IR Holding Bidco Inc. announces a public cash offer to the shareholders of IRRAS AB

THIS PRESS RELEASE IS NOT AN OFFER, WHETHER DIRECTLY OR INDIRECTLY, IN AUSTRALIA, CANADA, HONG KONG, JAPAN, NEW ZEALAND OR SOUTH AFRICA OR IN ANY OTHER JURISDICTION WHERE SUCH OFFER PURSUANT TO LEGISLATION AND REGULATIONS IN SUCH RELEVANT JURISDICTION WOULD BE PROHIBITED. SHAREHOLDERS NOT RESIDENT IN SWEDEN WHO WISH TO ACCEPT THE OFFER (AS DEFINED BELOW) MUST MAKE INQUIRIES CONCERNING APPLICABLE LEGISLATION AND POSSIBLE TAX CONSEQUENCES. SHAREHOLDERS SHOULD REFER TO THE OFFER RESTRICTIONS INCLUDED IN THE SECTION TITLED “IMPORTANT INFORMATION” AT THE END OF THIS PRESS RELEASE AND IN THE OFFER DOCUMENT WHICH WILL BE PUBLISHED BEFORE THE COMMENCEMENT OF THE ACCEPTANCE PERIOD FOR THE OFFER.

Legacy Capital, Spetses, Bacara, Lexington, Kleanthis G. Xanthopoulos, Panormos, Philippe Audi, and Nicolas Murat (together, the “Consortium”)[1], through IR Holding Bidco Inc.[2] (“IR Holding”), hereby announce a public offer to acquire all shares in IRRAS AB (publ) (“IRRAS”) for SEK 0.18 in cash per share (the “Offer”). The shares in IRRAS are listed on Nasdaq Stockholm.

Summary of the Offer

• IR Holding offers SEK 0.18 in cash for each share in IRRAS.
• The members of the Consortium own in aggregate 472,859,820 shares, corresponding to approximately 59.5 per cent of all shares and votes in IRRAS. The members of the Consortium that own shares in IRRAS will contribute their shares in IRRAS to IR Holding at completion of the Offer.
• The Offer values all shares in IRRAS at approximately SEK 143 million (based on 794,813,400 shares in IRRAS). The total value of the Offer, based on the 321,953,580 shares in IRRAS which are not directly or indirectly owned by a member of the Consortium, amounts to approximately SEK 58 million.
• The Offer Price represents a premium of:[3]

• 18 per cent compared to the closing price of the IRRAS share on Nasdaq Stockholm on 29 June 2023 of SEK 0.1531; and
• 30 per cent compared to the volume weighted average price of the IRRAS share on Nasdaq Stockholm during the 30 latest trading days up to and including 29 June 2023 of SEK 0.1387.

• Completion of the Offer is conditional upon the Offer being accepted to such extent that IR Holding becomes the owner of more than 90 per cent of the shares in IRRAS (on a fully diluted basis) as well as conditions 2–6 set out under “Conditions for completion of the Offer” below.
• IR Holding expects to publish the offer document regarding the Offer on or around 6 July 2023. The acceptance period for the Offer is expected to commence on or around 7 July 2023 and expire on or around 11 August 2023. IR Holding reserves the right to extend the acceptance period for the Offer.

Background and reasons for the Offer

Background

Legacy Capital was approached by IRRAS in February 2023 to enquire whether Legacy Capital would be interested in becoming a significant new investor in IRRAS. After approximately three months of due diligence, it became clear to Legacy Capital that while IRRAS has attractive potential, it also is subject to significant challenges going forward. The historically high cost structure, in particular, in combination with the long sales cycle and limited financing opportunities remaining in the Swedish market led Legacy Capital to the conclusion that while IRRAS is an interesting opportunity, it no longer has any real benefits of being a public company and would be better served under private ownership. On this basis, Legacy Capital approached Spetses and the Bacara Group with a proposal to explore the possibilities of taking IRRAS private.

No alternative financing available

One of the major reasons for a company to be listed and traded publicly is to have access to funding, and for a company like IRRAS on-going funding to meet operating expenses while growing revenue. IRRAS has historically financed its operations through a combination of directed capital raises and preferential rights offerings in the public market, priced at significant discounts to market consistent with market practice in the Swedish market. On this basis, IRRAS has raised an aggregate of SEK 894 million as a listed company, and IRRAS’ share price has been reduced from a high of SEK 45.85 in September 2018 to currently approximately SEK 0.15. In the most recent preferential rights offering, which was only 67 per cent subscribed, investors (other than the Bacara Group) subscribed for only 40 per cent of the full offering, despite a 90 per cent dilution (715,332,060 new shares were issued over the existing 79,481,340 shares). Spetses and the Bacara Group, being the largest shareholders of IRRAS, are of the view, supported by Pareto Securities, that there is no reason to believe that the 40 per cent minority today would support any further funding of IRRAS to a greater extent than at the last preferential rights offering in 2022.

The Bacara Group and Spetses have explored alternative financings not involving preferential rights offerings. None of those alternatives have come to fruition. IRRAS is in urgent need of capital to fund its operating expenses, and will need a significant capital injection imminently, which will lead to significant dilution for all current shareholders, in particular for the public minority that would not participate in a directed capital raising. The Consortium does not believe there is any alternative financing available to IRRAS that is remotely attractive to minority shareholders. As such, the Offer is highly attractive for IRRAS’ minority shareholders considering that it allows minority shareholders to realize immediate liquidity and certainty of value in respect of their shares, while eliminating the effect of the long-term business and execution risks described above.

For the foregoing reasons, the Consortium members accepted the proposal by Legacy Capital to explore the possibilities of making the Offer. In their collective view, the Offer is the best option for IRRAS, the only option the Bacara Group and Spetses are willing to support at this stage and fair to the minority shareholders in IRRAS.

The Consortium’s plans with IRRAS

Legacy Capital and its partners in the Consortium believe in the current business model of IRRAS, but believe action needs to be taken to reduce the exposure of a potential termination of the distribution arrangement with Medtronic. In effect, this means an increase in the direct sales force, more funding for research and development activities, and an active search to add to the product portfolio. In the Consortium’s view, the current share price does not allow for further financings to fund expenditures required for these purposes. At the same time, IRRAS’ historical high operating expense levels need to be further managed and controlled. The Consortium is convinced that these necessary measures can best be implemented in a private ownership setting.

IRRAS went public in Sweden in 2017. Today, there is very little connection with Sweden other than the public listing of the shares on Nasdaq Stockholm. The management is based in San Diego and the overwhelming majority of current revenue is being generated in the U.S. In many ways, IRRAS is a U.S. business with a Swedish stock exchange listing. The cost to IRRAS of being listed in Sweden is significant, not only because of listing fees but because of the costs ancillary to the Swedish listing, including IR personnel, office lease cost, the cost to run accounts in IFRS, and the cost of advisors relating to the presence in Sweden.

The Consortium and IR Holding support the strategy set by the management team of focusing on developing a strong U.S. presence. Given the Consortium members’ and IR Holding’s knowledge of IRRAS, the Consortium and IR Holding do not intend to implement any material changes to IRRAS’ employees and management team, nor to the existing organisation and locations of the operations, except to optimise current spending plans and better align this with IRRAS’ long term strategy which, among other things, may involve an evaluation of IRRAS’ operational presence in Europe and Sweden going forward. As a result of the depressed stock price and IRRAS being incorporated in Sweden, the talented U.S. based management team is unable to receive stock based compensation at levels commensurate with their market value. The Consortium and IR Holding regard the continuity of management as vital to the ongoing growth and development of IRRAS’ business, and accordingly plan to retain the management team on competitive and attractive terms.

The Offer

The Offer Price and the value of the Offer

IR Holding offers SEK 0.18 in cash per share in IRRAS (the “Offer Price”).

The Offer values all shares in IRRAS at approximately SEK 143 million (based on 794,813,400 shares in IRRAS). The total value of the Offer, based on the 321,953,580 shares in IRRAS which are not directly or indirectly owned by a member of the Consortium, amounts to approximately SEK 58 million.

No commission will be charged by IR Holding in respect of the settlement of the shares in IRRAS tendered to IR Holding under the Offer.

Premium

The Offer Price represents a premium of:[4]

• 18 per cent compared to the closing price of the IRRAS share on Nasdaq Stockholm on 29 June 2023 of SEK 0.1531; and
• 30 per cent compared to the volume weighted average price of the IRRAS share on Nasdaq Stockholm during the 30 latest trading days up to and including 29 June 2023 of SEK 0.1387.

Potential adjustment of the Offer Price

If IRRAS distributes dividends or makes any other value transfer prior to the settlement of the Offer, IR Holding will reduce the Offer Price accordingly or invoke completion condition 6 set out under “Conditions for completion of the Offer” below.

Conditions for completion of the Offer

Completion of the Offer is conditional upon:

1. the Offer being accepted to such extent that IR Holding becomes the owner of more than 90 per cent of the shares in IRRAS (on a fully diluted basis);
2. with respect to the Offer and the acquisition of IRRAS, the receipt of all necessary regulatory, governmental or similar clearances, approvals and decisions, in each case on terms that, in IR Holding’s opinion, are acceptable;
3. neither the Offer nor the acquisition of IRRAS being rendered wholly or partially impossible or significantly impeded as a result of legislation or other regulation, any decision of a court or a public authority, or any similar circumstance;
4. no circumstances having occurred that have a material adverse effect, or could reasonably be expected to have a material adverse effect, on IRRAS’ sales, results, liquidity, equity ratio, equity or assets;
5. no information made public by IRRAS, or disclosed by IRRAS to IR Holding, being inaccurate, incomplete or misleading, and IRRAS having made public all information that should have been made public by IRRAS; and
6. IRRAS not taking any action that is intended to impair the prerequisites for making or completing the Offer.

IR Holding reserves the right to withdraw the Offer in the event that it is clear that any of the above conditions is not satisfied or cannot be satisfied. However, with regard to the conditions set out in items 2–6 above, the Offer may only be withdrawn where the non-satisfaction of such condition is of material importance of IR Holding’s acquisition of IRRAS or if it is approved by the Swedish Securities Council.

IR Holding reserves the right to waive, in whole or in part, one or more of the conditions set out above, including, with respect to the condition set out in item 1, to complete the Offer at a lower acceptance level.

Approvals from authorities

Completion of the Offer is conditional upon, among other things, the receipt of all necessary regulatory, governmental or similar clearances, approvals and decisions, in each case on terms that, in IR Holding’s opinion, are acceptable.

According to IR Holding’s assessment, the Offer will not require any approvals from authorities.

Financing of the Offer

Completion of the Offer is not subject to any financing condition.

The Offer Price payable to shareholders of IRRAS that accept the Offer is financed in full by funds available to IR Holding pursuant to unconditional equity commitment letters issued by Legacy Capital.

The members of the Consortium own in aggregate 472,859,820 shares, corresponding to approximately 59.5 per cent of all shares and votes in IRRAS. The members of the Consortium that own shares in IRRAS will contribute their shares in IRRAS to IR Holding at completion of the Offer.

Review of information in connection with the Offer

IR Holding has conducted a due diligence review of IRRAS in connection with the preparation of the Offer. With the exception of the information which was made public through a press release by IRRAS yesterday on 29 June 2023, IRRAS has confirmed that no inside information regarding IRRAS has been disclosed to IR Holding or any member of the Consortium during the due diligence review.

Information on the Consortium and IR Holding

Legacy Capital, Spetses, Bacara, Lexington, Kleanthis G. Xanthopoulos, Panormos, Philippe Audi and Nicolas Murat have entered into an agreement to jointly carry out the Offer through IR Holding.

IR Holding (company registration number 7534780) is a Delaware corporation that currently is wholly-owned by Legacy Capital and will, at completion of the Offer, become co-owned by the members of the Consortium. IR Holding was incorporated on 26 June 2023. IR Holding has its registered office at 1209 Orange Street, County of New Castle, Wilmington, Delaware 19801. IR Holding was incorporated for the purpose of making the Offer, and has never conducted any other business.

Legacy Capital is a private limited liability company incorporated in Luxembourg. Legacy Capital is a special purpose vehicle formed for purposes of the Offer, and managed by a General Partner, the beneficial ownership of which is held 1/3 each by entities controlled by Martin Bjäringer, Michel Pettigrew and Olof Clausson. Legacy Capital does not own any shares in IRRAS.

Spetses is an investment vehicle managed and controlled by Levant Capital, a private equity firm established in 2006 and operating out of its office in the Dubai International Financial Center. Spetses is a holder of 234,500,000 shares, representing approximately 29.5 per cent of all shares and votes in IRRAS.

Bacara is a Cypriot based family owned investment holding company managed by Marios Fotiadis on behalf of his family. Bacara is a holder of 186,833,390 shares, representing approximately 23.5 per cent of all shares and votes in IRRAS. Lexington is a British Virgin Islands’ family owned holding company of Marios Fotiadis. Lexington is a holder of 31,557,270 shares, representing approximately 4.0 per cent of all shares and votes in IRRAS. Marios Fotiadis is the chairman of the board of directors of IRRAS.

Kleanthis G. Xanthopoulos is a board member (and previously CEO) of IRRAS. Mr. Xanthopoulos is a holder of 13,014,870 shares, representing approximately 1.6 per cent of all shares and votes in IRRAS. Mr. Xanthopoulos is very familiar with IRRAS’ business and, given his extensive experience in life sciences and relationships in the field, will be a key board member of IRRAS going forward.

Panormos is an investment holding company of the founders of Levant Capital, the investment manager of Spetses. Panormos is a holder of 3,878,450 shares, representing approximately 0.4 per cent of all shares and votes in IRRAS. Panormos has been involved with IRRAS since prior to its listing, have participated in various funding rounds, and will continue to support the company with its funding needs.

Philippe Audi and Nicolas Murat are partners at Levant Capital, the investment manager of Spetses, and holders of 2,301,210 and 774,630 shares, respectively, representing approximately 0.29 and 0.1 per cent of all shares and votes in IRRAS, respectively. Each of Philippe Audi and Nicolas Murat has been actively involved with IRRAS for several years, and the Consortium believes that their experience working with IRRAS will be crucial once IRRAS has been taken private and measures driving growth and reducing operating expenses are implemented.

The Consortium’s and IR Holding’s shareholding in IRRAS

The members of the Consortium own in aggregate 472,859,820 shares, corresponding to approximately 59.5 per cent of all shares and votes in IRRAS. The members of the Consortium that own shares in IRRAS will contribute their shares in IRRAS to IR Holding at completion of the Offer.

Apart from the above, neither IR Holding or the members of the Consortium nor any closely related parties to them own any shares or other financial instruments that give a financial exposure equivalent to a shareholding in IRRAS.

Neither IR Holding or the members of the Consortium nor any closely related parties to them have acquired, or agreed to acquire, any shares in IRRAS or any other financial instruments that give a financial exposure equivalent to a shareholding in IRRAS during the six months preceding this announcement of the Offer.

IR Holding and the members of the Consortium may acquire, or enter into agreements to acquire, shares in IRRAS in other ways than through the Offer. Any such acquisitions will be carried out or agreed in accordance with Swedish law and Nasdaq Stockholm’s Takeover Rules as well as disclosed in accordance with applicable rules.

Closely related parties and conflicts of interest, etc.

Since Marios Fotiadis is the chairman of the board of directors of IRRAS and investment manager of Bacara and Lexington, and Kleanthis G. Xanthopoulos is a member of the board of directors of IRRAS and a member of the Consortium, Marios Fotiadis and Kleanthis G. Xanthopoulos have a conflict of interest pursuant to Rule II.18 of Nasdaq Stockholm’s Takeover Rules. Consequently, Marios Fotiadis and Kleanthis G. Xanthopoulos have not participated, and will not participate, in IRRAS’ handling of matters regarding the Offer.

These circumstances also mean that Section III of Nasdaq Stockholm’s Takeover Rules is applicable to the Offer. As a result, the acceptance period of the Offer must be at least four weeks, and IRRAS must obtain, and no later than two weeks prior to the expiry of the acceptance period publish, a fairness opinion regarding the Offer from an independent expert.

Statement from the independent bid committee of IRRAS

IRRAS has informed IR Holding that the board of directors of IRRAS has established an independent bid committee, consisting of Catherine Gilmore-Lawless, Eva Nilsagård and Anita Tollstadius, to represent IRRAS in relation to the Offer.

Pursuant to Nasdaq Stockholm’s Takeover Rules, the independent bid committee is to announce its opinion of the Offer and obtain a fairness opinion from an independent expert no later than two weeks prior to the expiry of the acceptance period.

Preliminary timetable

• Publication of the offer document: 6 July 2023
• Acceptance period: 7 July‒11 August 2023
• Commencement of settlement: On or about 18 August 2023

IR Holding reserves the right to extend the acceptance period and to postpone the settlement date. Any such extension of the acceptance period or postponement of the settlement date will be announced by IR Holding through a press release in accordance with applicable laws and regulations (including Nasdaq Stockholm’s Takeover Rules).

Compulsory buy-out and delisting of IRRAS

In the event that IR Holding, whether in connection with the Offer or otherwise, becomes the owner of more than 90 per cent of the shares in IRRAS, IR Holding intends to commence a compulsory buy-out procedure in respect of the remaining shares in IRRAS in accordance with the Swedish Companies Act (Sw. aktiebolagslagen (2005:551)). In connection with such compulsory buy-out procedure, IR Holding intends to promote a delisting of the shares in IRRAS from Nasdaq Stockholm.

Applicable law and disputes

The Offer, and any agreements entered into between IR Holding and shareholders of IRRAS in connection with the Offer, is governed by and construed in accordance with the laws of Sweden. Any dispute, controversy or claim arising out of or in connection with the Offer shall be finally settled by Swedish courts, and Stockholm District Court shall be the court of first instance.

Nasdaq Stockholm’s Takeover Rules and the Swedish Securities Council’s rulings regarding interpretation and application of Nasdaq Stockholm’s Takeover Rules are applicable to the Offer. IR Holding has undertaken to Nasdaq Stockholm AB to comply with Nasdaq Stockholm’s Takeover Rules and to submit to any sanctions that can be imposed on IR Holding by Nasdaq Stockholm in the event of a breach of Nasdaq Stockholm’s Takeover Rules. IR Holding informed the Swedish Financial Supervisory Authority about the Offer and the undertaking towards Nasdaq Stockholm AB today on 30 June 2023.

Advisers

IR Holding has engaged Pareto Securities as financial adviser as well as Gernandt & Danielsson Advokatbyrå and Latham & Watkins as legal advisers in connection with the Offer.

In addition, Legacy Capital has engaged Gernandt & Danielsson Advokatbyrå and Latham & Watkins, and Spetses and the Bacara Group have engaged Advokatfirman Vinge and Cooley, as legal advisers in connection with the Offer.

* * *

IR Holding Bidco Inc.
The Board of Directors

This press release was submitted for publication on 30 June 2023 at 08.30 a.m. (CEST).

For enquiries, please contact:

Adam Makkonen
E-mail: adam.makkonen@fogelpartners.se
Phone: +46 70 316 63 75

Information about the Offer is available at: https://medical-solutions-offer.com/.

For administrative questions regarding the Offer, please contact your bank or nominee where you have your shares registered.

Important information

This press release has been published in English and Swedish. In the event of any discrepancy between the two language versions, the Swedish version shall prevail.

The Offer is not being made to (and acceptance forms will not be accepted from or on behalf of) persons domiciled in Australia, Canada, Hong Kong, Japan, New Zealand or South Africa, or whose participation in the Offer requires that additional offer documents are prepared or registrations effected or that any other measures are taken in addition to those required under Swedish law (including Nasdaq Stockholm’s Takeover Rules), unless an exemption applies.

This press release and any other documentation related to the Offer (including copies of such documentation) must not be mailed or otherwise distributed, forwarded or sent in or into any jurisdiction (including, without limitation, Australia, Canada, Hong Kong, Japan, New Zealand or South Africa) in which the distribution of this press release or the Offer would require any additional measures to be taken or would be in conflict with any law or regulation in any such jurisdiction. Persons who receive this press release (including, without limitation, banks, brokers, dealers, nominees, trustees and custodians) and are subject to the laws or regulations of any such jurisdiction will need to inform themselves about, and observe, any applicable restrictions and requirements. Any failure to do so may constitute a violation of the securities laws or regulations of any such jurisdiction. To the extent permitted by applicable law and regulations, the members of the Consortium and IR Holding disclaim any responsibility or liability for any violations of any such restrictions, and IR Holding reserves the right to disregard any acceptance forms whose submission constitutes a direct or indirect violation of any of these restrictions.

The Offer, the information and documents contained in this press release are not being made and have not been approved by an authorised person for the purposes of section 21 of the UK Financial Services and Markets Act 2000 (the “FSMA”). Accordingly, the information and documents contained in this press release are not being distributed to, and must not be passed on to, the general public in the United Kingdom, unless an exemption applies. The communication of the information and documents contained in this press release is exempt from the restriction on financial promotions under section 21 of the FSMA on the basis that it is a communication by or on behalf of a body corporate which relates to a transaction to acquire day to day control of the affairs of a body corporate; or to acquire 50 per cent or more of the voting shares in a body corporate, within article 62 of the UK Financial Service and Markets Act 2000 (Financial Promotion) Order 2005.

Forward-looking statements

Statements in this press release relating to any future status or circumstances, including statements regarding future performance, growth and other trend projections and other effects of the Offer, are forward-looking statements. These statements may generally, but not always, be identified by the use of words such as “anticipate”, “believe”, “expect”, “intend”, “plan”, “seek”, “will”, “would” or similar expressions.

By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that could occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to several factors, many of which are outside IR Holding’s and the Consortium members’ control. Any forward-looking statements in this press release speak only as of the date on which the statements are made and none of IR Holding or the Consortium members have any obligation (and undertake no obligation) to update or revise any of them, whether as a result of new information, future events or otherwise, except as required by applicable laws and regulations.