The Board of Directors in Cell Impact intends to resolve on a rights issue of up to approximately SEK 152 million and announces preliminary EBIT for Q3 2023

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The Board of Directors in Cell Impact AB (Nasdaq First North Growth Market: CI) (“Cell Impact” or the “Company”) today announces its intention to resolve on a rights issue of units, consisting of shares and warrants, of up to approximately SEK 152 million (the “Rights Issue”) out of which approximately 85 per cent will be secured through subscription and guarantee commitments. The Company has previously given notice to an Extraordinary General Meeting on 3 November 2023, which, among other things, is proposed to grant the Board of Directors an extended authorization to resolve on the Rights Issue. 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. Together with existing cash, 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 will be covered by subscription undertakings and guarantee commitments.

Summary

• The Board of Directors in Cell Impact today announces its intention to resolve on the Rights Issue. The Company has previously given notice to an Extraordinary General Meeting on 3 November 2023, which, among other things, is proposed to grant the Board of Directors an extended authorization to resolve on the Rights Issue.
• 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. Payment of the bridge loan to the Company is among other things conditional upon the Board of Directors resolving on the Rights Issue after obtaining authorization from the Extraordinary General Meeting.
• 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 has obtained 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 will be 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 approximately SEK 66 million in the beginning of October 2024.
• The Rights Issue will be covered up to approximately 85 per cent through a combination of subscription undertakings and guarantee commitments. Provided that the Extraordinary General Meeting resolves in accordance with the Board of Directors’ proposals on extended authorization and amendments to the Articles of Association regarding the limits of the share capital and the number of shares and that the Board of Directors resolves to carry out the Rights Issue on the basis of the extended issue authorization:
  • Östersjöstiftelsen has undertaken to enter into a subscription undertaking for its pro rata share of the proposed Rights Issue. Östersjöstiftelsen holds approximately 5.1 per cent of all outstanding shares; and
  • members of the Board of Directors and management have expressed their intention to enter into subscription agreements of in total approximately SEK 0.6 million.
• It is envisaged that all existing shareholders 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 will be SEK 2.00 per unit, corresponding to SEK 0.25 per new share. Warrants are issued free of charge.
• The prospectus is tentatively expected to be published on or around 15 November 2023.
• The record date in the Rights Issue is tentatively expected to take place on around 16 November 2023.
• The subscription period in the Rights Issue is tentatively expected to take place 20 November–4 December 2023.
• Net sales during Q3 2023 preliminarily amounted to approximately SEK 9 million (17), which is slightly higher than the approximately SEK 8 million that the Company has indicated earlier, but still lower than previous expectations. The cost savings have already started to have some effect during Q3 2023 – despite the significantly reduced sales, EBIT for the quarter is preliminarily around SEK -24 million, which is a smaller loss compared to both the corresponding quarter of the previous year and the first two quarters of 2023.

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 implemented what the Company calls Phase 1, which included converting existing demand into business to position Cell Impact for future growth. Phase 1 involved 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. Net sales during Q3 2023 preliminarily amounted to approximately SEK 9 million (17), which is slightly higher than the approximately SEK 8 million that the Company has indicated earlier, but still lower than previous expectations. 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 preliminary 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 intends 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 has obtained 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 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. Payment of the bridge loan to the Company is among other things conditional upon the Board of Directors resolving on the Rights Issue after obtaining authorization from the Extraordinary General Meeting. The Company is obliged to repay the bridge loan facility on or around the settlement date of the Rights Issue.

Terms for the Rights Issue
Anyone who on the record date, tentatively 16 November 2023, is registered in the share register as a shareholder in Cell Impact will receive one (1) unit right for each share held in Cell Impact. It is envisaged that 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 will be SEK 2.00 per unit, corresponding to SEK 0.25 per share. The warrants are issued free of charge.

Each warrant is intended to give the right to subscribe for one (1) new share in the Company during the period 16 September through 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.

Under the condition that the Rights Issue is fully subscribed, the number of shares in Cell Impact will increase with 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.

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

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

Extraordinary general meeting
The Company has previously given notice to an Extraordinary General Meeting on 3 November 2023, which is proposed to resolve on, among other things, an extended issue authorization, based on which the Board of Directors intends to resolve on the Rights Issue and amendments to the Articles of Association regarding the limits of the share capital and the number of shares.

Subscription undertakings, guarantee commitments and voting commitments
Provided that the Extraordinary General Meeting in the Company resolves in accordance with the Board of Directors’ proposal in an extended issue authorization and amendments to the Articles of Association regarding the limits of the share capital and the number of shares and that the Board of Directors subsequently resolves to carry out the Rights Issue, 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. Östersjöstiftelsen has also undertaken to vote in favour of the issue authorization and amendments to the Articles of Association at the Extraordinary General Meeting. In addition to the aforementioned subscription undertaking, members of the Board of Directors and management have expressed their intention to enter into subscription undertakings of in total approximately SEK 0.6 million.

In addition to the above-mentioned subscription undertaking, guarantors have provided guarantee commitments with customary conditions, which in total amount to approximately SEK 121 million, corresponding to approximately 80 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 shall 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.

Indicative timetable

• The Extraordinary General Meeting will be held on 3 November 2023.
• The Board of Directors intends to resolve on the Rights Issue and terms of the issue on or about 9 November 2023 (or as soon as the extended authorization is registered with the Swedish Companies Registration Office).
• The prospectus is tentatively expected to be approved by the Swedish Financial Supervisory Authority and published on or about 15 November 2023.
• The record date in the Rights Issue is tentatively expected to take place on or about 16 November 2023.
• The subscription period in the Rights Issue is tentatively expected to take place 20 November–4 December 2023.

Prospectus
A prospectus and subscription form will be made available before the subscription period commence on Cell Impact's website, www.cellimpact.se, 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.

This information is inside information that Cell Impact AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted, through the agency of the contact person above, for publication on October 23, 2023 at 17:31 CEST.

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.