Bawat receives subscription commitments for directed share issue of SEK 19m to fully match first tranche of Nefco-financing together totaling up to SEK 50m and has signed final term sheets with Nefco

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Hørsholm, Denmark, April 17th, 2023 - Bawat Water Technologies AB (”Bawat” or the “Company”) has, since the Company’s press release on March 24th, 2023 explored the conditions to carry out a new share issue to fulfil the condition to match part of the financing from Nefco with equity. Bawat has now received binding subscription commitments for directed share issues of a total of SEK 18.8 million at a subscription price of SEK 1.60 per share, conditional upon Bawat receiving the final approval from Nefco’s Board related to the Nefco-financing. The directed share issues will, indicatively, be divided into two separate share issues, one share issue to external investors including two family offices as anchor investors, which is conditional on being resolved by the Board of Directors of Bawat, and one share issue to certain persons within the board and management, which will be subject to a resolution by a general meeting of Bawat in accordance with Ch. 16 of the Swedish Companies Act (together the “Directed Share Issue”). The total financing commitment from Nefco is confirmed in signed term sheets with loan amount of approx. SEK 25 million (EUR 2.3 million), divided into two tranches with the first tranche of a loan of approximately SEK 15 million to be disbursed in the first half of 2023 and the second tranche of a convertible loan of approximately SEK 10 million in 2024 (the “Nefco-financing”). The Nefco-financing is subject to being matched with equity at a minimum 1:1 ratio in the Company, a condition now being fully fulfilled for the first tranche and additionally partly fulfilled for the second tranche (approx. 40 percent matched) through the Directed Share Issue of SEK 18.8 million. The Company is expecting to receive final approval from Nefco regarding the Nefco-financing in late April 2023 (the “Final Approval”). With the current strategy, the net-proceeds from the Directed Share Issue and the Nefco-financing are expected to be sufficient until the Company shows a positive cash flow and working capital requirements are generated by the business operations.

The Directed Share Issue

Bawat has received binding subscription commitments for the Directed Share Issue of SEK 18.8 million at a subscription price of SEK 1.60 per share. The Directed Share Issue is planned to take place as soon as possible after the Final Approval from Nefco. Under the assumption that the Directed Share Issue will amount to issue proceeds of a total of SEK 18.8 million with a subscription price of SEK 1.60 per share, a total of 11,751,250 shares will be issued in the Directed Share Issue. The new shares in the Directed Share Issue would indicatively correspond to approximately 23 percent of the total number of shares in the Company after the Directed Share Issue.

Subscription commitments have been received from two family offices with thorough insight and knowledge in the shipping industry as anchor investors (SEK 10.1 million), other external investors and some existing larger shareholders amongst others the Chairman of the Board in Bawat, Klaus Nyborg (SEK 1.5 million), CEO Marcus P. Hummer (SEK 0.2 million) and Selfinvest Aps (SEK 1.7 million). The two family offices’ subscription commitments would together result in an ownership of 12 percent of the total number of shares in the Company after the Directed Share Issue. A bridge loan of SEK 4.5 million from Selfinvest Aps and Klaus Nyborg is planned to be partly set off in the Directed Share Issue and partly repaid with proceeds from the Directed Share Issue.

The subscription price of SEK 1.60, which the subscribers has committed to subscribe shares for, has been determined through a book building procedure based on the volume-weighted average price on Nasdaq First North Growth Market. The subscription price corresponds to a discount of approximately 10 percent in relation to the volume-weighted average price on Nasdaq First North Growth Market during the last 30 trading days and approximately 20 percent in relation to the volume-weighted average price on April 14, 2023.

The Directed Share Issue is to be partly decided by the Board of Directors of Bawat with support of the authorization received at the extraordinary general meeting on February 21, 2022, and partly by a general meeting, which will be convened in a separate notice, due to the intention that the Chairman of the Board Klaus Nyborg and CEO Marcus P. Hummer will participate in the Directed Share Issue, in accordance with Ch. 16 of the Swedish Companies Act.

The Board of Directors is of the opinion that the proceeds from the Directed Share Issue would fulfill Nefco’s requirement of matching Nefco-financing with equity which is seen as a favorable long-term financing for Bawat at market conditions and that the Directed Share Issue is positive for the Company's further development and to secure sufficient working capital need. The Board of Directors has also considered the possibility to raise the required equity through a rights issue. The Board of Directors has concluded that a rights issue would entail significantly longer execution time and thereby increased market risk exposure compared to a directed share issue. In addition, given the market volatility that has been observed during the beginning of 2023, and which is still ongoing, the Board of Directors has assessed that a rights issue would also require significant underwriting commitments from an underwriting syndicate, which would entail additional costs and/or additional dilution depending on the type of consideration paid for such underwriting commitments. Moreover, unlike a rights issue, the Directed Share Issue is expected to broaden the shareholder base and provide the Company with new reputable owners, which the Board of Directors believes will strengthen the liquidity of the shares and be beneficial to the Company. The Company’s Board of Directors considers it of immense importance to have long-term and financially strong shareholders.

In light of the above, the Board of Directors has made the assessment that the Directed Share Issue with deviation from the shareholders' preferential rights is the most favorable alternative for Bawat and in the best interest of the Company's shareholders.

If the Company has not received the final approval from Nefco and the Directed Share Issue has not been resolved by the Board of Directors of the Company, on or before 31 May 2023, the undertakings from the subscribers shall lapse.

Nefco-financing final term sheet

The Nefco-financing has been confirmed in a signed term sheets between Nefco and Bawat, with a total loan amount of approximately SEK 25 million (EUR 2.3 million). The Nefco-financing will be disbursed in two tranches, with the first tranche consisting of a loan of approximately SEK 15 million (EUR 1.3 million) to be disbursed in the first half of 2023, and the second tranche consisting of a convertible loan of approximately SEK 10 million (EUR 1.0 million) to be disbursed in 2024. The Nefco-financing interest rates are Euribor based with a margin on market terms and has final maturity after seven years. The Company is expecting to receive Final Approval from Nefco’s board regarding the Nefco-Financing in late April 2023, which would imply disbursement of funds from Nefco to Bawat in the end of the 2nd quarter 2023. See below for summarized terms agreed between Bawat and Nefco for each tranche.

Nefco-financing first tranche - Loan

• Loan amount of up to EUR 1.3 million
• Repayment in equal instalments starting in 24 months with final maturity seven years from signing of the loan agreement
• Availability for 12 months

Nefco-financing second tranche – Convertible Loan

• Bawat shall issue a convertible loan to Nefco whereby Nefco has the right to convert the loan in full and subscribe for shares in Bawat no later than 18 months from disbursement
• Loan amount of up to EUR 1.0 million
• The price for the shares at possible conversion is set to a 15 percent premium to the average of the close price in the Bawat share during 10 days in April resulting in conversion price of SEK 1.92
• Repayment in one instalment on the final maturity date i.e. in seven years unless converted
• Availability for 15 months

Use of proceeds

The net-proceeds from the Directed Share Issue will primarily be used for expanding the Company's global sales network with purpose to increase brand and technology awareness and expanding the technical support and execution organization. Selected investments related to BaaS-business model will also be made to expedite the development of the BaaS-business.

With the current strategy, the net-proceeds from the Directed Share Issue and the Nefco-financing are considered to be sufficient until the Company shows a positive cash flow and working capital requirements are generated by the business operations.

Lock up undertakings

The Company’s board members and senior executives have, towards Arctic Securities, subject to customary exemptions, agreed to not divest any shares in Bawat during a period of 180 calendar days from today.

Advisors

Arctic Securities AS, filial Sverige is financial advisor to the Company in connection with the Directed Share Issue and the Nefco-financing. Advokatfirman Lindahl is legal advisor to the Company in connection with the Directed Share Issue.

For further information, please contact:

Marcus P. Hummer
CEO Bawat
+45 8870 8803
[email protected]
www.bawat.com

This press release constitutes inside information that Bawat Water Technologies AB is obliged to make public pursuant to the EU Market Abuse Regulation 596/2014. The information was sent for publication, through the agency of the contact persons set out above, at the time stated by the Company's news distributor, Cision, at the publication of this press release.

About Bawat

The development of an entirely new approach to ballast water treatment utilizing onboard waste heat to treat ballast water led to the founding of Bawat in 2011. A ballast water treatment system avoids disposal of untreated water in seas and harbors.

Bawat's BWMS is a system that is simple, cost-effective, and sustainable, build on a zero environmental impact, using standard marine components. No filters, no chemicals no UV. And is the first to market a USCG/IMO Type Approval BWMS that uses pasteurization to treat ballast water in a one-pass process. Bawat has built upon its innovative breakthrough, and now offers ballast water solutions to the maritime industry in three categories:

• A ship BWMS for Retrofit and New Builds
• Mobile containerized solution for multiple vessel usage in a port, on a ship or for rigs
• Ballast Water as a Service for contingency services in ports

Bawat is an engineer-driven company that is rooted in the tradition of Danish maritime innovation and with a deep maritime insight: www.bawat.com.

Bawat is listed on Nasdaq First North Premier Growth Market

Certified Adviser:
Svensk Kapitalmarknadsgranskning AB
www.skmg.se 

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In the United Kingdom, this document 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 document relates is available only to, and will be engaged in only with, "qualified investors" (according to the definition in article 86(7) of the British Financial Services and Markets Act 2000) 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 British Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (ii) high net worth entities falling within Article 49(2)(a)-(d) of 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 does not identify, or purport to identify, the risks (direct or indirect) that may be associated with an investment in the Company's shares. Any investment decision to acquire or subscribe for new shares in the Directed Share Issue must be made on the basis of all publicly available information relating to the Company and the Company's shares. Such information has not been verified by the Arctic Securities AS, filial Sverige (the “Manager”). The Manager act for the Company in connection with the Directed Share Issue and no one else. The Manager will not be responsible to anyone other than the Company for providing the protections afforded to its clients nor for giving advice in relation to the Directed Share Issue or any other matter referred to herein.

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Forward-looking statements

This press release contains forward-looking statements that reflect the Company's intentions, assessments, or expectations about the Company's future results, financial position, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company operates. Forward-looking statements are statements that do not relate to historical facts and may be identified by the inclusion of 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 assumptions reflected in these forward-looking statements are reasonable, it cannot be guaranteed 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 the date of this press release 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 this is required under law or Nasdaq First North Growth Market Rulebook for Issuers of Shares.