TECHSTEP ANNOUNCES ACQUISITION OF MYTOS, AGREEMENT IN PRINCIPLE REGARDING ACQUISITION OF APRO AND FULLY UNDERWRITTEN PRIVATE PLACEMENT OF NOK 100 MILLION

On 1 February 2017, Techstep ASA (“Techstep” or the  “Company”) entered into a binding agreement to acquire Mytos  AS (“Mytos”) for an aggregated purchase price of NOK 120.0 million, and entered into an agreement in principle to acquire Apro Tele og Data AS (“Apro”) for an aggregate purchase price of NOK 15.5 million. In connection with these transactions and to finance further acquisitions, the company intends to complete a fully underwritten private placement (the “Private Placement”) of NOK 100 million at NOK 5.70 per share.

Mytos acquisition
On 1 February 2017, Techstep entered into a binding agreement to acquire the entire share capital of Mytos AS (“Mytos”) for an aggregated fixed purchase price of NOK 120.0 million.

Mytos is a software as a services company with mainly recurring revenue. Mytos offers a full range of telecom expense management (“TEM”) modules, all with proprietary software and highly user friendly implementation and operation. Mytos has an active end user base of approximately 122,000 and 600 customers per year-end 2016. This acquisition strengthens Techstep’s solution portfolio with new capabilities and adds to the customer base.

Mytos delivered revenues of NOK 12.3 million, NOK 16.6 million and NOK 21.5 million in 2014, 2015 and 2016, respectively, and delivered EBITDA of NOK 3.5 million, NOK 6.8 million and NOK 6.9 million in 2014, 2015 and 2016, respectively. Adjusted EBITDA in 2016 was NOK 9.2 million. Total assets of Mytos were NOK 6.0 million, NOK 8.6 million and NOK 7.2 million at year-end 2014, 2015 and 2016, respectively. Mytos has a net debt position of approximately NOK 2.2 million as at year-end 2016. As of the time of transaction, Mytos has 11 employees.

The purchase price payable at closing of NOK 120.0 million will be settled with NOK 50.0 million in cash (financed by the Company’s current cash position) and NOK 70.0 million in Techstep shares, to be issued at a price of NOK 6.00 per Techstep share, corresponding to 11,666,667 new Techstep shares (“Mytos Consideration Shares”), equal to 11.38 per cent of the currently issued share capital of Techstep. The shares will be issued under Techstep’s current board authorization to issue shares approved at the extraordinary general meeting held at 4 November 2016. The Mytos Consideration Shares will be issued on a separate ISIN pending approval and publication of a listing prospectus which is currently being prepared by the Company. Following publication of the prospectus, the Mytos Consideration Shares will be transferred to the ordinary ISIN of the Company and will from such time be admitted to trading on Oslo Børs. Closing is subject to customary conditions, including certain third party consents and entering into new employment contracts with key employees, and is expected ultimo February 2017. The sellers will have a lock-up on the Mytos Consideration Shares with 1/3 until 7 November 2017, 1/3 until 7 May 2018 and 1/3 until 7 November 2019, subject to certain exceptions.

Mytos is currently owned 100 per cent by Mytos Systems AS. The CEO of Mytos is Atle Aarak and the Board of Directors  consists of Lars Ole Allum, Anders Brandt, Bent Erik Skaug, Hans Anders Borgen and Per Gunnar Gulliksen.

Except for the sellers’ right to receive the Mytos Consideration Shares, the transaction does not involve any specific rights to the benefit of the members of the Board of Directors or the executive managements of Techstep or Mytos respectively, nor is any such agreements expected to be entered into.

Agreement in principle regarding acquisition of Apro
On 1 February 2017, Techstep entered into an agreement in principle to acquire the entire share capital of Apro Tele og Data AS (“Apro”) for an aggregate purchase price of NOK 15.5 million. The agreement is inter alia subject to due diligence and negotiation of a share purchase agreement.

Apro was established in 1973 and delivers communication solutions with focus on mobile communications. Apro sells hardware, mobile subscriptions and offers consulting services for larger clients and customer support / maintenance and repair inhouse. Apro is a part of the Telering brand which has 115 centers/shops on franchise basis across Norway.

Apro had a turnover of NOK 71 million in 2016 and an EBITDA of NOK 4 million. The purchase price will be settled with NOK 7 million in cash and NOK 8 million in shares based on a Techstep share price of NOK 6.00 per Techstep share, corresponding to 1,333,333 new Techstep shares, and a seller note in the amount of NOK 500,000. In addition, it has been agreed that the sellers will have the right to an earn-out payment up to NOK 4.5 million based on certain criteria’s regarding increased profitability.

The transaction is subject to satisfactory due diligence and further assumes cash and debt free basis with a normalized level of net working capital.

Further announcement regarding the Apro acquisition will be made in due course.

Gaute Engbakk, CEO of Techstep, says:

“With the acquisition of Mytos and Apro we are taking a significant step forward in positioning Techstep as the leading provider in the Nordics of the digital workplace delivering integrated enterprise mobility solutions. The acquisition of Mytos contributes unique solutions within telecom expense management software, while we attain a significant customer base. Apro further brings a large customer base to provide with our solutions offerings and a team particularly skilled in in the public sector area.”

Fully underwritten Private Placement of NOK 100 million
In connection with the announced acquisitions and to further strengthen the company’s balance sheet for further growth the Company intends to complete the Private Placement of approximately NOK 100 million at NOK 5.70 per Techstep share, corresponding to 17,543,860 shares. Arctic Securities AS and DNB Markets, a part of DNB Bank ASA, have been engaged as Joint Bookrunners for the Private Placement (the “Managers”).

The Private Placement is fully underwritten by inter alia Middelborg AS, a company owned by board member Kristian Lundkvist, Cipriano AS, a company owned by the Chairman of the Board, Einar J. Greve, Datum AS, and other Norwegian institutional and private investors (the “Underwriters”). The Underwriters will receive an aggregate underwriting commission of NOK 2 million. The Underwriters are guaranteed allocation of shares in the Private Placement for an amount corresponding to 50 per cent of its underwriting obligation in respect of the Private Placement. Middelborg AS, Cipriano AS, and Datum AS have pre-committed to subscribe for minimum 5,263,158 shares.

The waiver of the preferential rights inherent in a private placement is considered necessary in the interest of time and successful completion.

Further information regarding the Private Placement (including timing) will be announced in due course.

Techstep will acquire the minority shares in Teki Solutions and Nordialog Asker
The Company will acquire the remaining 21.84 per cent of Teki Solutions and the remaining 50 per cent of Nordialog Asker. In order to settle these transactions, 7,515,325 new Techstep shares will be issued.

Further announcements regarding these two transactions will  be made in due course.

Share option grant
The Board of Directors of the Company has today resolved to grant 3 million share options to CEO Gaute Engbakk, and 1.5 million share options to each of CFO Marius Drefvelin and Chief Innovation Officer Mads Vårdal. The option grant is subject to the approval of the annual general meeting of Techstep. The options vest in three tranches with 1/3 per tranche, on the first, second and the third anniversary after the grant at a strike price of NOK 5.70, 6.50 and 7.00, respectively.  Neither Gaute Engbakk, Marius Drefvelin nor Mads Vårdal owns currently any shares or rights to shares in Techstep prior to the option grant. Once the options have been duly issued, the Company will have issued in total 6 million share options.

Shareholdings
Chairman of the Board, Einar J. Greve, has, through his wholly owned company Cipriano AS, pre-committed to subscribe for at least 877,193 shares in the Private Placement. Further, Cipriano AS has today entered into an option agreement with Zono Holding AS in which Cipriano AS may acquire 3,000,000 Techstep shares from Zono Holding AS. The options vest in three tranches with 1/3 per tranche, on 6, 18 and 30 months after the grant at a strike price of NOK 3.40, 4.30 and 5.00, respectively. All options expire after 30 months. Neither Einar J. Greve nor Cipriano AS owns any shares or rights to shares in Techstep prior to this.

Board member Kristian Lundkvist has, through his wholly owned company Middelborg AS, pre-committed to subscribe for at least 877,193 shares in the Private Placement. Other than the foregoing, Kristian Lundkvist and his affiliates do not own any shares or right to shares in Techstep.

Further, Zono Holding AS has in a shareholders meeting on 30 January 2017 resolved to distribute 59,706,969 shares in Techstep to its 16 shareholders through a capital reduction. The distribution is inter alia pending a 6 weeks mandatory creditor notification period and bank approval. Following completion of the capital reduction, the shares will be distributed and owned inter alia as follows:

Middelborg Invest AS: 25,525,228 shares
Datum AS: 15,720,370 shares
Cipriano AS: 2,774,182 shares
Antares Group AS (owned by Gaute Engbakk): 554,838 shares
Duo Jag AS (partly owned by member of the Board of Directors,
Ingrid Leisner): 554,834 shares

Following the completion of the capital reduction, Zono Holding AS will own 3,000,000 shares in Techstep.

Financial update
Preliminary figures show that Techstep delivered revenues of  NOK 573 million and EBITDA as reported of NOK -3 million for the full year 2016. EBITDA including Nordialog Asker, adjusted for one-off costs and the annualization effect of restructuring initiatives, is NOK 24 million.

Please find attached an updated Techstep company presentation.

There will also be an investor presentation on Thursday 2 February 2017 at 12:00 at Hotel Continental. Please register your attendance to events@arctic.com or ca@dnb.no.

Link to Techstep Investor Presentation

For further information please contact:

Gaute Engbakk, CEO of Techstep: +47 91633281
Marius Drefvelin, CFO of Techstep: +47 95895690
Einar J. Greve, Chairman of the Board of Techstep: +47 90027766

About Techstep
Techstep is a B2B solutions and services provider offering mobile hardware & subscriptions and solutions. The company has a customer base of approximately 3,600 companies with approximately 220,000 end users. Techstep offers its clients integrated enterprise mobility solutions.