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Essity Complete Vinda Divestment; Contests Clause Breach Claims

CONSUMER STAPLES

  • Noting that Essity has completed the divestment of its Vinda holding – not unexpected given it received regulatory approval earlier in March.
  • Focus remains on the stance of bondholders arguing the sale is a breach of the EMTN’s cessation of business clause which would trigger early repayment.
  • The Essity press release outlines the company position:

    “Essity has several legal opinions confirming that the divestment of the shares in Vinda does not constitute a ‘cessation of business’ under Essity's EMTN program. These opinions considered several qualitative and quantitative factors, such as the continued business with Vinda under licenses, etc. However, already the fact that Essity only owns 51.59% of the shares and sales account for 8.5% of Essity’s total sales, means that the divestment of the shares does not qualify as ‘cessation of business’.”

  • The market seems to think otherwise with bonds trading richer on the day; their EUR 29s and EUR 30s are over two points higher on the day to trade above EUR 90.
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