004/72/WE). Podpisy: Iwona Szmitkowska – Prezes Zarządu Nicola Dell’Edera - Wiceprezes Zarządu | |
