Observe Medical ASA: Placement of NOK 22 million Private Placement and contemplated Subsequent Offering
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Oslo, 24 June 2024
Observe Medical ASA (the "Company" or "Observe Medical", OSE ticker "OBSRV") today announces that the Company has successfully placed a private placement of NOK 22 million with a group of existing shareholders, including Ingerø Reiten Investment Company AS, JPB AS and ELI AS, and one new investor (the "Private Placement").
The Private Placement comprised an offer of up to 65,000,000 shares (the "Offer Shares"), to raise gross proceeds of minimum NOK 21,000,000 and maximum NOK 26,000,000 million at a subscription price per Offer Share of NOK 0.40 (the "Offer Price"). In total 55,000,000 shares were subscribed for in the Private Placement, raising gross proceeds to the Company in the amount of NOK 22,000,000. The Offer Price has been set as a result of negotiations on arm's length.
The net proceeds from the Private Placement will be used to finance the Company's further growth, including the Company's working capital needs in relation to continuous product development and ramp-up of production and sales activities, some of which are of an immediate nature.
The Private Placement is divided into two tranches, of which the first tranche comprises 38,137,038 Offer Shares, representing just below 20% of the issued share capital of the Company (the "Tranche 1 Offer Shares" and "Tranche 1"), and the second tranche comprises 16,862,962 Offer Shares, representing approximately 8.84% of the issued share capital, not taking into consideration the Tranche 1 Offer Shares (the "Tranche 2 Offer Shares" and "Tranche 2"). Allocations of Offer Shares to investors will be split between Tranche 1 and Tranche 2 on a pro rata basis, provided, however, that certain investors have agreed to receive their allocation in Tranche 2. Completion of Tranche 2 is inter alia subject to the extraordinary general meeting of the Company (the "EGM") resolving to increase the Company's share capital by issuing the Tranche 2 Offer Shares. The EGM is expected to be held on or about 17 July 2024. Notification of allocation and settlement instructions for Tranche 1 and Tranche 2 (conditional allocation for Tranche 2) will be communicated to investors on 25 June 2024.
Both Tranche 1 and Tranche 2 will be settled on a delivery-versus-payment (DVP) basis with existing and unencumbered shares already listed on Euronext Expand, pursuant to a share lending agreement (the "Share Lending Agreement") entered into between the Company, certain lager shareholders of the Company (the "Share Lenders") and Carnegie AS (the "Settlement Agent") on 24 June 2024, provided, however, that the Share Lenders only will receive the Tranche 2 Offer Shares allocated to them once such shares have been issued by the Company. The share loan for Tranche 1 will be settled with new shares in the Company, resolved issued by the board of directors pursuant to an authorisation granted to it by the annual general meeting held on 24 May 2024 (the "Board Authorisation"), while the share loan for Tranche 2 will be settled with new shares to be issued by the Company following, and subject to, the EGM resolving to increase the Company's share capital by issuing the Tranche 2 Offer Shares.
Completion of Tranche 2 is subject to (i) completion of Tranche 1, (ii) the EGM resolving to issue the Tranche 2 Offer Shares, and (iii) the Share Lending Agreement remaining in full force and effect (the "Tranche 2 Conditions"). Completion of Tranche 1 will not be conditional upon or otherwise affected by the completion of Tranche 2, and the applicants' acquisition of Tranche 1 Offer Shares will remain final and binding and cannot be revoked, cancelled or terminated by the respective applicants if Tranche 2, for whatever reason, is not completed. Investors being allocated Offer Shares in the Private Placement have undertaken to vote in favour of Tranche 2 and the Subsequent Offering (as defined below) at the EGM.
The Tranche 1 Offer Shares are tradable from allocation, while the Tranche 2 Offer Shares will be tradable, subject to, and following (i) satisfaction of the Tranche 2 Conditions and (ii) the Company having published a stock exchange announcement regarding the approval of Tranche 2 by the EGM.
The board of directors has today resolved to issue the Tranche 1 Offer Shares based on the Board Authorisation. After registration of the share capital increase, the Company's share capital will be increased by NOK 9,915,629.88, to NOK 59,493,782.92. The total number of shares in the Company will be 228,822,242 shares, each with a nominal value of NOK 0.26.
The board of directors has carefully considered the Private Placement in light of the equal treatment obligations under the Norwegian Public Limited Liability Companies Act, the Norwegian Securities Trading Act, Oslo Børs Rule Book II and Oslo Børs' guidelines on the rule of equal treatment, and is of the opinion that the Private Placement is in compliance with these requirements. It is in this respect relevant that the Company has an immediate need of additional equity to finance its further growth, including working capital in relation to continuous product development and ramp-up of production and sales activities. A rights issue would take substantially longer to complete, which could significantly impair the Company's situation. The board of directors has, in addition to considering the possibility of conducting a rights issue, looked into other financing alternatives (bank financing and direct lending) and concluded that such alternatives are not available. Given the Company's financial situation, it has been deemed necessary to determine the Offer Price through discussions with investors, and the discount to the market price of the shares is deemed to have a factual basis because the Company does not have access to alternative sources of financing.
The board of directors will propose to the EGM that it is granted an authorisation to carry out a subsequent offering (the "Subsequent Offering") of up to 32,500,000 new shares in the Company, directed at shareholders in the Company as of 24 June 2024(as registered in Euronext Securities Oslo (VPS) two trading days thereafter) who (i) were not allocated Offer Shares in the Private Placement, and (ii) are not domiciled in a jurisdiction where such an offer would be unlawful or, for jurisdictions other than Norway, require any prospectus, filing, registration or similar action (the "Eligible Shareholders"). The Eligible Shareholders will be granted non-transferable subscription rights to subscribe for and be allocated new shares in the Subsequent Offering. The subscription price in the Subsequent Offering will be equal to the Offer Price. Oversubscription will be permitted, but subscription without subscription rights will not be permitted.
The net proceeds from the Subsequent Offering will be used for general corporate purposes, including working capital needs in relation to continuous product development and ramp-up of production and sales activities. The Subsequent Offering will be conditional upon the approval of the EGM, as well as the completion of the Private Placement. The application period for the Subsequent Offering is expected to commence shortly after the publication of the Prospectus (as defined below). The Company will issue a separate stock exchange announcement with further details on the Subsequent Offering.
Against this background, the board of directors has considered the Private Placement to be in the common interest of the Company and its shareholders. Due to the structure of the Private Placement, the shareholders' preferential rights will be waived.
The Company will publish a prospectus for the listing of the Tranche 2 Offer Shares to be redelivered to the Share Lenders, subject to approval by the EGM, as well as the offer and listing of new shares in connection with the Subsequent Offering (the "Prospectus"). Publication of the Prospectus is subject to approval of the Prospectus by the Norwegian Financial Supervisory Authority, expected during September 2024. The Tranche 2 Offer Shares will, subject to the EGM's resolution, be issued prior to approval and publication of the Prospectus, and will thus be issued under a separate ISIN and will only be tradable on Euronext Expand after the Prospectus has been published.
Based on the above, the board of directors has decided to propose to the EGM that:
- the Company's share capital is increased by NOK 4,384,370.12 by the issuance of 16,862,962 new shares, each with a nominal value of NOK 0.26, at a subscription price of NOK 0.40 in connection with completion of Tranche 2;
- the board of directors is granted an authorisation to increase the Company's share capital by up to NOK 8,450,000, by the issuance of up to 32,500,000 new shares, each with a nominal value of NOK 0.26, at a subscription price of NOK 0.40, in connection with the Subsequent Offering; and
- the board of directors is granted a new authorisation to increase the Company's share capital by up to NOK 12,775,630 (approximately 20% of the Company's share capital after completion of Tranche 2) in connection with acquisitions of other companies or businesses, to secure an optimal capital structure for the Company and to capitalise on potential growth opportunities, as well as to finance further growth and the continued product development and commercialisation of the Company's business, which authorisation will replace the Board Authorisation.
Carnegie AS is acting as settlement agent for the Private Placement and the Subsequent Offering. Advokatfirmaet Thommessen AS is acting as legal advisor to the Company.
For further information, please contact:
Jørgen Mann, Interim CEO Observe Medical
Mobile: +45 408 67 558
E-mail: [email protected]
Johan Fagerli, CFO Observe Medical
Mobile: +47 958 12 765
E-mail: [email protected]
This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements according to Section 5-12 of the Norwegian Securities Trading Act. The information was submitted for publication by Johan Fagerli, CFO, on 24 June 2024 at the time set out above.
About Observe Medical:
Observe Medical is a Nordic medtech company that develops, markets and sells innovative medtech products for the global market. The Company is committed to improving patient welfare and patient outcomes, improving clinical data accuracy and promoting positive health economics.
The Company seeks to drive growth by leveraging its expertise in sales and commercialisation of its broad portfolio of medical technology products, mainly in urine measurement and ultrasound, in combination with targeted M&A and distribution. Observe Medical is working with a network of leading distributors to provide outstanding solutions for healthcare professionals globally.
The Company is headquartered in Oslo, Norway.
Further information is available at www.observemedical.com.
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IMPORTANT INFORMATION
The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy, fairness or completeness. Neither the Settlement Agent, nor or any of its affiliates or any of their respective directors, officers, employees, advisors or agents accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available, or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith. This announcement has been prepared by and is the sole responsibility of Observe Medical.
Neither this announcement nor the information contained herein is for publication, distribution or release, in whole or in part, directly or indirectly, in or into or from Australia, Canada, Japan, Hong Kong, South Africa or the United States (including its territories and possessions, any State of the United States and the District of Columbia) or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. The publication, distribution or release of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
This announcement is not an offer for sale of securities in the United States. The securities referred to in this announcement have not been and will not be registered under the U.S. Securities Act, and may not be offered or sold in the United States absent registration with the U.S. Securities and Exchange Commission or an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in accordance with applicable U.S. state securities laws. The Company does not intend to register any securities referred to herein in the United States or to conduct a public offering of securities in the United States.
This announcement is an advertisement and is not a prospectus for the purposes of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 (the "EU Prospectus Regulation") (together with any applicable implementing measures in any Member State). All of the securities referred to in this announcement has been offered by means of a set of subscription materials provided to potential investors, except for the subsequent repair offering which will be made on the basis of a listing and offering prospectus. Investors should not subscribe for any securities referred to in this announcement except on the basis of information contained in the aforementioned subscription materials or for the subsequent repair offering, the prospectus.
In any EEA Member State, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the EU Prospectus Regulation, i.e. only to investors who can receive the offer without an approved prospectus in such EEA Member State.
This communication is only being distributed to and is only directed at persons in the United Kingdom that are "qualified investors" within the meaning of the EU Prospectus Regulation as it forms part of English law by virtue of the European Union (Withdrawal) Act 2018 and that are (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") or (ii) high net worth entities, and other persons to whom this announcement may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. Persons distributing this communication must satisfy themselves that it is lawful to do so.
This announcement is made by, and is the responsibility of, the Company. The Settlement Agent and its affiliates are acting exclusively for the Company and no-one else in connection with the transactions described in this announcement. They will not regard any other person as their respective clients in relation to the transactions described in this announcement and will not be responsible to anyone other than the Company, for providing the protections afforded to their respective clients, nor for providing advice in relation to the transactions described in this announcement, the contents of this announcement or any transaction, arrangement or other matter referred to herein.
In connection with the transaction described in this announcement, the Settlement Agent and any of its affiliates, acting as investors for their own accounts, may subscribe for or purchase securities and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such securities of the Company or related investments in connection with the transactions described in this announcement or otherwise. Accordingly, references in any subscription materials to the securities being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, the Settlement Agent and any of its affiliates acting as investors for their own accounts. The Settlement Agent does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.
Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "aim", "expect", "anticipate", "intend", "estimate", "will", "may", "continue", "should" and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies, and other important factors which are difficult or impossible to predict and are beyond its control. 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. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. The Company, the Managers and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise. The information, opinions and forward-looking statements contained in this announcement speak only as at its date and are subject to change without notice.
