The board of directors in Minesto AB ("Minesto" or the "Company") has today, subject to the approval by an extraordinary general meeting, resolved to carry out a partially secured rights issue of shares of approximately SEK 153.4 million before deduction of transaction costs (the "Rights Issue"). The subscription price has been set to SEK 5.20 per share. Those who on the record date are registered as shareholders in Minesto have, for each fourteen (14) existing shares, preferential rights to subscribe for three (3) newly issued shares in the Rights Issue. The Company has received subscription commitments from Corespring New Technology AB, the Company's senior management, and the chairman of the board, amounting to approximately SEK 15.2 million, corresponding to approximately 9.9 percent of the Rights Issue. Furthermore, the Company has entered into agreements on guarantee commitments of SEK 104.8 million, which secures the Rights Issue to approximately 78.2 percent. The notice to the extraordinary general meeting will be published today through a separate press release. Due to the Rights Issue, the publishing of Minesto’s Year-End Report and Annual Report is brought forward to the 24th of February 2023. Previously communicated dates were 16th of March 2023 (Year-End Report) and 23rd of March 2023 (Annual Report).
Summary
The board of directors in Minesto has today, subject to the approval by an extraordinary general meeting, resolved to carry out the Rights Issue.
The extraordinary general meeting will be held on 20 February 2023 and the notice will be published through a separate press release.
The net proceeds from the Rights Issue are intended to be used for the following purposes stated in order of priority; (i) continue commercialization and expansion of the Company’s project portfolio in early target markets, (ii) finance the completion of Dragon 12 installation, commissioning and continuous production, (iii) finance the first phase of the 10 MW site at Hestfjord, Faroe Islands, and initial investments in infrastructure, (iv) strengthening of balance sheet to enable orders, matching public investments and external site development and (v) general costs associated with the business operations.
Upon full subscription in the Rights Issue, Minesto will receive approximately SEK 153.4 million before deductions of costs related to the Rights Issue.
The subscription price in the Rights Issue is set to SEK 5.20 per share.
Shareholders in Minesto on the record date of 27 February 2023 have preferential rights to subscribe for new shares in the Rights Issue.
One (1) existing share in the Company entitle the holder to one (1) subscription right. Fourteen (14) subscription rights entitle for subscription of three (3) new shares.
Shareholders who choose not to participate in the Rights Issue will have their ownership diluted by up to approximately 17.6 percent but have the opportunity to compensate themselves financially for the dilution effect by selling their subscription rights.
The subscription period in the Rights Issue is expected to take place from 1 March 2023, up to and including 15 March 2023.
Corespring New Technology AB, the Company’s senior management and the chairman of the board has entered into subscription commitments which amounts to approximately SEK 15.2 million in total, corresponding to approximately 9.9 percent of the Rights Issue.
The Company has entered into agreements on guarantee commitments of SEK 104.8 million, corresponding to approximately 68.3 percent of the Rights Issue.
In total, approximately 78.2 percent of the Rights Issue is secured by subscription- and guarantee commitments.
The full terms and conditions for the Rights Issue will be available in the prospectus which is expected to be published on or about 27 February 2023.
Due to the Rights Issue, the publishing of Minesto’s Year-End Report and Annual Report is brought forward to the 24th of February 2023. Previously communicated dates were 16th of March 2023 (Year-End Report) and 23rd of March 2023 (Annual Report).
”Over the past year, Minesto’s technology has refined into products that have proven their competitiveness by continuous electricity production and unmatched performance. This rights issue strengthens our financial position for scale-up investments and broadening of a commercial project portfolio. Minesto has entered a new development phase on the road towards utilization of a so far untapped global natural resource.” says Dr Martin Edlund, CEO, Minesto.
Background and motive
Minesto currently has a verified technology for extracting electricity from ocean currents with an established plant in operation in the Faroe Islands. In order to realize the following global market potential, the Company needs to strengthen its financial resources. Minesto will require a strong balance sheet and long-term delivery capacity to take orders from larger players and provide project customers with power plants. This investment initiative gives Minesto the opportunity to achieve commercial breakthrough. The strategy includes three main steps: (i) Expanding the project portfolio and initiating the first project investments, (ii) completing the installation of the first commercial-scale power plant, Dragon 12 (1.2 MW), as well as (iii) realizing the first phases of the first commercial tidal park in Hestfjord, Faroe Islands.
Use of proceeds
If the Rights Issue is fully subscribed, the Company will receive a maximum of approximately SEK 153.4 million before deduction of transaction costs. Given the Company's current business plan and against the above background, the Company intends to distribute the expected net cash in accordance with the below order of priority:
Continue the commercialization and expand of the Company’s project portfolio in early target markets – approximately 25 percent.
Finance the completion of Dragon 12 installation, commissioning and continuous production – approximately 25 percent.
Finance the first phases of the 10 MW site at Hestfjord, Faroe Islands, and initial investments in infrastructure – approximately 20 percent.
Strengthening of balance sheet to enable sales orders, match public investments and external site investments – approximately 20 percent.
General costs associated with business operations– approximately 10 percent.
Extraordinary general meeting
Through a separate press release, the Company will convene an extraordinary general meeting to be held on 20 February 2023 to approve the Rights Issue.
The Rights Issue
Those who on the record date, 27 February 2023, are registered in the share register of Minesto as shareholders will receive one (1) subscription right for each share held in the Company. Fourteen (14) subscription rights entitle the holder to subscription of three (3) new shares. In addition, investors are offered to subscribe for shares without subscription rights. The subscription price is SEK 5.20 per share, which means that Minesto will receive gross proceeds of approximately SEK 153.4 million before deduction of issue costs, provided that the Rights Issue is fully subscribed.
Provided that the Rights Issue is fully subscribed, the number of shares in Minesto will increase by 29,497,530, from 137,655,143 to 167,152,673, and the share capital will increase by a maximum of SEK 1,474,876.50, from SEK 6,882,757.15 to SEK 8,357,633.65. Shareholders who choose not to participate in the Rights Issue will have their ownership diluted by up to 17.6 percent through the Rights Issue (based on the total outstanding shares after the Rights Issue). These shareholders have the opportunity to compensate themselves financially for the dilution effect by selling their subscription rights received.
Subscription- and guarantee commitments
Minesto has received subscription commitments from Corespring New Technology AB and the Company's senior management, Martin Edlund (CEO), Fredrik Ahlström (CFO), Bernt Erik Westre (CTO), David Collier (COO) and the Company's chairman Jonas Millqvist, amounting to a total of approximately SEK 15.2 million, corresponding to approximately 9.9 percent of the Rights Issue. Furthermore, the Company has entered into agreements guarantee commitments on customary terms, including conditions that subscription is made at least equivalent to the subscription commitments. The guarantee commitments amount to a total of SEK 104.8 million, corresponding to approximately 68.3 percent of the Rights Issue. Through the subscription and guarantee commitments, the Rights Issue is secured to approximately 78.2 percent. Neither the subscription nor the guarantee commitments are secured by bank guarantees, escrow funds, pledges or similar arrangements.
The guarantee commitments are subject to a underwriting commission, adapted to the prevailing market condition, of twelve (12) percent of the guaranteed amount in cash compensation. No commission is paid for the subscription commitments.
The full terms and conditions of the Rights Issue and further information about the parties that have entered into subscription- and guarantee commitments will be presented in the prospectus that is expected to be published around 27 February 2023.
Lock-up undertakings
Prior to the execution of the Rights Issue, all the board of directors and senior management of the Company as well as the major shareholders Corespring New Technology AB and BGA Invest AB have entered into lock-up undertakings, which, among other things mean that they, with customary exceptions, have undertaken not to sell shares in the Company. The lock-up undertakings expire on the day that falls 180 days after the announcement date of the outcome in the Rights Issue.
Furthermore, the Company has undertaken towards Pareto Securities AB and Skandinaviska Enskilda Banken AB, subject to customary exceptions, not to issue additional shares or other share-related instruments for a period of 12 months after the end of the subscription period.
Financial reporting brought forth
To ensure a formally correct execution of the Rights Issue, the board of directors of the Company has resolved to bring forward the publishing of Minesto’s Year-End Report and its Annual Report to the 24th of February 2023. Previously communicated dates were 16th of March 2023 (Year-End Report) and 23rd of March 2023 (Annual Report) respectively.
Advisers
Pareto Securities AB and Skandinaviska Enskilda Banken AB are acting as Joint Global Coordinators and Bookrunners. MAQS Advokatbyrå is legal adviser to the Company and Baker & McKenzie Advokatbyrå is legal adviser to the Joint Global Coordinators and Bookrunners in connection with the Rights Issue.
