Kyoto Group AS - Contemplated private placement

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY, IN AUSTRALIA, CANADA, JAPAN, HONG KONG OR THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH THE RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER OF ANY OF THE SECURITIES DESCRIBED HEREIN.

Lysaker, 10 January 2023: Kyoto Group AS (“Kyoto” or the “Company”) today announces a private placement of new shares in the Company in order to raise gross proceeds of NOK 45-65 million (the "Private Placement").

Kyoto has engaged Arctic Securities AS and Fearnley Securities AS (together, the “Managers”) to advise on and effect the contemplated Private Placement of new shares in the Company (the "New Shares"). The number of shares to be issued in the Private Placement and the price per New Share (the "Offer Price") will be determined by the board of directors of the Company (the "Board") on the basis of an accelerated bookbuilding process to be conducted by the Managers.

The net proceeds from the Private Placement will be used to cover the Company’s liquidity needs, including for pre-ordering of long lead-time items for production of Heatcube, continued market expansion and the related upscaling activities, building project execution capacity combined with partnering setups and general corporate purposes.

The minimum amount of the capital raise will not be sufficient to fund all of the company's planned growth activities set out above, and depending on the final amount of capital raised in the private placement and a possible subsequent offering, the company may need to prioritize which initiatives to pursue or to find additional sources of financing.The following investors and close associates of primary insiders have, subject to certain conditions, committed to apply for and will be allocated New Shares in the Private Placement (the "Pre-committing Investors"):

• Valinor AS has pre-committed to subscribe for a number of New Shares equal to NOK 8.55 million in the Private Placement.
• Hydro Energi Invest AS has pre-committed to subscribe for a number of New Shares equal to minimum NOK 3.6 million in the Private Placement.
• KM New Energy AS has pre-committed to subscribe for a number of New Shares equal to NOK 15 million in the Private Placement.
• Racon Capital Partners has pre-committed to subscribe for a number of New Shares equal to NOK 5 million in the Private Placement.
• Altitude Capital has pre-committed to subscribe for a number of New Shares equal to NOK 5 million in the Private Placement.

Certain of the agreements provide for larger investments and allocations in the event that the Private Placement is completed at the upper level of the size range.

In addition, members of Kyoto Executive Leadership have signalled that they will exercise their right to acquire an aggregate of 75,000 shares under the Company's share incentive program, subject to applicable laws and regulations.

The bookbuilding period in the Private Placement will commence today, 10 January 2023, at 16:30 hours CET and close on 11 January 2023 at 08:00 hours CET. The Company may, however, at any time resolve to extend or shorten the bookbuilding period on short or no notice. If the bookbuilding period is extended or shortened, any other dates referred to herein may be amended accordingly.

The Private Placement will be directed towards selected Norwegian and international investors, in each case subject to and in compliance with applicable exemptions from relevant prospectus, filing and other registration requirements. The minimum application and allocation amount in the Private Placement has been set to the NOK equivalent of EUR 100,000. The Company may, however, at its sole discretion, allocate an amount below EUR 100,000 to the extent applicable exemptions from the prospectus requirement pursuant to the Norwegian Securities Trading Act and ancillary regulations (including Regulation (EU) 2017/1129) are available, including to employees and directors of the Company and the Company group.

Allocation of New Shares will be determined by the Board, at its sole discretion, in consultation with the Managers, following the expiry of the bookbuilding period.

Settlement of the New Shares is expected to take place on or about 23 January 2023 on a delivery versus payment basis by delivery of listed shares facilitated by a pre-funding agreement expected to be entered into between the Company and the Managers.

The Completion of the Private Placement is conditional upon (i) necessary corporate resolutions by the Company to consummate the Private Placement and allocate the New Shares, including final approval by the Board of the Private Placement and the resolution by an extraordinary general meeting of the Company expected to be held on 18 January 2023 (the "EGM") to resolve the share capital increase pertaining to the New Shares, and (ii) the share capital increase pertaining to the New Shares being registered with the Norwegian Register of Business Enterprises and the New Shares having been validly issued in the VPS. The Company may, in its sole discretion and in consultation with the Managers, cancel the Private Placement, at any time and for any reason prior to the satisfaction of these conditions without any compensation to the applicants.

The members of the Company's Executive Leadership and Board have agreed to a 6 month lock-up, subject to customary exemptions.

The Private Placement represents a deviation from the shareholders' pre-emptive right to subscribe for the New Shares. The Board has considered the Private Placement in light of the equal treatment obligations under the Norwegian Public Limited Companies Act, the Norwegian Securities Trading Act, the rules on equal treatment under Oslo Rule Book II for companies admitted to trading on Euronext Growth Oslo and the Oslo Stock Exchange's Guidelines on the rule of equal treatment, and deems that the proposed Private Placement is in compliance with these obligations. The Board is of the view that it will be in the common interest of the Company and its shareholders to raise equity through a private placement, particularly in light of the current challenging market conditions and the time and costs of alternative methods of securing the desired funding currently available to the Company. By structuring the equity raise as a private placement, the Company is expected to raise equity efficiently, with a lower discount to the current trading price, at a lower cost and with a significantly reduced completion risk compared to a rights issue.

The Company may, subject to completion of the Private Placement and certain other conditions, consider to conduct a subsequent repair offering of new shares at the Offer Price in the Private Placement which, subject to applicable securities law, will be directed towards (i) eligible shareholders in the Company as of the end of trading today, 10 January January 2023 (and as registered in the VPS as of the end of 12 January 2023) who were not allocated shares in the Private Placement and who are not resident in a jurisdiction where such offering would be unlawful or, for jurisdictions other than Norway, would require any prospectus, filing, registration or similar action (the “Subsequent Offering”). Launch of a Subsequent offering will require approval by the EGM of the Company and a publication of a prospectus to be prepared by the Company. The subscription price in a Subsequent Offering will be identical with the Offer Price in the Private Placement. The Subsequent Offering will be subject to approval by the EGM and the publication of a prospectus.