GomSpace Group AB (publ) ("GomSpace" or the "Company") has entered a convertible loan agreement of SEK 53.6 million and announces the intention of the board of directors of the Company to resolve on a rights issue of between SEK 100 to 125 million (the "Rights Issue"). The terms and conditions for the Rights Issue will be announced following a decision by the board of directors to carry out the Rights Issue, indicatively during first quarter of 2023, with the intention to have the loan amount of SEK 53.6 million converted into new shares in the Rights Issue. The convertible loan is part of a broader financing plan to secure both the long-term funding of the ambitious product investment program announced by GomSpace earlier in 2022 and the short-term working capital needs of the Company, consisting of the SEK 53.6 million convertible loan, the EUR 18 million credit facility from the European Investment Bank announced earlier today and the intended Rights Issue of between SEK 100 to 125 million (of which SEK 53.6 million is intended to be contributed by way of set-off of the convertible loan).
Background and reasons
The convertible loan is part of a broader financing plan to secure both the long-term funding of the ambitious product investment program announced in the Company's interim report for the first quarter of 2022 and the short-term working capital needs of the Company, consisting of the SEK 53.6 million convertible loan, the EUR 18 million credit facility from the European Investment Bank announced earlier today and the intended Rights Issue of between SEK 100 to 125 million (of which SEK 53.6 milion is intended to be contributed by way of set-off of the convertible loan).
The board of directors has assessed the most appropriate timing of the intended Rights Issue and, in light of moving forward with an equity financing besides a convertible loan and a credit facility, the time required for preparing and having a prospectus approved by the Swedish Financial Supervisory Authority, as well as the board of directors deeming it appropriate to initiate the subscription period after the publication of the Company's financial report for the fourth quarter of 2022, intends to resolve on the Rights Issue and announce the terms and conditions, indicatively during the first quarter of 2023.
Assuming a fully-subscribed Rights Issue of between SEK 100 to 125 million (of which SEK 53.6 milion is intended to be contributed by way of set-off of the convertible loan), the net proceeds from the Rights Issue are intended, in order of priority, to be used to cover:
1. investment in internal research and development projects of an enlarged satellite platform, and
2. operating expenses and to finance the working capital.
Any proceeds remaining from the Rights Issue after covering the above mentioned purposes are intended to be used to cover general corporate purposes.
Board of directors of GomSpace, comments: "The board of directors continuously review's the Company's existing and forecasted cash flows to ensure that the Company has the funds and resources required to conduct the business and the strategic direction decided by the board. The convertible loan ensures sufficient funds to meet the short-term working capital needs of the Company. In addition, the indended conversion of the loan into new shares in the contemplated Rights Issue is expected to fulfill the capital injection requirement of at least EUR 4.8 million, which is a condition for drawdown of tranche A (EUR 5 million) under the credit facility with the European Investment Bank. Altogether, the convertible loan, the credit facility from the European Investment Bank and the intended Rights Issue are intended to secure full financing of the current business plan until the Company is expected to be cash flow positive."
Niels Buus, CEO of GomSpace, comments: "As communicated earlier, with the goal of becoming the European nano- and microsatellites champion we have introduced a new strategy. Now we are happy to announce that we have also secured the short-term and long-term financing for our plans and operation. As the first part of the strategy, we aim to double the standard product content in the deliveries to our customers by initiating a Product Investment Program to create a modular capability to support customers' different needs for applications and In-Orbit Demonstration platforms. In that program we will utilize our relations with our recurring customers who are aiming for mission-critical application requiring a new level of reliability that does not exist in the new space industry today. We are proud and grateful for the trust and support of our main shareholders in helping to put together this financing package. "
Convertible loan agreement
The Company has entered a convertible loan agreement with a consortium consisting of its largest shareholder The Hargreaves Family No. 14 Settlement as well as board members and members of the executive management. In addition to the largest shareholder, there are 10 lenders in total, including the CEO, the CFO and the rest of the members of the executive management (seven of them are shareholders in the Company as of today). The loan amounts to SEK 53,593,350 in total (approximately 72 percent of the total loan amount has been contributed by the largest shareholder).
The loan carries an annual interest rate of five (5) per cent as from 1 April 2023 and matures on 31 December 2023. The loan can be converted in a future new share issue (through set-off), to the same terms as offered to other investors, alternatively repaid to the lenders in cash no later than the maturity date 31 December 2023. The Company's and the lenders' mutual intention is to have the loan amount converted into new shares in the contemplated Rights Issue (through set-off). In the Rights Issue, if resolved upon, the lenders will not have any separate preferential right that goes beyond the pro-rata preferential right that the respective lenders will have based on their shareholding (if any) in the Company at the record date of the Rights Issue. Conversion of any part of the loan amount exceeding the respective lenders' pro-rata preferential right to subscribe for new shares in the intended Rights Issue will thus be subject to allotment of new shares without support of subscription rights. There is no lock-up or similar arrangement restricting the lenders from trading in the Company's shares meaning that the preferential rights will be finally determined on the basis of their respective shareholding as of the record date of the intended Rights Issue and the respective lenders' undertaking to covert the loan to new shares shall only apply to the extent the lender, as a result of subscription, will not pass the applicable threshold for placing a mandatory bid for the remaining shares in the Company (30 per cent of the total number of votes in the Company). No renumeration will be paid for the subscription undertakings pursuant to the loan agreement.
The convertible component of the loan is on a contractual basis and the loan is thus not a convertible debenture issued pursuant to the Swedish Companies Act. Several lenders are closely related to the Company but the convertible loan does not trigger the requirement of a shareholders' approval pursuant to the Swedish Securities Council's ruling 2019:25.
The intended Rights Issue
The board of directors today announces its intention to resolve on an issue of new shares of between SEK 100 to 125 million with preferential rights for the Company's shareholders, i.e. the Rights Issue as defined above. The issue resolution is intended to be adopted with support of the authorisation from the annual general meeting held on 22 April 2022.
Provided that the Rights Issue is resolved upon and fully subscribed, the Company will receive between SEK 100 to 125 million (of which SEK 53.6 milion is intended to be contributed by way of set-off of the convertible loan) before deduction of costs related to the transaction (primarily consisting of fees to legal advisors and costs for practical management). The intended Rights Issue will be secured up to approximately between 54 to 43 percent (depending on the size of the Rights Issue) through the convertible loan agreement (refer to the section "Convertible loan agreement" above for further information).
The board of directors of the Company intends to resolve on the Rights Issue and announce the terms and conditions, including a timetable, indicatively during the first quarter of 2023. If resolved upon, full terms and conditions for the Rights Issue will be disclosed in a prospectus to be published by the Company no later than in conjunction with the commencement of the subscription period.
Setterwalls Advokatbyrå AB has acted as legal adviser to GomSpace in respect of the convertible loan agreement and will act as legal adviser to GomSpace in connection with the intended Rights Issue.
For more information, please contact:
Niels Buus (CEO)
Tel: +45 40 31 55 57
About GomSpace Group AB
The Company's business operations are mainly conducted through the wholly-owned Danish subsidiary, GomSpace A/S, with operational office in Aalborg, Denmark. GomSpace is a space company with a mission to be engaged in the global market for space systems and services by introducing new products, i.e. components, platforms and systems based on innovation within professional nanosatellites. The Company is listed on the Nasdaq First North Premier Growth Market exchange under the ticker GOMX. FNCA Sweden AB, firstname.lastname@example.org the Company's Certified Adviser. For more information, please visit our website on www.gomspace.com.
This information is information that GomSpace is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 18.10 p.m. CET on November 25, 2022.
The information in this press release does not contain or constitute an offer to acquire, subscribe or otherwise trade in shares or other securities in the Company. No action has been taken and no measures will be taken to permit a public offering in any jurisdictions other than Sweden.
This release is not a prospectus in accordance with the definition in the Prospectus Regulation (EU) 2017/1129 ("Prospectus Regulation") and has not been approved by any regulatory authority in any jurisdiction. This announcement does not identify, or purport to identify, risks (direct or indirect) that may be associated with an investment in shares or other securities in the Company. A prospectus (the "Prospectus") is intended to be prepared in connection with the Rights Issue and be reviewed and approved by the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) which is the national competent authority in Sweden under the Prospectus Regulation. In order for investors to fully understand the potential risks and benefits associated with a decision to participate in the Rights Issue, any investment decision should only be made based on the information in the Prospectus. Thus, investors are encouraged to review the Prospectus in its entirety. This press release constitutes an advertisement in accordance with article 2 k of the Prospectus Regulation.
The information in this press release may not be released, distributed or published, directly or indirectly, in or into the United States of America, Australia, Japan, Canada, Hong Kong, New Zealand, Singapore, South Korea, South Africa or any other jurisdiction in which such action would be unlawful or would require registration or any other measures than those required by Swedish law. Actions in violation of these restrictions may constitute a violation of applicable securities laws. No shares or other securities in the Company have been registered, and no shares or other securities will be registered, under the United States Securities Act of 1933, as amended (the "Securities Act") or the securities legislation of any state or other jurisdiction in the United States of America and no shares or other securities may be offered, sold or otherwise transferred, directly or indirectly, in or into the United States of America, except under an available exemption from, or in a transaction not subject to, the registration requirements under the Securities Act and in compliance with the securities legislation in the relevant state or any other jurisdiction of the United States of America.
Within the European Economic Area ("EEA"), no public offering of shares or other securities ("Securities") is made in other countries than Sweden. In other member states of the EU, such an offering of Securities may only be made in accordance with an applicable exemption in the Prospectus Regulation. In other member states of the EEA which have implemented the Prospectus Regulation in its national legislation, any offer of Securities may only be made in accordance with an applicable exemption in the Prospectus Regulation and/or in accordance with an applicable exemption under a relevant national implementation measure. In other member states of the EEA which have not implemented the Prospectus Regulation in its national legislation, any offer of Securities may only be made in accordance with an applicable exemption under national law.
In the United Kingdom, this press release and any other materials in relation to the securities described herein is only being distributed to, and is only directed at, and any investment or investment activity to which this press release relates is available only to, and will be engaged in only with, "qualified investors" (within the meaning of the United Kingdom version of the EU Prospectus Regulation (2017/1129/ EU) which is part of United Kingdom law by virtue of the European Union (Withdrawal) Act 2018) who are (i) persons having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); (ii) high net worth entities etc. falling within Article 49(2)(a) to (d) of the Order; or (iii) such other persons to whom such investment or investment activity may lawfully be made available under the Order (all such persons together being referred to as "relevant persons"). In the United Kingdom, any investment or investment activity to which this communication relates is available only to, and will be engaged in only with, relevant persons. Persons who are not relevant persons should not take any action on the basis of this press release and should not act or rely on it.
This press release contains forward-looking statements that reflect the Company's intentions, beliefs, or current expectations about the Company's future results, financial condition, liquidity, development, prospects, anticipated growth, strategies and opportunities and the markets in which the Company operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "expect", "anticipate", "intend", "may", "plan", "estimate", "will", "should", "could", "aim" or "might", or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The Company does not guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors and readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither the Company nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release, unless it is not required by law or Nasdaq First North Growth Market's rule book for issuers.
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