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Strengthening of Asetek's financial position through rights issue and update of medium-term ambitions

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Aalborg, 7 November 2024

Strengthening of financial position through rights issue

The board of directors of Asetek A/S ("Asetek" or the "Company") has resolved to seek to strengthen the Company's financial position through a rights issue.

As announced in the half year report of 2024 of the Company and the related company announcement of 13 August 2024, lower demand in Asetek's Liquid Cooling segment impacted the Company's earnings in first half year of 2024 and continues to affect the business in 2024. As response to these developments, Asetek initiated measures to right-size the organisation and management, including scaling down the U.S. operations. While these measures are expected to yield annual cost savings of approximately USD 3 million with full effect from the first quarter of 2025, they are not sufficient to satisfy the Company's working capital and its ambition to continue investments in its SimSports segment as further set out in the updated medium-term ambitions below.  

On this basis, the board of directors of the Company has resolved to seek an authorisation from the shareholders to complete the necessary capital raise and will call for an extraordinary general meeting of the Company to propose that it becomes authorised to issue new shares with preemptive rights for the Company's shareholders through a rights issue.

If granted by the general meeting, the board of directors intends, subject to prevailing market conditions and other factors, to use its authorisation to launch a rights issue expectedly in Q4 of 2024 or Q1 of 2025.

The Company has engaged ABG Sundal Collier Denmark, Filial af ABG Sundal Collier ASA ("ABGSC"), as financial advisor in connection with the capital raise, and ABGSC has in a customary market sounding received positive feed-back and non-binding support for a rights issue.

Updated medium-term ambitions

In 2023, Asetek announced medium-term ambitions of averaging a 15% annual increase in revenue until 2025, however, with significant variations from year to year. The Company has reviewed and decided to update its ambitions for the medium term. Overall, the updated medium-term ambitions reflect the Company’s efforts to adapt to changes to the market environment in the Liquid Cooling segment as well as the Company’s continued comfort in executing its growth strategy within the SimSports segment.

For the Liquid Cooling segment, the Company aims to reach a revenue of USD 50 million towards the end of the medium term. The Company believes that it will likely experience a negative single-digit growth rate in 2025 before positive revenue growth rates will return from 2026 and onwards. Further, the Company aims to consistently achieve an Adjusted EBITDA Margin of +25% in the medium term for the Liquid Cooling segment.

For the SimSports segment, the Company aims to reach a revenue of USD +50 million and continuously improve the Adjusted EBITDA Margin and reach a positive, single-digit Adjusted EBITDA margin towards the end of the medium term.

In order to achieve the medium-term ambitions Asetek expects a financing need as of today of around USD 20 million during the medium term, which includes the capital to strengthen the Company’s financial position in the short term. As a significant share of the capital will be invested over multiple years, the Company will evaluate its options on how to obtain the financing amount, including as part of the contemplated rights issue, which is contemplated to cover at least USD 15 million (gross proceeds) of the required capital, future share issues or debt issuance as well as the timing of these.  

The medium-term ambitions are based on a number of assumptions related to future sales and costs. The Company assumptions regarding future sales are highly uncertain and to a large extent outside of the Company’s control. The Company will to a larger degree be able to postpone planned cost increases or reduce previously increased costs, and the Company will continuously evaluate the need to do so.

For further information about the Company, please contact:

Snr. Director, Head of Investor Relations, Per Anders Nyman

phone: +45 2566 6869

email: investor.relations@asetek.com

About Asetek

Asetek (ASTK), a global leader in mechatronic innovation, is a Danish garage-to-stock-exchange success story. Founded in 2000, Asetek established its innovative position as the leading OEM developer and producer of the all-in-one liquid cooler for all major PC & Enthusiast gaming brands. In 2021, Asetek introduced its line of products for next level immersive SimSports gaming experiences. Asetek is headquartered in Denmark and has operations in China, Taiwan and the United States.

IMPORTANT INFORMATION

This company announcement contains forward-looking statements. These statements are not guarantees of future performance and involve certain risks and uncertainties, in particular this announcement should not be construed as a confirmation neither that an offering will complete, nor of the deal size or the price. Therefore, actual future results may differ materially from what is forecast in this report due to a variety of factors.

This announcement is intended for the sole purpose of providing information. Persons needing advice should consult an independent financial adviser. This announcement does not constitute an investment recommendation.

This announcement is not a prospectus and investors should not purchase any securities referred to in this announcement on the basis of this announcement. The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may or should be placed by any person for any purposes whatsoever on the information contained in this announcement or on its completeness, accuracy or fairness. The information in this announcement is subject to change. No obligation is undertaken to update this announcement or to correct any inaccuracies, and the distribution of this announcement shall not be deemed to be any form of commitment on the part of the Company to proceed with any transaction or arrangement referred to herein. This announcement has not been approved by any competent regulatory authority.

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In particular, this announcement does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, securities to any person in the United States (including its territories and possessions, any state of the United States and the District of Columbia, the "United States"), Australia, Canada, Japan or South Africa, or in any jurisdiction to whom or in which such offer or solicitation is unlawful ("Excluded Territories"). Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. The securities referred to in this announcement have not been, and will not be, registered under the U.S. Securities Act of 1933 as amended (the "U.S. Securities Act") or under the securities laws of any state of the United States, and may not be offered, sold, resold or delivered, directly or indirectly, in or into the United States absent registration except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act. Subject to certain limited exceptions, the securities referred to in this announcement would only be offered or sold outside the United States.  The securities referred to in this announcement have not been and will not be registered under any applicable securities laws of any state, province, territory, county or jurisdiction of the Excluded Territories. Accordingly, such securities may not be offered, sold, resold, taken up, exercised, renounced, transferred, delivered or distributed, directly or indirectly, in or into the Excluded Territories or any other jurisdiction if to do so would constitute a violation of the relevant laws of, or require registration of such securities in, the relevant jurisdiction. There will be no public offer of securities in the United States or elsewhere.

This announcement has been prepared on the basis that any offers of securities referred to herein in any Member State of the EEA or the United Kingdom will be made pursuant to an exemption under Regulation (EU) 2017/1129 on prospectuses (the "Prospectus Regulation") from the requirement to publish a prospectus for offers of such securities. The information set forth in this announcement is only being distributed to, and directed at, persons in Member States of the EEA or the United Kingdom who are qualified investors (Qualified Investors) within the meaning of Article 2(1)(e) of the Prospectus Regulation.

In addition, in the United Kingdom, this announcement is only being communicated to, is directed only at Qualified Investors (i) who are “investment professionals” falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order"), (ii) high net worth entities falling within Article 49(2)(a)-(d) of the Order or (iii) persons to whom it may otherwise lawfully be communicated, all such persons together being referred to as "Relevant Persons".

Under no circumstances should persons who are not Relevant Persons rely or act upon the contents of this announcement. Any investment or investment activity to which this announcement relates is not available to and may not be engaged with, persons (i) in any Member States or the EEA who are not Qualified Investors, or (ii) in the United Kingdom who are not Relevant Persons.

None of the Company, any managers appointed by the Company for purpose of an offering or any of their respective subsidiary undertakings, affiliates or any of their respective directors, officers, employees, advisers, agents or any other person accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to the truth, accuracy, completeness or fairness of the information or opinions in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company 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 does not constitute an investment recommendation. The price and value of securities and any income from them can go down as well as up and you could lose your entire investment. Past performance is not a guide to future performance. Information in this announcement cannot be relied upon as a guide to future performance.

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