Karo Pharma resolves on a fully guaranteed rights issue of approximately SEK 2.5 billion and announces the terms of the rights issue

Karo Pharma Aktiebolag ("Karo Pharma") has, by power of authorisation from the annual general meeting on 21 April 2021, resolved to carry out a new issue of shares with preferential rights for Karo Pharma's shareholders of approximately SEK 2,508 million (the "Rights Issue").
 

• Shareholders in Karo Pharma have preferential rights to subscribe for three (3) new shares per fourteen (14) existing shares.
• The subscription price is SEK 52 per new share, which, provided that the Rights Issue is fully subscribed, amounts to proceeds of approximately SEK 2,508 million prior to issue costs.
• The last day of trading in the Karo Pharma share including the right to obtain subscription rights is 21 March 2022 and the first day of trading in the Karo Pharma share excluding the right to obtain subscription rights is 22 March 2022. The record date for participation in the Rights Issue is 23 March 2022. Subscription rights will be traded on Nasdaq First North Growth Market from and including 28 March 2022 up to and including 6 April 2022.
• The subscription period will run from and including 28 March 2022 up to and including 11 April 2022
• Karo Pharma's largest shareholder, Karo Intressenter AB (holding approximately 81.4 per cent of the shares in Karo Pharma)[1] - has undertaken to subscribe for its pro rata share of the Rights Issue and to guarantee the remaining portion of the Rights Issue. Hence, the Rights Issue is fully guaranteed.

Background and reasons

Karo Pharma was founded 1987 and has since expanded and fundamentally changed the focus of its business. At the same time, the Company has continued to strive to improve health and wellbeing for patients and consumers. Karo Pharma's vision is to become the leading player in Europe within everyday health. The Company wants to build a profitable, fast-growing pan-European consumer healthcare company with a clear category- and brand positioning, and strives to continue to grow both organically and through acquisitions. Karo Pharma's vision includes to own and develop a portfolio with distinct brands within selected categories and the Company intends to accelerate the development of the Company's capabilities within e-commerce. Karo Pharma has, as part of its vision, conducted and will conduct the below mentioned acquisitions.

As communicated on 22 November 2021, Karo Pharma has entered into an agreement to acquire all of the shares in Sylphar International NV for a consideration of EUR 300m with an intention to carry out a rights issue, and as communicated on 13 January 2022 the acquisition is now completed. The transaction was financed through a new credit facility and a new bridge loan facility provided by SEB, Swedbank, DNB and Alecta pensionsförsäkringar, ömsesidigt. On 24 December 2021, Karo Pharma announced that it had entered a put option agreement pursuant to which it may acquire the dermatology brand E45® for a total consideration of GBP 200m and that the acquisition is expected to close in the second quarter of 2022. The transaction is intended to be financed with debt from Karo Pharma's existing lending banks. On 19 January 2022, Karo Pharma entered an agreement, through Sylphar, on the acquisition of Satin Naturel. The transaction was completed on 2 March 2022 and was financed with debt from Karo Pharma's existing lending banks.

The Rights Issue is carried out with the purpose of repaying the bridge loan facility which was entered into in connection with the acquisitions of Sylphar International NV and to strengthen Karo Pharma's financial capacity to carry out future acquisitions of companies and product portfolios as well as seize other market opportunities and to continue efforts related to internalisation of its sales organisation.

Change of Listing Venue

As communicated on 9 March 2022 and 10 March 2022, respectively, Karo Pharma has applied for delisting of its shares from Nasdaq Stockholm and Nasdaq Stockholm has approved the application, subject to certain conditions, including that Karo Pharma's shares are admitted to trading on Nasdaq First North Growth Market (the "Change of Listing Venue"). The last day of trading on Nasdaq Stockholm is expected to be 24 March 2022 and the first day of trading on Nasdaq First North Growth market is expected to be 25 March 2022. The subscription rights, paid subscribed shares (BTA) and shares from the Rights Issue will therefore be admitted to trading on Nasdaq First North Growth Market.

Terms for the Rights Issue

Shareholders who are registered shareholders of Karo Pharma on the record date, 23 March 2022, have preferential right to subscribe for new shares in proportion to the number of shares held on the record date. Shareholders will receive three (3) subscription rights for each share held. Fourteen (14) subscription rights entitle to subscription for one (1) new share. Furthermore, investors are offered the opportunity to subscribe for shares without subscription rights.

In the event that not all new shares are subscribed for by exercise of subscription rights, the Board of Directors shall, within the limits of the maximum amount of the Rights Issue, resolve on allotment of new shares subscribed for without subscription rights. Allotment of shares subscribed for without exercise of subscription rights shall, primarily, be allotted to those who have subscribed for shares by exercise of subscription rights and, in addition, have applied for subscription without subscription rights, irrespective of whether the subscriber was a shareholder on the record date or not and, in the event of oversubscription, pro rata in relation to the number of subscription rights each subscriber has exercised for subscription of shares. Secondarily, shares subscribed for without subscription rights will be allotted to others who have applied for subscription without subscription rights and, in the event of oversubscription, pro rata in relation to the number of shares stated in each subscription application, while allotment of shares subscribed for without the exercise of subscription rights thirdly shall be made to Karo Intressenter AB in accordance with their guarantee commitment.

The share capital may be increased by a maximum of SEK 19,288,319.893000 and the maximum number of new shares that may be issued is 48,221,400. The subscription price is SEK 52 and, provided that the Rights Issue is fully subscribed, the proceeds are expected to amount to approximately SEK 2,508 million prior to issue costs.

The Karo Pharma share is traded including the right to participate in the Rights Issue up to and including 21 March 2022 on Nasdaq Stockholm. Subscription can take place during the subscription period from and including 28 March 2022 up to and including 11 April 2022. Trading in subscription rights will take place from and including 28 March 2022 up to and including 6 April 2022 on Nasdaq First North Growth Market, and trading in paid subscribed shares (BTA) will take place from and including 28 March 2022 up to and including 26 April 2022 on Nasdaq First North Growth Market.

Shareholders who choose not to participate in the Rights Issue will have their shareholding diluted by approximately 17.6 per cent, but have the opportunity to obtain financial compensation for this dilution by selling their subscription rights.

Subscription undertakings and guarantee commitments

Karo Pharma's largest shareholder, Karo Intressenter AB (holding approximately 81.4 per cent of the shares in Karo Pharma), has undertaken to subscribe for its pro rata share of the Rights Issue and to guarantee the remaining portion of the Rights Issue. Hence, the Rights Issue is fully guaranteed.

Preliminary timetable for the Rights Issue and the Change of Listing Venue

21 March Last day of trading in the Karo Pharma share including the right
2022 to participate in the Rights Issue
22 March First day of trading in the Karo Pharma share excluding the
2022 right to participate in the Rights Issue
23 March Record date, i.e., shareholders registered in the share register
2022 on this day will receive subscription rights for participation
in the Rights Issue
23 March Estimated date for publication of the prospectus
2022
24 March Estimated last day of trading in Karo Pharma's shares on Nasdaq
2022 Stockholm
25 March Estimated first day of trading in Karo Pharma's shares on Nasdaq
2022 First North Growth Market
28 March - 6 Trading in subscription rights
April 2022
28 March - Subscription period
11 April
2022
28 March - Trading in paid subscribed shares (BTA)
26 April
2022
19 April Estimated date of announcement of the outcome of the Rights
2022 Issue

Advisors

Skandinaviska Enskilda Banken AB ("SEB"), DNB Markets, part of DNB Bank ASA, Swedish branch ("DNB") and Swedbank AB (publ) ("Swedbank") are Joint Global Coordinators in connection with the Rights Issue. White & Case Advokataktiebolag is legal advisor to Karo Pharma in connection with the Rights issue and the listing on Nasdaq First North Growth Market. SEB is financial advisor to Karo Pharma in connection with the listing on Nasdaq First North Growth Market. Erik Penser Bank AB is Certified Advisor in connection to the listing on Nasdaq First North Growth Market.

For further information, please contact:

Christoffer Lorenzen, CEO, +4673-501 76 20, christoffer.lorenzen@karopharma.com

Jon Johnsson, CFO, +46 73-507 88 61, jon.johnsson@karopharma.com

This information is such information that Karo is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication by the contact persons set out above, at 08:00 CET on 16 March 2022.

About Karo Pharma

Karo Pharma delivers smart choices for everyday healthcare. We own and commercialize branded, original over-the-counter products and prescription medicines. Our products are available in more than 60 countries, with Europe and the Nordic region as our core markets. Karo Pharma is headquartered in Stockholm, Sweden and listed on Nasdaq Stockholm Large Cap.

Forward-looking statements

This news release contains certain forward-looking statements that are based on uncertainty, as they relate to events and depend on circumstances that will occur in the future and which, by their nature, may have an impact on results of operations and the financial condition of Karo Pharma. Such forward-looking statements reflect our current expectations and are based on the information currently available. Karo Pharma cannot give any assurance as to whether such forward-looking statements will prove to be correct. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements.

Important information

The information in this press release does not contain or constitute an offer to acquire, subscribe for or otherwise trade in shares, subscription rights or other securities in Karo Pharma Aktiebolag. 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 by any person for any purpose on the information contained in this announcement or its accuracy, fairness or completeness.

This announcement is not a prospectus for the purpose of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market, and repealing Directive 2003/71/EC (together with any related implementing and delegated regulations, the "Prospectus Regulation"). Investors should not invest in any securities referred to in this announcement except on the basis of information contained in a prospectus. Any invitation to those entitled to subscribe for shares in Karo Pharma Aktiebolag is made solely through the prospectus which Karo Pharma Aktiebolag estimates to publish on or about 23 March 2022.

This press release or information herein may not, in whole or partly, be released, published or distributed, directly or indirectly, in or into Australia, Hong Kong, Japan, Canada, New Zealand, South Africa, Switzerland, Singapore, the United States or any other jurisdiction where such action is wholly or partially subject to legal restrictions or where such action would require additional prospectuses, registrations or other actions in addition to what is required pursuant to Swedish law. Nor may the information in this press release be forwarded, reproduced or disclosed in a manner that contravenes such restrictions or would entail such requirements. Failure to comply with this instruction may result in a violation of applicable securities laws.

No subscription rights, paid subscribed shares (BTA) or new shares have or will be registered under the United States Securities Act of 1933 (the "Securities Act") or securities legislation in any state or other jurisdiction in the United States and may not be offered, subscribed, used, pledged, sold, resold, allotted, delivered or transferred, directly or indirectly, into or within the United States, other than pursuant to an exemption from, or in a transaction that is subject to, the registration requirements of the Securities Act. Furthermore, the securities mentioned in this press release have not been registered and will not be registered under any applicable securities law in Australia, Hong Kong, Japan, Canada, New Zealand, South Africa, Switzerland or Singapore and may, with certain exceptions, not be offered or sold within, or on behalf of a person or for the benefit of a person who is registered in, these countries. The Company has not made an offer to the public in to subscribe for or acquire the securities mentioned in this press release other than in Sweden.

In the EEA Member States, with the exception of Sweden, (each such EEA Member State, a "Relevant State"), this press release and the information contained herein are intended only for and directed to qualified investors as defined in the Prospectus Regulation. The securities mentioned in this press release are not intended to be offered to the public in any Relevant State and are only available to qualified investors except in accordance with exceptions in the Prospectus Regulation. Persons in any Relevant State who are not qualified investors should not take any actions based on this press release, nor rely on it.

In the United Kingdom, this announcement 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 (i) have professional experience in matters relating to investments which fall within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (as amended, the "Order"), (ii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc") of the Order, (iii) are outside the United Kingdom, or (iv) are persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise lawfully be communicated or caused to be communicated (all such persons together being referred to as "relevant persons"). This announcement is directed only at relevant persons and must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this announcement relates is available only to relevant persons and will be engaged in only with relevant persons.

[1] Based on the shareholding as of 15 Mars 2022. The total number of shares in Karo Pharma amounts to 225,033,204 shares.