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Oslo, 3 March 2025: Reference is made to Lokotech Group AS' (the "Company")
stock exchange announcement published on 4 February 2025, where it was announced
that the Company had retained Pareto Securities AS and SpareBank 1 Markets AS
(together, the "Managers") to act as joint financial advisors in connection with
the exploration of a potential capital raise.
Following this announcement and in response to feedback from investors, the
Company's board of directors (the "Board") has resolved to propose that the
Company carries out a share capital raise, by way of a partially underwritten
rights issue of new shares in the Company (the "Offer Shares"), to raise gross
proceeds of up to NOK 200 million, of which subscriptions for NOK 125 million
will be underwritten (the "Rights Issue"). The Rights Issue will be directed
towards the existing shareholders in the Company and such investors will receive
listed and tradable subscription rights during the Rights Issue.
The Company was admitted to trading on Euronext Growth Oslo on 12 May 2021,
following a successful NOK 110 million private placement of new shares, with the
mission of developing an industry-leading Scrypt Application Specific Integrated
Circuit (ASIC), also known as a microchip, system design. After a series of
rigorous design iterations, including 19 updates to the IP library by the
Company's IP vendors, comprehensive simulations, testing and validation, the
successful redesign and final power simulation announced on 5 September 2024,
represented a key step towards fulfilling the Company's mission. With the
proceeds from the Rights Issue, the Company will be fully positioned to execute
the final tape-out and move into mass production of our ASIC microchip. This
milestone is a defining step in bringing our technology to market and unlocking
significant growth opportunities. Testing and simulations indicate that the ASIC
significantly outperforms the competing microchips currently on the market, and
the Company has already received strong interest with several framework
agreements for delivery of the microchip to private operators in the USA. Based
on this, the Company remains confident that it is well positioned for the market
anticipated to represent more than a USD 1.4 billion opportunity.
"I want to extend my deepest gratitude to our design team for their unwavering
commitment, which has positioned the Company to now fulfill its vision of
bringing a disruptive Scrypt ASIC to the blockchain mining industry. This
contemplated capital raise marks a significant and defining milestone for the
Company, and structured as a rights issue, we invite all existing shareholders
to participate in the next phase of our exciting journey. We have already made
the first down payment and officially entered the manufacturing phase with
GlobalFoundries, with the first ASICs anticipated to be available in Q3 2025.
Following the initial production, we will rapidly scale up to mass production to
capitalize on the pre-orders already secured and the substantial inbound
interest in our Scrypt ASICs." said Yngve Bolstad Johansen, Chair of the Board
of Directors of the Company.
In addition to its Scrypt ASIC business unit, the Company is engaged in other
business areas through its majority interest in Powerpool Mining SL
(PowerPool.io), a six-algorithm mining pool and blockchain services business,
and its wholly-owned subsidiary Arctic Core AS which owns four data center
projects.
The proposed Rights Issue is among other things subject to approval by the
Company's shareholders at an extraordinary general meeting in the Company (the
"EGM"). The EGM is expected to be held on or about 30 April 2025.
The Partially Underwritten Rights Issue
The Rights Issue will be underwritten in part by a consortium comprising of
certain primary insiders in the Company, existing shareholders in the Company as
well as new investors (the "Underwriters"). The Underwriters that are primary
insiders have also pre-committed to subscribe for Offer Shares in the Rights
Issue, in an amount equal to their respective underwriting commitment, totaling
NOK 4.125 million (the "Pre-Commitment").
The terms and conditions of the underwriting arrangement are set out in
underwriting agreements dated 28 February 2025 (the "Underwriting Agreement").
The Underwriters are entitled to an underwriting commission of 12% of their
respective underwriting obligations, which shall be settled by an equal split
between (i) cash payment and (ii) delivery of newly issued shares in the
Company, each issued at the Subscription Price (the "Fee Shares"). It is
expected that the Fee Shares will be issued based on an authorization granted by
the EGM to the Board to increase the share capital of the Company, subject to
approval by the EGM.
The Underwriters comprise of the following:
- Prozium AS (a company closely associated with CTO of the Company, Christian
Rustad) has underwritten and pre-committed to subscribe for Offer Shares in an
amount of NOK 100,000
- Infingent AS (a company associated with CEO Ola Stene Johansen) has
underwritten and pre-committed to subscribe for Offer Shares in an amount of NOK
3,000,000.
- Black Monday Holding AS, a company owned and controlled by the chairman of the
Board Yngve Bolstad Johansen, has underwritten and pre-committed to subscribe
for Offer Shares in an amount of NOK 500,000.
- Ruben Gómez Morales, CEO of PowerPool SL, has underwritten and pre-committed
to subscribe for Offer Shares in an amount of NOK 100,000.
- Susheel Raj Nuguru, member of the Board, has underwritten and pre-committed to
subscribe for Offer Shares in an amount of NOK 50,000.
- Sator AS, a company owned and controlled by board member Henrik Danielsen, has
underwritten and pre-committed to subscribe for Offer Shares in an amount of NOK
300,000.
- Wiktor Boguchwal Miesok, board member, has underwritten and pre-committed to
subscribe for Offer Shares in NOK 50,000.
- Kjetil Westeng, board member, has underwritten and pre-committed to subscribe
for Offer Shares in NOK 25,000.
- Bluefin Access Capital LLC, Fredrik Lundgren, Wilhelm Risberg, Anavio Capital
Partners LLP, Norda ASA, Selandia Alpha Invest A/S, Songa Capital AS, Paul
Zeino, Exelity AB, Nowo Global Fund, Delta Invest AS, Philip Ohlsson, Opulens
Invest AS, AD94 Holding Aktiebolag, Consentia AB and Rickard Rönblom have in
aggregate underwritten a total amount of NOK 120,875,000.
Pursuant to the Underwriting Agreement for the Rights Issue, the subscription
price in the Rights Issue (the "Subscription Price") is proposed by the Board to
equal the theoretical ex rights price for the Company's shares ("TERP") based on
the volume-weighted average price (VWAP) of the Company's shares on Euronext
Growth Oslo over the last three trading days prior to the EGM (i.e. the three
trading days ending on 16.30 CEST at the date of the EGM), less a discount of
35% rounded down to 4 decimal places. The subscription price for the new shares
to be issued in the Rights Issue, and thus the exact maximum number of new
shares and the exact maximum amount of the share capital increase, will be
announced through a stock exchange announcement prior to the EGM and then be
reflected in the final proposed resolution to the EGM, and ultimately be
determined by the EGM.
Additionally, warrants (Nw.: Frittstående tegningsrett) will be issued to the
investors who are allocated shares in the Rights Issue on a pro-rata basis based
on their respective allocations. The number of warrants issued in the Rights
Issue is intended to equal 10% of the post-Rights Issue number of shares
outstanding in the Company. The strike price of the warrants is proposed to be
calculated as the greater of (i) a 35% discount to the volume-weighted average
price of the Company's shares on the last three trading days prior to the first
date on which the warrant holders can exercise the warrants, and (ii) the TERP
in the Rights Issue. The warrants may only be exercised from 1 April 2026 to 15
April 2026 (post-annual report 2025). The Company intends to apply for the
warrants to become tradable on Euronext Growth Oslo in connection with
settlement of the Rights Issue.
In connection with the Rights Issue, an EEA prospectus (the "Prospectus") will
be prepared by the Company, which is subject to approval by the Financial
Supervisory Authority in Norway (the "NFSA"). The Prospectus will be published
prior to the commencement of the subscription period and will form the basis for
subscriptions in the Right Issue. Pursuant to Section 10-4 (1) of the Norwegian
Private Limited Companies Act, the shareholders of the Company on the last day
of trading in the share inclusive of the rights, which is expected on or about 2
May 2025 and which will be the trading day following the EGM, will, subject to
applicable law, be granted preferential rights to subscribe for and be allocated
the new shares in the Company. The shareholders will, according to the Board's
proposal, receive subscription rights proportionate to their existing
shareholding as registered at the record date expected on or about 6 May 2025 in
the Company's shareholder register in Euronext Securities Oslo ("VPS"). The
Underwriters will thereafter have a preferential right to subscribe for shares
not subscribed based on exercised subscription rights, limited upwards to their
respective underwriting obligations. Oversubscription with subscription rights
will be allowed, but such oversubscription will be given allocation (to the
extent any shares remain available for allocation) only after allocating shares
to Underwriters who have subscribed for shares (limited upwards to such
Underwriter's Underwriting Obligation). Remaining shares not allocated pursuant
to the above is allocated firstly to Underwriters who have subscribed for shares
in excess of their respective underwriting obligations, and secondly, to
Underwriters pursuant to their underwriting obligation on a pro rata basis. If
an Underwriter subscribes directly in the Rights Issue and gets allocated shares
based on this subscription, this allocation will be subtracted from the
respective Underwriter's underlying underwriting obligation. Other than
subscriptions by the Underwriters, subscription without subscription rights will
not be allowed. The Company will apply for admission to trading of the
subscription rights on Euronext Growth Oslo. Primary insiders of the Company and
their close associates (collectively owning approximately 40.1% of the Company)
have agreed to not sell their subscription rights in the Rights Issue. However,
the Managers may facilitate a sale of a portion of their subscription rights
that they do not exercise in a structured off-market transaction at or above the
current market price for the subscription rights. If such sale occurs the
proceeds from the sale must be used to subscribe in the Rights Issue.
The Company, as well as primary insiders and their close associates
(collectively owning approximately 40.1% of the Company), have provided lock-up
undertakings to the Managers on customary terms and conditions. Subject to the
lock-up undertaking provided by the Company, the Company has, amongst other
things, agreed to not issue or sell shares for a period ending 6 months after
the completion of the Rights Issue. Subject to the terms and conditions of the
lock-up undertakings provided by primary insiders and their close associates,
such persons have agreed to, amongst other things (1) for a period commencing on
successful underwriting of the Rights Issue and ending on completion of the
Rights Issue, will undertake not to sell, pledge or otherwise dispose of, or
purchase or otherwise acquire any shares in the Company, and (2) for a period
commencing on completion of the Rights Issue and ending on the date falling 6
months thereafter, not to sell, pledge or otherwise dispose of any shares in the
Company.
Use of proceeds
The net proceeds to the Company from the NOK 125 million underwritten portion of
the Rights Issue will be used to secure the tape-out and enable mass production
of the Company's proprietary Scrypt ASIC Miner. This includes the NOK equivalent
of (i) approx. USD 7.2 million for the mask set and associated non-recurring
engineering for production equipment, (ii) approx. USD 2.2 million for
engineering and production wafers, and (iii) approx. USD 1.8 million for general
corporate purposes and transaction costs (final amounts and allocation depending
on the final results in the Rights Issue). If the Company receives valid
subscriptions for more than the underwritten portion of the Rights Issue, the
additional net proceeds will be used to increase the production batch of the
Company's proprietary Scrypt ASIC Miner.
Timeline
According to the current tentative timetable, and subject to among other things
the relevant approvals by the EGM and publication of the Prospectus, the
Company's shares are expected to trade exclusive of subscription rights from on
or around 5 May 2025, the record date for the subscription rights is expected to
be on or around 6 May 2025 and the subscription period for the Rights Issue is
expected to commence on or around 7 May 2025 at 09.00 CEST and end on or around
21 May 2025 at 16.30 CEST. The period during which the Subscription Rights are
to be tradable is expected to commence on or around 7 May 2025 at 09.00 CEST and
end on or around 15 May 2025 at 16.30 CEST. Investors receiving allocation in
the Rights Issue will get delivery of tradable shares in the Company shortly
after the end of the Subscription Period, expected on or about 3 June 2025.
Settlement is also subject to timely payment, expected on or about 26 May 2025
and subsequent registration of the new share capital in the Norwegian Register
of Business Enterprises. The Subscription Period may not be shortened, but the
Company's board of directors may extend the subscription period in its sole
discretion. Any changes will be announced through stock exchange announcements.
For more information, please contact:
CEO Ola-Stene Johansen, email osj@lokotech.no
This information is considered to include inside information pursuant to the EU
Market Abuse Regulation article 7 and is subject to the disclosure requirements
pursuant to section 5-12 of the Norwegian Securities Trading Act. This stock
exchange announcement was published by Ola Stene-Johansen, CEO in Lokotech Group
AS, on 3 March 2025 at 08:00 CET.
IMPORTANT NOTICE These materials are not and do not form a part of any offer of
securities for sale, or a solicitation of an offer to purchase, any securities
of the Company in the United States or any other jurisdiction. Copies of these
materials are not being made and may not be distributed or sent into any
jurisdiction in which such distribution would be unlawful or would require
registration or other measures.
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 "Securities
Act"), and accordingly may not be offered or sold in the United States absent
registration or an applicable exemption from the registration requirements of
the Securities Act and in accordance with applicable U.S. state securities laws.
Any sale in the United States of the securities mentioned herein will be made
solely to "qualified institutional buyers" (QIBs) as defined in Rule 144A under
the Securities Act, pursuant to an exemption from the registration requirements
under the Securities Act, as well as to major U.S. institutional investors under
SEC Rule 15a-6 to the United States Exchange Act of 1934, as amended.
This communication contains certain forward-looking statements concerning future
events, including possible issuance of equity securities of the Company.
Forward-looking statements are statements that are not historical facts and may
be identified by words such as "believe", "expect", "anticipate", "strategy",
"intends", "estimate", "will", "may", "continue", "should" and similar
expressions. The forward-looking statements in this communication are based upon
various assumptions, many of which are based, in turn, upon further assumptions.
The Company believes that these assumptions were reasonable when made. However,
these assumptions are inherently subject to significant known and unknown risks,
uncertainties, contingencies and other important factors which are difficult or
impossible to predict and are beyond its control. Such risks, uncertainties,
contingencies and other important factors include the possibility that the
Company will determine not to, or be unable to, issue any debt, hybrid or equity
securities, and 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 make any guarantee that the assumptions
underlying the forward-looking statements in this announcement are free from
errors. The information, opinions and forward-looking statements contained in
this communication speak only as at its date and are subject to change without
notice.
Each of the Company, the Managers and their respective affiliates disclaims any
obligation or undertaking to update, review or revise any statement contained in
this communication whether as a result of new information, future developments
or otherwise. Neither the Managers nor any of its affiliates makes any
representation as to the accuracy or completeness of this announcement and none
of them accepts any liability arising from the use of this announcement or
responsibility for the contents of this announcement or any matters referred to
herein. This announcement is for information purposes only and is not to be
relied upon in substitution for the exercise of independent judgment. It is not
intended as investment advice and under no circumstances is it to be used or
considered as an offer to sell, or a solicitation of an offer to buy any
securities or a recommendation to buy or sell any securities of the Company.
Certain figures contained in this announcement, including financial information,
have been subject to rounding adjustments. Accordingly, in certain instances,
the sum or percentage change of the numbers contained in this announcement may
not conform exactly with the total figure given.
The distribution of this announcement and other information may be restricted by
law in certain jurisdictions. Persons into whose possession this announcement or
such other information should come are required to inform themselves about and
to observe any such restrictions. Any failure to comply with these restrictions
may constitute a violation of the securities laws of any such jurisdiction.
Specifically, neither this announcement nor the information contained herein is
for publication, distribution or release, in whole or in part, directly or
indirectly, in or into or from the United States (including its territories and
possessions, any state of the United States and the District of Columbia),
Australia, Canada, Hong Kong, Japan or any other jurisdiction where to do so
would constitute a violation of the relevant laws of such jurisdiction.