The Board of Directors in Nilar intends to resolve on a fully guaranteed rights issue of approximately SEK 275 million

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The Board of Directors in Nilar International AB (publ) (Nasdaq First North Premier Growth Market: NILAR) (“Nilar” or the “Company”) today announces its intention to resolve on a fully guaranteed rights issue of shares equivalent to a value of approximately SEK 275 million (the “Rights Issue”). An Extra General Meeting is proposed to authorize the Board of Directors to resolve on the Rights Issue. The Extra General Meeting is planned to be held on 18 May 2022 and the notice will be published through a separate press release. The purpose of the Rights Issue is to secure financing of Nilar’s new strategy and business plan. Together with existing cash, the net proceeds from the Rights Issue is expected to be sufficient to finance the Company’s business plan to the end of 2023, provided that the Rights Issue generates gross proceeds of approximately SEK 275 million.

Summary

• The Board of Directors in Nilar today announces its intention to resolve on the Rights Issue. An Extra General Meeting is proposed to authorize the Board of Directors to resolve on the Rights Issue.
• The Extra General Meeting is planned to be held on 18 May 2022 and the notice will be published through a separate press release.
• The purpose of the Rights Issue is to secure financing of Nilar’s new strategy and business plan. The net proceeds will be used to finance on-going operations and production costs, product research and development activities, investments in production equipment and general corporate purposes, including payment of deferred tax related to Covid-19 payment respite. Together with existing cash in the Company, the net proceeds from the Rights Issue is expected to be sufficient to finance the Company’s business plan to the end of 2023 provided that the Rights Issue generates gross proceeds of approximately SEK 275 million.
• The Rights Issue is fully secured to approximately SEK 275 million through a combination of subscription undertakings and guarantee commitments. Provided that the Extra General Meeting authorizes the Board of Directors and that the Board of Directors subsequently resolves to carry out the Rights Issue:
  • certain existing shareholders, among others Fjärde AP-fonden (AP4), Första AP-fonden (AP1), Christopher Braden, AFA Försäkring and R&H Trust Co (Jersey) Limited (as Trustee of the Elk Trust), have undertaken to subscribe for shares in the Rights Issue. Total subscription undertakings from existing shareholders amount to up to approximately SEK 97 million, equivalent to approximately 35 percent of the Rights Issue; and
  • external guarantors and certain existing shareholders have provided guarantee commitments subject to customary conditions which, in aggregate, amount to approximately SEK 178 million, equivalent to approximately 65 percent of the Rights Issue.
• Gunnar Wieslander (chairman), Erik Oldmark (CEO) and Johan Önnesjö (CFO) have communicated that they intend to subscribe for shares in the Rights Issue.
• The prospectus is expected to be published on or around 30 May 2022.
• The record date in the Rights Issue is planned to occur on or around 31 May 2022.
• The subscription period in the Rights Issue is expected to take place 2 June – 16 June 2022.
• The subscription price in the Rights Issue will be priced at a customary discount to TERP.

Background and motive

During the last months, Sweden and Europe have experienced the effects of changed circumstances regarding supply and demand of several types of energy sources. The transition from fossil-based to renewable energy has significant impact on energy systems and infrastructure, where intermittent energy sources like solar and wind generate highly variable amounts of energy, leading to volatile energy prices. At the same time, disorder and unrest in the world have disrupted the supply of e.g., oil and natural gas, generating side effects that affect energy prices in several parts of the world. Societies’ consumption patterns of energy are also rapidly changing, following for instance the growing electric vehicle market which leads to an increased pressure on our already strained electric grids. Changing consumption patterns together with an increasing share of intermittent energy create reliability- and stability problems in the electric grid.

Nilar sees that stationary electrical energy storage has the potential to become a key component in order to mitigate these fluctuations of energy supply and demand. The installed base of stationary energy storage in Europe is expected to, according to Wood McKenzie, nine-fold between 2021 and 2030, an increase from 10.2 GWh to 103.1 GWh in nine years¹. Thanks to Nilar’s unique battery technology, the Company sees good conditions for taking part in this rapidly growing market. Together with selected collaborative partners, the Company strives to become a market leader within optimized solutions for customers who seek high-performing, cost-efficient, safe and sustainable energy storage.

Nilar’s previous strategy, i.e. rapidly scaling-up the production capacity, was severely negatively affected by pandemic related challenges in the supply chain for Nilar’s system integration partners during 2021. Difficulties for the system integration partners to obtain key components in the end product resulted in significantly decreased sales for Nilar. Beyond this emerged product quality related issues, simultaneously as prices of raw materials increased globally. After the appointment of Erik Oldmark as the CEO of the Company in October 2021, the development of a revised business strategy was initiated, in order to establish an action plan that prioritizes profitability above short-term growth of production volume. The revised strategy is now set and consists of, as previously communicated, the initiatives listed below:

• Increased focus on growth within larger installations of energy storages on the European market within the segments for commercial and industrial facilities and the electric grid.
• Increased focus on building long-term partnerships with selected key system integrators in order to create sharply optimized energy storage solutions based on customer needs.
• The Company will shift focus from supplying complete energy storages systems to focusing on its competitive battery and BMS-platform², together with the reoxygenating technology; and to hand over the construction of the complete battery system to its partners.
• The Company will increase the sales price of its products to reflect the customer value of its next generation battery pack with reoxygenating technology, and to compensate for increased costs of raw material.

To adjust the Company’s cost base, the decision to temporarily decrease production volume in Gävle was taken during the fall 2021, as well as to pause the ongoing construction of the new production unit in Paldiski, Estonia. This also meant a significant temporary reduction of the workforce. The financial impact of the cost savings measures implemented during 2021 will be reflected in the financial result from the second quarter of 2022. As a result of the revised business strategy, the future sales development is planned to increase at a slower pace than planned in the previous strategy.

To be able to implement the revised strategy and to deliver according to the new business plan, Nilar’s Board of Directors intends to carry out a Rights Issue of approximately SEK 275 million. The net proceeds will be used to finance on-going operations and production costs, product research and development activities, investments in production equipment and general corporate purposes, including payment of deferred tax related to Covid-19 payment respite.

If the Rights Issue generates gross proceeds of approximately SEK 275 million the Company expects, together with existing cash, to be able to finance its business plan to the end of 2023. Until then, the Company will focus on achieving the following milestones:

• Sign strategic agreements with key integrators for joint solution development towards the Company’s main target customer segments.
• Delivery of batteries, including the new reoxygenating functionality, together with performance and quality improvements on the existing battery design.
• Pull forward development of Nilar’s next generation battery and control systems, to be launched in 2024, to optimize and align the Company’s technology with its revised strategy.
• Set out a roadmap for reaching a production volume capacity of 150-200MWh by 2025, including the production unit in Paldiski, Estonia.

Extra General Meeting

An extra general meeting is proposed to authorize the Board of Directors to resolve on a rights issue. The Extra General Meeting is planned to be held on 18 May 2022 and the notice will be published through a separate press release.

Subscription undertakings, guarantee commitments and voting commitments

Provided that the Extra General Meeting resolves to authorize the Board of Directors and that the Board of Directors resolves to carry out the Rights Issue, certain existing shareholders, among others Fjärde AP-fonden (AP4), Första AP-fonden (AP1), Christopher Braden, AFA Försäkring and R&H Trust Co (Jersey) Limited (as Trustee of the Elk Trust), have undertaken to subscribe for shares in the Rights Issue. Total subscription undertakings from existing shareholders amount to approximately 35 percent of the Rights Issue, which corresponds to approximately SEK 97 million. These shareholders have also undertaken toa vote in favor of the authorization at the extra general meeting.

In addition of the aforementioned subscription commitments, external guarantors and certain existing shareholders, among other Fjärde AP-fonden, have provided guarantee commitments subject to customary conditions, which in aggregate, amount to approximately SEK 178 million, corresponding to approximately 65 percent of the Rights Issue.

The Rights Issue is fully secured to approximately SEK 275 million through the subscription undertakings and guarantee commitments mentioned above.

For the guarantee undertakings, except for in relation to Fjärde AP-fonden’s guarantee undertaking, a guarantee commission of nine percent 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 guaranteed commitments will be available in the prospectors published before the start of the subscription period.

Gunnar Wieslander (chairman), Erik Oldmark (CEO) and Johan Önnesjö (CFO) have communicated that they intend to subscribe for shares in the Rights Issue.

Indicative timetable and terms of the issue

• The Extra General Meeting is planned to be held on 18 May 2022.
• The Board of Directors is expected to resolve on the Rights Issue and its terms around the 20 May 2022 (or as soon as the new authorization to issue shares has been registered with the Swedish Companies Registration Office).
• The prospectus is expected to be published on or around the 30 May 2022.
• The record date in the Rights Issue is expected to take place on or around 31 May 2022.
• The subscription period in the Rights Issue is expected to take place around 2 June – 16 June 2022.

Prospectus

The prospectus and subscription form will be made available before the subscription period commence on Nilar’s website, www.nilar.com, as well as 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 the Sole Global Coordinator and Bookrunner. Baker & McKenzie Advokatbyrå AB acts as legal advisor to the Company.

For further information, please contact:

Erik Oldmark, CEO

Mobile: +46 70 432 4444

E-mail: erik.oldmark@nilar.com

This information is such information that Nilar International AB is obligated to make public pursuant to the EU Market Abuse Regulation 596/2014. The information was submitted, through the agency of the contact person above, for publication on 7 April 2022, 08:00 CEST. Above responsible person can also be contacted for further information.

About Nilar

Nilar is a Swedish based developer and manufacturer of battery systems used in Electrical Energy Storage  (ESS) systems suitable for stationary applications. Nilar’s battery technology is based on nickel-metal hydride (NiHM) and has three distinct product benefits: performance through a long calendar lifetime, safety through a non-flammable battery technology, and sustainability from an energy efficient production process and a product made of recyclable materials. The Company’s head office is located in Täby, Sweden, and Nilar’s production and research and development is carried out in Gävle with an additional future production facility planned in Paldiski, Estonia.

Nilar is listed on Nasdaq First North Premier Growth Market and FNCA Sweden AB is the Company’s Certified Adviser (CA). Contact information: 08-52800399 or info@fnca.se.

Important information

The information in this press release does not contain or constitute an offer to acquire, subscribe or otherwise trade with shares or other securities in Nilar. No action has been taken and measures will not be taken to permit a public offering in any other jurisdictions besides Sweden.

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. This press release neither identify nor pretends to identify risks (direct or indirect) that can be connected to an investment in shares or other securities in Nilar. A prospectus will be prepared in connection with the Rights Issue and be reviewed and approved by the Swedish Financial Supervisory Authority, which is the national competent authority in Sweden with regard to the Prospectus Regulation. In order for investors to fully understand the potential risks and benefits associated with a decision to participate in the Rights Issue, any investment decision should only be made based on the information in the Prospectus. Thus, investors are encouraged to review the Prospectus in its entirety.

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 the United States of America, Australia, Hong Kong, Japan, Canada, New Zeeland, Switzerland, Singapore, South Africa, South Korea or any other jurisdiction where such act would be unlawful, where such action is subject to legal restrictions or would require additional registration or other measures beyond those that follow from Swedish law. Actions in violation of these restrictions may constitute a violation of applicable securities law. No shares or other securities in Nilar have been registered, and no shares or other securities will be registered, under the United States Securities Act of 1933, as amended (“Securities Act”) or the securities legislation of any state or other jurisdiction in the United States of America and no shares or other securities may be offered, sold or otherwise transferred, directly or indirectly, in or into the United States of America, except under an available exemption from, or in a transaction not subject to, the registration requirements under the Securities Act and in compliance with the securities legislation in the relevant state or any other jurisdiction of the United States of America.

Within the European Economic Area (“EEA”), no offer of shares or other securities (“Securities”) is made to the public in any other country than Sweden. In other member states of the EU, such an offering of Securities may only be made in accordance with the Prospectus Regulation. In other member states of the EEA which have implemented the Prospectus Regulation in its national legislation, any offer of Securities may only be made in accordance with an applicable exemption in the Prospectus Regulation and/or in accordance with an applicable exemption under a relevant national implementation measure. In other member states of the EEA which have not implemented the Prospectus Regulation in its national legislation, any offer of Securities may only be made in accordance with an applicable exemption under national law. In the United Kingdom, this document and any other materials in relation to the securities described herein is only being distributed to, and is only directed at, and any investment or investment activity to which this document relates is available only to, and will be engaged in only with, “qualified investors” (within the meaning of the United Kingdom version of the EU Prospectus Regulation (2017/1129/ EU) which is part of United Kingdom law by virtue of the European Union (Withdrawal) Act 2018) who are (i) persons having professional experience in matters relating to investments who fall within the definition of “investment professionals” in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); (ii) high net worth entities etc. falling within Article 49(2)(a) to (d) of the Order; or (iii) such other persons to whom such investment or investment activity may lawfully be made available under the Order (all such persons together being referred to as “relevant persons”). In the United Kingdom, any investment or investment activity to which this communication relates is available only to, and will be engaged in only with, relevant persons. Persons who are not relevant persons should not take any action on the basis of this press release and should not act or rely on it.

This press release may contain forward-looking statements which reflect the Company’s current view on future events and financial and operational development. Words such as “intend”, “expect”, “anticipate”, “may”, “believe”, “plan”, “estimate” and other expressions which imply indications or predictions of future development or trends, and which are not based on historical facts, are intended to identify forward-looking statements. Forward-looking statements inherently involve both known and unknown risks and uncertainties as they depend on future events and circumstances. Forward-looking statements do not guarantee future results or development and the actual outcome could differ materially from the forward-looking statements.

The English text is an unofficial translation of the original Swedish text. In case of any discrepancies between the Swedish text and the English translation, the Swedish text shall prevail.

¹Wood Mackenzie, Global energy storage outlook H2 2021 update. Includes stationary energy storages for use, for residential properties, commercial properties/application and “front-of the meter” in Europe.