The Board of Directors of Ovzon has resolved on a fully guaranteed rights issue of up to approximately SEK 750 million

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The Board of Directors in Ovzon AB (publ) ("Ovzon" or the "Company") has today, pursuant to the authorization granted by the extra general meeting on 21 December 2018, resolved on a fully guaranteed new share issue of a maximum of 25,189,197 shares with preferential rights for the Company's existing shareholders (the "Rights Issue"). The subscription price in the Rights Issue is SEK 29.70 per share. The Company will receive approximately SEK 750 million before deduction of transaction costs related to the Rights Issue.

Summary 

•  The proceeds from the Rights Issue will primarily be used to finance the Company’s own satellite – Ovzon-3 – which is planned to be launched during the first quarter of 2021 at the earliest

• Existing shareholders in the Company receives three subscription rights for each share held as of the record date. One subscription right entitles the holder to subscribe for one new share in the Rights Issue
• Record date for participation in the Rights Issue is 7 January 2019
• Subscription in the Rights Issue may occur under the period as of 9- 23 January 2019
• The Company will receive approximately SEK 750 million before deduction of transaction costs related to the Rights Issue
• The subscription price in the Rights Issue is SEK 29.70 per share, which corresponds to a discount of approximately 30.60 percent compared with the theoretical price after separation of subscription rights, based on the closing price of the Ovzon share on 21 December 2018 on Nasdaq First North Premier
• For existing shareholders not participating in the Rights Issue, a dilution effect corresponding to 75.00 percent of the total number of shares and votes in the Company following the Rights Issue will arise

• The Company's largest shareholder, OverHorizon (Cyprus) PLC, has undertaken not to use any of its allotted subscription rights in order to enable its shareholders to subscribe for shares in the Rights Issue corresponding to a number for the respective shareholder which corresponds to such shareholder's indirect ownership in Ovzon. In the event that not all shareholders in OverHorizon (Cyprus) PLC exercise their subscription rights for shares in the Company, OverHorizon (Cyprus) PLC may sell their remaining subscription rights and may use the proceeds to acquire shares in Ovzon.

• Certain of the Company’s major shareholders[1] have undertaken to subscribe for their respective pro-rata share of the Rights Issue. These subscription undertakings amount to, in aggregate, approximately SEK 333 million, equivalent to approximately 44 percent of the Rights Issue. In addition, the Company has received guarantee commitments amounting to approximately SEK 417 million from certain existing shareholders[2] and external guarantors[3], corresponding to approximately 56 percent of the Rights Issue. Consequently, the Rights Issue is fully guaranteed

Background and reasons

Ovzon provides satellite based broadband services through user friendly, compact and light terminals, targeting markets and customers in need of high capacity in combination with mobility. This comprise, among others, users which are dependent on real-time sensors and video uploads, either from mobile platforms or directly from users transmitting on-the-go.

Ovzon’s current system is designed to give competitive advantages through a unique combination of multiple applications, including high mobility, high-speed data, both in uplink and in downlink, small terminals and high link availability. Ovzon’s own satellite design could furthermore give steerable coverage areas and enable direct communication between smaller terminals.

Ovzon’s current services offering is based on leased satellite transponders from existing satellites. To broaden the service coverage and the total available bandwidth, the Company intends to lease additional satellite capacity from satellites that are in manufacturing and are planned to be launched in 2019.

Since its establishment, the strategic goal of the Company has been to launch its own satellites, of which the first is referred to as Ovzon-3. The development of the satellite has been underway for a long time. The Company assess that Ovzon-3 will entail, among other things, significantly increased service performance, new types of services, the potential to use even smaller terminals, increased coverage areas and more available bandwidth, which in all leads the Company to believe that it will be able to offer a more advanced and valuable satellite communication service based on its own satellite.

Ovzon plans to launch Ovzon-3 during the first quarter of 2021 at the earliest. Based on an optimized utilization of the satellite’s capacity, the Company expects that Ovzon-3 will generate annual revenues of up to SEK 1 billion with a better margin.

Use of proceeds

The total investment required for Ovzon-3 is expected to amount to SEK 1.5 billion and includes financing, insurance manufacturing, launch, and of the satellite. In order to finance Ovzon-3 the Board of Directors has today, pursuant to the authorization granted by the extra general meeting held on 21 December 2018, resolved on the Rights Issue of approximately SEK 750 million. The Company expects to finance SEK 750 million through the Rights Issue and the remaining part through current reserves and external loans. The Company has as of the date of this press release not received loan financing to finance the remaining part of Ovzon-3.

In the event that the conditions for the completion of the Ovzon-3 project no longer exist, the Board of Director’s shall act for a dividend of the Company's excess liquidity to an amount not exceeding the total amount which has been paid in the Rights Issue. Such resolution for dividend is subject to the Company having sufficient non-restricted equity and that the payment is deemed justified in accordance with the Swedish Companies Act Ch. 17, Sec. 3 and that the payment is otherwise made in accordance with the Swedish Companies Act's rules regarding value transfers.

RIghts Issue

The Board of Directors of the Company has today, pursuant to the authorization granted by the extra general meeting held on 21 December 2018, resolved on a new share issue of up to a maximum of approximately SEK 750 million with preferential rights for the Company’s existing shareholders in proportion to their shareholdings as of the record date 7 January 2019.

Holders of shares, which on the record date of 7 January 2018 are entered in the share register held by Euroclear Sweden AB, have the right, for each existing share, to subscribe for three new shares at a subscription price of SEK 29.70 per share. The subscription price corresponds to a discount of approximately 30.60 percent compared to the theoretical price after the separation of subscription rights, based on the closing price of the Ovzon share on 21 December 2018 on Nasdaq First North Premier.

Shareholders receive three subscription rights for each share held on the record date. One subscription right entitle to subscription of one share in the Rights Issue. The Rights Issue will provide Ovzon with a maximum of SEK 750 million, before deduction of transaction costs, by issuing a maximum of 25,189,197 shares.

The Rights Issue will result in an increase of the share capital of a maximum of approximately SEK 2,518,920. Upon full subscription, the number of shares in Ovzon, after the Rights Issue, will amount to a maximum of 33,585,596 shares and the share capital will amount to a maximum of approximately SEK 3,358,560. For existing shareholders not participating in the Rights Issue, a dilution effect corresponding to approximately 75.00 percent of the total number of shares and votes in the Company following the Rights Issue will arise. Shareholders who choose not to participate in the Rights Issue have the opportunity to compensate for the economic dilution effect by selling their subscription rights.

The last day of trading in Ovzon's shares, including the right to receive subscription rights in the Rights Issue, is 3 January 2019. Subscription of shares with subscription rights shall be by cash payment during the period from 9-23 January 2019. Subscription of shares without subscription rights shall be made on a special subscription list during the period from 9-23 January 2019. Payment for shares subscribed without subscription rights shall be made in cash no later than two banking days following the issue of the settlement note, which indicates notification of allocation. The Board of Directors is entitled to extend the subscription period and the last day for payment.

The Company's largest shareholder, OverHorizon (Cyprus) PLC, has undertaken not to use any of its allotted subscription rights in order to enable its shareholders to subscribe for shares in the Rights Issue corresponding to a number for the respective shareholder which corresponds to such shareholder's indirect ownership in Ovzon. If not all shareholders of OverHorizon (Cyprus) PLC exercise their right to subscribe for shares in the Company, OverHorizon (Cyprus) PLC will, to the extent possible, sell its subscription rights.

If all of the new shares are not subscribed for with subscription rights, the board will decide on allotment of new shares subscribed for without subscription rights. Allocation will then be decided in the priority as set forth below:

• Firstly, allocation will be made to persons who are shareholders in OverHorizon PLC and have applied for subscription without subscription rights. Allotment shall in such case be made with a number of shares which do not exceed the subscribers implicit pro rata part[4] of the maximum number of shares that may be issued in the Rights Issue.

• Secondly, allocation shall be made to those who have applied for subscription without subscription rights and who has subscribed for shares with subscription rights or to those subscribers who have applied for subscription in accordance with the instructions for shareholders in OverHorizon PLC, regardless of whether or not the subscriber was a shareholder on the record date. In case of oversubscription, allocation shall be made in relation to the total number of shares allotted through (i) exercise of subscription rights or (ii) in accordance with the instructions applicable for shareholder in OverHorizon PLC. To the extent that this is not possible, by drawing of lots.

• Thirdly, allocation shall be made to other persons who have applied for subscription without subscription rights, and in the case of oversubscription, pro rata to the new number of shares subscribed for in the application form. To the extent that this is not possible, by drawing of lots.

• Finally, allotment of the remaining shares shall be made to the investors who have provided guarantees and in accordance with the conditions of their respective guarantee.

The full terms and conditions of the Rights Issue and information about the Company will be included in a prospectus expected to be published on the Company's website around 8 January 2019.

Articles of association

The Board of Directors had today also resolved that the articles of association, according to item 7 in the agenda of the extra general meeting held on 21 December 2018, shall be registered at the Swedish Companies Registration Office in connection with registration of the Rights Issue, This means that the limits for the number of shares are changed from a minimum of 5,000,000 and a maximum of 20,000,000 to a minimum of 33,585,596 and a maximum of 134,342,384 and the limits for the share capital in the articles of association are changed from a minimum of SEK 500,000 and a maximum of SEK 2,000,000 to a minimum of SEK 3,358,556 and a maximum of SEK 13,434,224.

Subscription undertakings and guarantees

Certain of the Company’s major shareholders[5] have undertaken to subscribe for their respective pro-rata share of the Rights Issue. These subscription undertakings amount to, in aggregate, approximately SEK 333 million, equivalent to approximately 44 percent of the Rights Issue. In addition, the Company has received guarantee commitments amounting to approximately SEK 417 million from certain existing shareholders[6] and external guarantors[7], corresponding to approximately 56 percent of the Rights Issue. Consequently, the Rights Issue is fully guaranteed.

Preliminary time table for the Rights Issue

Advisors 

Carnegie Investment Bank is financial adviser and Baker McKenzie is legal adviser to the Company in connection with the Rights Issue.

This information is information that Ovzon AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below, at 1.15 PM CET on 27 December 2018.

For more information, contact

Lennart Hällkvist

Chairman of the Board

lha@ovzon.com

Per Wahlberg

CEO

pwa@ovzon.com

Johan Brandt

CFO

jbr@ovzon.com

Tel: +46 8 508 600 60

E-mail: media@ovzon.com 

About Ovzon

Ovzon offers a revolutionary mobile broadband service via satellite combining high bandwidth with highly mobile terminals – offering speeds up to 80 times faster than competing services. Applications include real-time sensor and video upload, either from moving or highly mobile platforms or directly from users on-site transmitting on-the-go. Ovzon is headquartered in Solna, Sweden and has offices in Tampa, FL and Bethesda, MD in the United States. The share (OVZON) is traded on Nasdaq First North Premier, FNCA Sweden AB is the company’s Certified Adviser. Read more on http://www.ovzon.com.

Important information 

The release, announcement or distribution of this press release may, in certain jurisdictions, be subject to restrictions. The recipients of this press release in jurisdictions where this press release has been published or distributed shall inform themselves of and follow such restrictions. The recipient of this press release is responsible for using this press release, and the information contained herein, in accordance with applicable rules in each jurisdiction. This press release does not constitute an offer, or a solicitation of any offer, to buy or subscribe for any securities in Ovzon in any jurisdiction, neither from Ovzon nor from someone else.

Any investment decision in connection with the Rights Issue must be made on the basis of all publicly available information relating to the Company. Such information has not been independently verified by the financial advisors. The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness.

This press release does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein may not be sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended (the “Securities Act”), and may not be offered or sold within the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There is no intention to register any securities referred to herein in the United States or to make a public offering of the securities in the United States. The information in this press release may not be announced, published, copied, reproduced or distributed, directly or indirectly, in whole or in part, within or into Australia, Hong Kong, Japan, Canada, New Zealand, Singapore, South Africa,  the United States or in any other jurisdiction where such announcement, publication or distribution of the information would not comply with applicable laws and regulations or where such actions are subject to legal restrictions or would require additional registration or other measures than what is required under Swedish law. Actions taken in violation of this instruction may constitute a crime against applicable securities laws and regulations.

This press release is not a prospectus for the purposes of Directive 2003/71/EC (the “Prospectus Directive”) and has not been approved by any regulatory authority in any jurisdiction. A prospectus regarding the Rights Issue described in this press release will be prepared and submitted to Swedish Financial Supervisory Authority (Sw. Finansinspektionen). Following the Swedish Financial Supervisory Authority's approval and registration of the prospectus, the prospectus will be published and kept available at Ovzon's website.

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” 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”); or (ii) high net worth entities falling within Article 49(2)(a) to (d) of 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.

Forward-looking statements

This press release contains forward-looking statements that reflect the Company’s intentions, beliefs, or current expectations about and targets for the Company’s future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as “believe”, “expect”, “anticipate”, “intend”, “may”, “plan”, “estimate”, “will”, “should”, “could”, “aim” or “might”, or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. The Company does not guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors and readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither the Company nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release.

Information to distributors 

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended (“MiFID II”); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the “MiFID II Product Governance Requirements”), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any “manufacturer” (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the shares in Ovzon have been subject to a product approval process, which has determined that such shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the “Target Market Assessment”). Notwithstanding the Target Market Assessment, Distributors should note that: the price of the shares in Ovzon may decline and investors could lose all or part of their investment; the shares in Ovzon offer no guaranteed income and no capital protection; and an investment in the shares in Ovzon is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the share issue.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the shares in Ovzon.

Each distributor is responsible for undertaking its own Target Market Assessment in respect of the shares in Ovzon and determining appropriate distribution channels. 

[1] Investment AB Öresund, Bure Equity AB, AFA Försäkring, Catella Fonder, Handelsbanken Fonder, Dan Sten Olsson m. familj and AB Traction.

[2] Investment AB Öresund, Bure Equity AB, AFA Försäkring, Catella Fonder, Dan Sten Olsson m. familj and AB Traction.

[3] Carnegie Investment Bank AB, Swedia Invest AB and Ingo Invest AB.

[4] Each subscriber’s implicit pro rata part is calculated as the subscriber’s ownership in OverHorizon PLC multiplied with OverHorizon PLC's ownership in Ovzon multiplied with the maximum number of shares to be issued in the Rights Issue.

[5] Investment AB Öresund, Bure Equity AB, AFA Försäkring, Catella Fonder, Handelsbanken Fonder, Dan Sten Olsson m. familj and AB Traction.

[6] Investment AB Öresund, Bure Equity AB, AFA Försäkring, Catella Fonder, Dan Sten Olsson m. familj and AB Traction.

[7] Carnegie Investment Bank AB, Swedia Invest AB and Ingo Invest AB.