The Board of Directors in Cell Impact has resolved on the previously announced rights issue of up to approximately SEK 152 million

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The Board of Directors in Cell Impact AB (Nasdaq First North Growth Market: CI) (“Cell Impact” or the “Company”) has today, by virtue of the authorization granted by the extraordinary general meeting on 3 November 2023, resolved on the previously announced rights issue of a maximum of 75,826,928 Units, corresponding to a maximum of 606,615,424 new shares and a maximum of 151,653,856 warrants giving the right to subscribe for new shares, with preferential rights for the Company's existing shareholders (the "Rights Issue"). About 85 per cent of the Rights Issue is covered by subscription undertakings and guarantee commitments. The subscription price in the Rights Issue is SEK 2.00 per Unit, corresponding to SEK 0.25 per share. The warrants are issued free of charge. If the Rights Issue is fully subscribed, the Company will receive approximately SEK 152 million before deduction of transaction costs related to the Rights Issue and, upon full exercise of the warrants, an additional amount of up to approximately SEK 66 million before deduction of transaction costs at the beginning of October 2024.

Summary

• The Board of Directors in Cell Impact has today, by virtue of the authorization granted by the extraordinary general meeting on 3 November 2023, resolved on a rights issue of a maximum of 75,826,928 Units, corresponding to a maximum of 606,615,424 new shares and a maximum of 151,653,856 warrants giving the right to subscribe for new shares, with preferential rights for the Company's existing shareholders.
• In connection with the Rights Issue, the Company has entered into bridge loan agreements of SEK 20 million to ensure sufficient liquidity during the period November-December 2023.
• The purpose of the Rights Issue is to ensure continued financing of Cell Impact’s business plan together with increasing the Company’s productivity and capability. The net proceeds are planned to be used as follows:
  • to repay the bridge loan of SEK 20 million that the Company obtains in connection to the Rights Issue;
  • to finance existing operations;
  • investments in new production equipment in order to ensure increased productivity and capability; and
  • general corporate purposes.
• Together with existing cash and the funds which will be made available within the bridge loan facility, the net proceeds from the Rights Issue are expected to be sufficient to finance the Company’s business plan up until early 2025 provided that the Rights Issue generates gross proceeds of approximately SEK 129 million, corresponding to the approximately 85 per cent of the Rights Issue that is covered by subscription undertakings and guarantee commitments.
• In the event of full exercise of the warrants and under the condition that the Rights Issue is fully subscribed, the Company may receive an additional amount of up to approximately SEK 66 million before deduction of transaction costs in the beginning of October 2024.
• The Rights Issue is covered up to approximately 85 per cent through a combination of subscription undertakings and guarantee commitments.
  • Östersjöstiftelsen has entered into a subscription undertaking for its pro rata share of the Rights Issue. Östersjöstiftelsen holds approximately 5.1 per cent of all outstanding shares.
  • Members of the Board of Directors and management have entered into subscription undertakings of a total of approximately SEK 0.6 million, corresponding to approximately 0.4 per cent of the Rights Issue; and
  • The Company has entered into agreements regarding guarantee commitments of a total of approximately SEK 120.6 million, equivalent to approximately 79.5 per cent of the Rights Issue.
• Existing shareholders will receive one (1) unit right for each share owned on the record date. One (1) unit right will give the right to subscribe for one (1) Unit, which will consist of eight (8) newly issued shares and two (2) warrants.
• The subscription price in the Rights Issue is SEK 2.00 per Unit, corresponding to SEK 0.25 per share. Warrants are issued free of charge.
• The prospectus is expected to be published on or around 15 November 2023.
• The record date in the Rights Issue will take place on 16 November 2023.
• The subscription period in the Rights Issue is 20 November–4 December 2023.
• For existing shareholders who refrain from participating in the Rights Issue, the dilution amounts to the equivalent of up to approximately 90.9 per cent of the number of shares and votes in the Company following the Rights Issue.

Background and reasons

Cell Impact is a global supplier of advanced flow plates in metal and a production method used in the market of fuel cells and electrolysis. By using a scalable unique method for high-velocity forming – Cell Impact Forming™ – the Company makes it possible to produce a large quantity of flow plates with more advanced designs. Cell Impact’s forming technology is more compact, cost and energy efficient and environmentally friendly than conventional methods.

Cell Impact has implemented what the Company calls Phase 1, which included converting existing demand into business to position Cell Impact for future growth. Phase 1 involved initiative for securing enough capacity to initially meet the need of customers and capture business opportunities. It also involved building a larger factory and acquiring new production equipment.

The next step for the Company – Phase 2 – is a follow up to Phase 1 that is planned to be implemented to ramp up the level of automation and efficiency in processes with the objective to greatly reduce production costs and secure capacity to handle growing volumes.

The market for fuel cells is growing rapidly. Cell Impact is in a phase in the market where companies that want to become part of the value chain must position themselves with an attractive offer that includes cost-effective scalability. Normally, a fuel cell contains several hundred flow plates, which means that there is a multiplier effect. This means that the demand for flow plates is considerable even at lower levels of fuel cells demand and increases substantially when the demand is higher. Furthermore, Cell Impact expects a significant potential for its flow plates in the growing market of electrolyzers.

Although the long-term outlook for Cell Impact looks positive in light of the growth of the hydrogen industry, the Company is currently experiencing a significantly lower level of activity among its customers, resulting in delayed orders. The Company assesses that the lower demand for flow plates in particular will last for several quarters before a positive trend is re-established and has thus come to the conclusion that further adjustments to the financial targets that were communicated in the Q2 report (including the timing of reaching EBITDA break-even) cannot be ruled out.

Due to lower than expected sales levels, the Company has implemented a cost saving program and will continue to adapt its cost level to the demand situation. Postponed investment initiatives may lead to a somewhat slower implementation of the Company's Phase 2 for more efficient production. The cost savings have already started to have some effect during Q3 2023. Despite the significantly reduced sales, the operating profit (EBIT) for the quarter is around SEK -24 million, which is a smaller loss compared to both the corresponding quarter of the previous year and the first two quarters 2023.

In order to continue to deliver on its business plan, the Board of Directors of Cell Impact have resolved to carry out a rights issue of up to approximately SEK 152 million. The purpose of the Rights Issue is to ensure continued financing of Cell Impact’s business plan, which includes increasing the Company’s production capacity and capability.

The net proceeds are planned to be used as follows:

• to repay the bridge loan of SEK 20 million that the Company obtains in connection with the Rights Issue;
• to finance existing operations;
• investments in new production equipment in order to ensure increased productivity and capability; and
• general corporate purposes.

If the Rights Issue brings in approximately SEK 129 million before deductions for costs related to the Rights Issue, corresponding to the approximately 85 per cent that will be covered by subscription undertakings and guarantee commitments, the proceeds from the Rights Issue, together with existing cash and the funds which will be made available within the bridge loan facility, are expected to be sufficient to finance the Company’s business plan until early 2025.

In the event of full exercise of the warrants and under the condition that the Rights Issue is fully subscribed, the Company may receive an additional amount of up to approximately SEK 66 million before deduction of transaction costs in the beginning of October 2024.

In connection with the Rights Issue, the Company has entered into bridge loan agreements of SEK 20 million to ensure sufficient liquidity during the period November-December 2023. The Company is obliged to repay the bridge loan facility on or around the settlement date of the Rights Issue.

Rights Issue

The Board of Directors of the Company has today, by virtue of the authorization granted by the extraordinary general meeting held on 3 November 2023 resolved on a new share issue of a maximum of 75,826,928 Units, corresponding to a maximum of 606,615,424 new shares and a maximum of 151,653,856 warrants giving the rights to subscribe for new shares, with preferential rights for the Company's existing shareholders in proportion to the number of shares they hold on the record date 16 November 2023.

Existing shareholders will receive one (1) unit right for each share held in Cell Impact on the record date. One (1) unit right will give the right to subscribe for one (1) Unit, which will consist of eight (8) newly issued shares and two (2) warrants. The subscription price in the Rights Issue is SEK 2.00 per unit, corresponding to SEK 0.25 per share. The warrants are issued free of charge.

Each warrant will give the right to subscribe for one (1) new share in the Company during the period 16 September up to and including 30 September 2024. The subscription price for the subscription of shares by exercise of warrants will correspond to 70 per cent of the volume-weighted average price paid for the Company's share during the period from and including 2 September 2024 to and including 13 September 2024, however not lower than SEK 0.12, corresponding to the share's quota value, and not higher than SEK 0.44, corresponding to 175 per cent of the subscription price for one share in the Rights Issue.

Upon full subscription, the number of shares in Cell Impact will increase by a maximum of 758,269,280, from 75,826,928 to 834,096,208 and the share capital will increase by a maximum of approximately SEK 87,774,335 from approximately SEK 8,777,433 to approximately SEK 96,551,768, provided that all warrants are exercised.

Existing shareholders who choose to not to participate in the Rights Issue will have their share of ownership diluted by up to 90.9 per cent, but they have the opportunity to compensate themselves financially for the dilution effect by selling their received unit rights.

The last day of trading in Cell Impact’s shares including the right to receive unit rights in the Rights Issue is 14 November 2023. Subscription of Units with or without unit rights shall be made by cash payment during the period 20 November–4 December 2023. After the end of the subscription period, unexercised unit rights become invalid thus losing their value.

In the event that not all Units are subscribed for by exercise of unit rights, the Board of Directors shall, within the maximum amount of the Rights Issue, decide on allotment of Units subscribed for without exercise of unit rights as follows:

• primarily, Units shall be allotted to those who have registered for subscription and have subscribed for Units by exercising unit rights, regardless of whether they were shareholders on the record date or not. In case of oversubscription, Units shall be allotted in relation to the number of unit rights that each subscriber has exercised for subscription of Units;
• secondarily, Units shall be allotted to others who have subscribed for Units without exercising of unit rights. In case of oversubscription, allotment shall be made in relation to the total number of Units entered into respective subscription notification. To the extent that this cannot be done, allotment shall be made through drawing of lots; and
• lastly, allotment of Units that have been subscribed for without exercising unit rights shall be made to those who have entered into agreements regarding guarantee commitments in their capacity as guarantors. In case that allotment to them cannot be made in full, allotment shall be made pro rata in relation to the amount each guarantor has guaranteed subscription for, and to the extent that this cannot be done, allotment shall be made through drawing of lots. Allotment in this case only takes place to up to 85 per cent of the Rights Issue.

The complete terms and conditions for the Rights Issue as well as information about the Company will be presented in a prospectus which will be, following the approval of the Swedish Financial Supervisory Authority, made public and published on the Company's website on or around 15 November 2023.

Subscription undertakings and guarantee commitments

Östersjöstiftelsen has undertaken to subscribe for its pro rata share in the Rights Issue. Östersjöstiftelsen holds approximately 5.1 per cent of all outstanding shares. In addition to the abovementioned subscription undertaking, members of the Board of Directors and management have entered into subscription undertakings of in total approximately SEK 0.6 million, equivalent to approximately 0.4 per cent of the Rights Issue.

In addition to the abovementioned subscription undertakings, guarantors have provided guarantee commitments with customary conditions, which, in aggregate, amount to approximately SEK 120.6 million, equivalent to approximately 79.5 per cent of the Rights Issue.

Consequently, the Rights Issue will be covered to approximately 85 per cent by the above-mentioned subscription undertakings and guarantee commitments.

For the guarantee commitments, a guarantee commission of 11 per cent of the guaranteed amount will be paid as a cash remuneration. No remuneration shall be paid for the subscription undertakings. Neither subscription undertakings nor guarantee commitments are secured by bank guarantee, blocked funds, pledges or similar arrangements. Further information regarding the parties who have entered into guarantee commitments will be available in the prospectus published before the start of the subscription period.

Timetable of the Rights Issue

• Last day of trading in shares including right to receive unit rights occurs on 14 November 2023.
• First day of trading in shares excluding right to receive unit rights occurs on 15 November 2023.
• The record date in the Rights Issue is set to 16 November 2023.
• Trading in unit rights occurs on 20–29 November 2023.
• The subscription period in the Rights Issue occurs on 20 November–4 December 2023.
• Announcement of the final outcome in the Rights Issue will take place on or about 6 December 2023.
• Trading in BTUs is expected to occur on or about 20 November – 12 December 2023.
• Delivery of and trading in new shares and warrants is expected to take place on or about 18 December 2023.

Prospectus

A prospectus and subscription form will be made available before the subscription period commences on Cell Impact's website, www.cellimpact.com, and on Carnegie Investment Bank AB's (publ) website, www.carnegie.se.

Advisers

In conjunction with the Rights Issue, the Company has engaged Carnegie Investment Bank AB (publ) as Sole Global Coordinator and Joint Bookrunner and Pareto Securities AB as Joint Bookrunner. Advokatfirman Vinge acts as legal adviser to the Company and Baker McKenzie represents Sole Clobal Coordinator and Joint Bookrunners in connection with the Rights Issue.

The information was submitted, through the agency of the contact person below, for publication on 8th November 2023 at 19:30 CET.

Important information

Publication, release, or distribution of this press release may in certain jurisdictions be subject to legal restrictions and persons in the jurisdictions where the press release has been made public or distributed should be informed of and follow such legal restrictions. The recipient of this press release is responsible for using this press release and the information herein in accordance with applicable rules in each jurisdiction. This press release does not constitute an offer or solicitation to buy or subscribe for any securities in Cell Impact AB (publ) in any jurisdiction, either from Cell Impact AB (publ) or from anyone else.

This press release is not a prospectus according to the definition in Regulation (EU) 2017/2019 (the “Prospectus Regulation”) and has not been approved by any regulatory authority in any jurisdiction. A prospectus will be prepared by the Company and published on the Company’s website after the prospectus has been reviewed and approved by the Swedish Financial Supervisory Authority.

This press release does not constitute an offer or solicitation to buy or subscribe for securities in the United States. The securities mentioned herein may not be sold in the United States without registration, or without an exemption from registration, under the U.S. Securities Act from 1933 (“Securities Act”), and may not be offered or sold within the United States without being registered, covered by an exemption from, or part of a transaction that is not subject to the registration requirements according to the Securities Act. There is no intention to register any securities mentioned herein in the United States or to issue a public offering of such securities in the United States. The information in this press release may not be released, published, copied, reproduced or distributed, directly or indirectly, wholly or in part, in or to Australia, Hong Kong, Japan, Canada, New Zealand, Singapore, South Africa, the United States or any other jurisdiction where the release, publication or distribution of this information would violate current rules or where such an action is subject to legal restrictions or would require additional registration or other measures beyond those that follow from Swedish law. Actions in contravention of this instruction may constitute a violation of applicable securities legislation.

Forward-looking statements

This press release contains forward-looking statements related to the Company's intentions, estimates or expectations with regard to the Company's future results, financial position, liquidity, development, outlook, estimated growth, strategies and opportunities as well as the markets in which the Company is active. Forward-looking statements are statements that do not refer to historical facts and can be identified by the use of terms such as “believes”, “expects”, “anticipates”, “intends”, “estimates”, “will”, “may”, “implies”, “should”, “could” and, in each case, their negative, or comparable terminology. The forward-looking statements in this press release are based on various assumptions, which in several cases are based on further assumptions. Although the Company believes that the assumptions reflected in these forward-looking statements are reasonable, there is no guarantee that they will occur or that they are correct. Since these assumptions are based on assumptions or estimates and involve risks and uncertainties, actual results or outcomes, for many different reasons, may differ materially from those what is stated in the forward-looking statements. Due to such risks, uncertainties, eventualities and other significant factors, actual events may differ materially from the expectations that expressly or implicitly are contained in this press release through the forward-looking statements. The Company does not guarantee that the assumptions which serve as a basis for the forward-looking statements in this press release are correct, and each reader of the press release should not rely on the forward-looking statements in this press release. The information, opinions and forward-looking statements that expressly or implicitly are stated herein are provided only as of the date of this press release and may change. Neither the Company nor any other party will review, update, confirm or publicly announce any revision of any forward-looking statement to reflect events that occur or circumstances that arise with respect to the contents of this press release, beyond what is required by law or Nasdaq First North Growth Market Rulebook.

Potential investors should not put undue trust in the forward-looking statements herein, and potential investors are strongly recommended to read the sections in the prospectus that include a more detailed description of the factors that can affect the Company’s business and its associated market.