Savo-Solar announces its plan to arrange a rights issue of approx. EUR 3.9 million and other not previously disclosed information

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Savo-Solar Plc
Company Announcement            21 June 2016 at 11.15 a.m. (CET)

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Savo-Solar announces its plan to arrange a rights issue of approximately EUR 3.9 million and other not previously disclosed information

The Board of Directors of Savo-Solar Plc (“Savo-Solar” or the “Company”) has decided to arrange a partially underwritten rights issue totalling approximately EUR 3.9 million (the “Offering”), under the condition that the Extraordinary General Meeting to be summoned today gives authorization to the Board of Directors to resolve on the Offering. The Offering is expected to consist of a maximum of 11,930,156 new shares (the “Offer Shares”). The Offer Shares would constitute up to 42.86 per cent of all shares in the Company should the Offering be fully subscribed. New information regarding financials of the Company as per 30 April 2016, order backlog for 2016 and quotation backlog has also been released.

Summary of the Offering

  • Savo-Solar is currently growing its business and sales faster than expected. In combination with the fact that production and installation costs have been higher than expected, additional financing will be needed somewhat earlier than previously expected.
  • Savo-Solar is planning to give all its shareholders registered in Savo-Solar’s shareholder register maintained by Euroclear Finland Ltd (“Euroclear Finland”) or Euroclear Sweden AB (“Euroclear Sweden”) three (3) book-entry subscription rights (the “Subscription Rights”) for every one (1) share held on the Offering record date. Each four (4) Subscription Rights entitle the holder to subscribe for one (1) Offer Share.
  • The subscription price is expected to be EUR 0.33 per Offer Share. The subscription price includes a discount of approximately 34.22 per cent compared to the volume weighted average price (SEK 4.68) to the Company’s share on First North Sweden during the last 30 trading days prior to 21 June 2016 and a discount of approximately 34.59 per cent compared to the volume weighted average price (EUR 0.51) to the Company’s share on First North Finland during the last 30 trading days prior to 21 June 2016. Compared to the closing price of the Company’s share on First North Sweden on 20 June 2016 (SEK 4.32) the subscription price includes a 28.78 per cent discount and compared to the closing price of the Company’s share on First North Finland on 20 June 2016 (EUR 0.49) a 32.65 per cent discount.
  • The record date for the Offering is planned to be 25 August 2016 with the last day of trading including the Subscription Rights on 23 August 2016 and the first day of trading excluding the Subscription Rights on 24 August 2016.
  • The subscription period for the Offer Shares (the “Subscription Period”) is expected to commence on 30 August 2016 at 09:30 Finnish time (08:30 Swedish time), and is expected to end on 15 September 2016 at 16:30 Finnish time (15:30 Swedish time) in Finland and on 13 September 2016 in Sweden at 16:30 Finnish time (15:30 Swedish time).
  • Approximately EUR 3.9 million before the transaction costs is expected to be raised in the Offering if the Offering is fully subscribed.
  • The Offering is underwritten to approximately 61.7 per cent by current shareholders and external guarantee providers. The external guarantee providers are entitled to receive their guarantee compensation either in cash or in new shares of the Company by setting off the guarantee compensation against subscription price of the new shares in a directed share issue to be conducted after the Offering, if necessary. The subscription price of the shares in the directed share issue will be defined based on the volume weighted average price of the Company’s shares on First North Sweden during the subscription period of the Offering.
  • An additional bridge financing of EUR 0.9 million has been raised as working capital until the proceeds of the Offering are expected to be received in September. Interest of the bridge loan amounts to 7.5 per cent fixed.

Reasons for the Offering and use of proceeds

Savo-Solar produces the internationally award-winning solar thermal absorbers and collectors. The collectors which include MPE absorbers are, according to the information available to the Company’s management, the most efficient in the world. Savo-Solar focuses on large collectors and industrial sized heating systems. Savo-Solar started to deliver its products in June 2011 and has since delivered nearly 35,000 square metres of absorbers and collectors to several resellers, agents or end customers in 17 countries on four continents.

Savo-Solar has experienced a rapid growth which continued in 2015 when the revenue doubled compared to 2014. The Company expects the strong growth to continue in 2016 more than doubling the revenue compared to 2015, mainly due to large-scale deliveries to district heating companies in Denmark and other European countries. The order backlog has increased significantly during the last months and amounted to approximately EUR 3.4 million as per 30 April 2016, with approximately EUR 1.5 million in revenue for the first four months in 2016. In order to enable further strong growth, the investment in increased production capacity is a prerequisite. Also, higher costs in materials, services, personnel and other operating expenses resulting from a higher order intake than expected, the Company is in need of additional working capital.

The Company aims to raise approximately EUR 3.9 million through the Offering. If the Offering is fully subscribed, the Company expects to receive net proceeds of approximately EUR 3.3 million from the Offering, after deducting the estimated expenses related to the Offering payable by the Company of approximately 0.6 million.

The Company will use the net proceeds from the Offering i) to secure its working capital needs in order to deliver the signed and upcoming orders in 2016-2017 and to enter new market areas (approximately EUR 1.7 million), ii) to secure capacity-increasing investments in the production line to be able to deliver on coming orders (approximately EUR 0.7 million) and iii) to repayment of bridge loan and interest payment, approximately EUR 0.97 million.

Financial information that has not been published before (unaudited)

INCOME STATEMENT

EUR (thousand) 1 January- 30 April 2016 
Revenue 1,545
Other operating income 63
Materials and services -1,447
Gross margin, % 6.3%
Personnel costs -741
Depreciation, amortisation and write-downs -175
Other operating expenses -636
EBIT -1,392
EBIT margin, % -90.1%
Total financial income and expense -92
Extraordinary items 0
Net profit (loss) -1,484
Net profit margin, % -96.1%

BALANCE SHEET

ASSETS  
EUR (thousand)   Per 30 April 2016
Fixed Assets 2,852
Intangible assets 2,023
Tangible assets 697
Shares in companies 132
Current assets 2,297
Inventories 579
Accounts receivable 140
Receivables from group companies 15
Other receivables 2
Prepayments and accrued income 825
Cash and cash equivalents 734
Assets in total 5,149


EQUITY AND LIABILITIES  
EUR (thousand)   Per 30 April 2016
Equity 1,315
Share capital 470
Unrestricted equity fund 12,714
Retained earnings 10,385
Net/Profit loss for reporting period -1,484
Long- term liabilities 2,109
Capital loans 1,431
Loans from financial institutions 363
Other liabilities 314
Short-term liabilities 1,725
Loans from financial institutions 150
Advanced received 594
Trade payables 670
Other liabilities -80
Accrued liabilities 392
Total equity and liabilities 5,149

Order backlog for 2016

The order backlog with delivery in 2016, as shown below, amounted to approximately EUR 3.4 million as per 30 April 2016. The revenue for the period 1 January- 30 April 2016 was EUR 1.5 million.

Project Country Status
Logumkloster 2 DK Delivered 02/2016
Jelling Varmevaerke DK Won, delivery 06/2016
Elemenco UKR Won, delivery 07/2016
DES/Lolland Forsyning DK Won, delivery 09/2016
Fors A/S/Jyderup DK Won, delivery 11/2016
Small orders    
Total value (EUR)   4,949,695

Quotation backlog

Enquiries for tenders for large projects have increased significantly, mainly as a result of successful deliveries in Denmark. The current quotation backlog comprises projects to a value of approximately EUR 7 million, as shown below, and quotations are still open for deliveries in 2016. From 2017 and onwards the Company aims at targeting markets outside Europe, thereby considerably increasing the size of the potential markets.

Class of Quotation Region Main product quoted Estimated Value (EUR)
Collector packages Middle-East Large Collector 194,100
Turn-Key Solutions Nordic Large Collector 127,200
Other Asia Heat exchangers 4,020,000
Collectors Central Europe Large Collector 354,507
Collector packages Middle East Large Collector 1,380,000
Collector packages Middle East Large Collector 44,200
Turn-Key Solutions Nordic Large Collector 152,000
Collector sets (w/o pumps) Middle East Large Collector 514,000
Turn-Key Solutions Nordic Large Collector 275,000
Other Nordic EMI-Coating 124,480
Collectors Nordic Large Collector 303,000
Collectors (small offers) Nordic, Central Europe Large Collector 120,000
Total     7,608,487

The Offering

Size of the contemplated Offering will be approximately EUR 3.9 million. The Offering has been underwritten to 61.7 per cent by current shareholders and external guarantee providers.  

The Board of Directors of the Company is planning to offer up to 11,930,156 new shares in the Company for subscription in accordance with the shareholders’ preferential subscription right. All shareholders registered in Savo-Solar’s shareholder register maintained by Euroclear Finland or Euroclear Sweden are planned to be given three (3) book-entry Subscription Rights for every one (1) share held in the Company on the Offering record date, which is approximately 25 August 2016. Each four (4) Subscription Rights would entitle their holder to subscribe for one (1) Offer Share. The Subscription Rights are planned to be registered in shareholders’ book-entry accounts in the book-entry system maintained by Euroclear Finland approximately on 25 August 2016 and in the book-entry system maintained by Euroclear Sweden approximately on 29 August 2016. The Subscription Rights are planned to be freely assigned and they are expected to be traded on First North Finland and First North Sweden between 30 August 2016 and 9 September 2016.

After the subscription, temporary shares corresponding to the Offer Shares subscribed for based on the Subscription Rights (the “Temporary Shares”) will be entered into the subscriber’s book-entry account. The Offer Shares will be entered in the subscriber’s book-entry account once they have been entered into the trade register, approximately during week 38, 2016. Trading in the Temporary Shares is planned to commence on First North Finland and on First North Sweden as their own special share class approximately on 30 August 2016. The Temporary Shares will be combined with the Company’s current shares after the Offer Shares have been registered into the trade register. The combination is planned to take place approximately during week 38, 2016, and the Offer Shares are planned to be subject to trading together with the Company’s existing shares approximately during week 38, 2016 on First North Finland and during week 39, 2016 on First North Sweden.

Planned timetable for the Offering       

12 July 2016 Extraordinary General Meeting
23 August 2016 Resolution regarding the Offering by the Board of Directors
23 August 2016 The prospectus is published
23 August 2016 Last day of trading including the Subscription Rights
24 August 2016 First day of trading excluding the Subscription Rights
25 August 2016 Record date for the Offering
30 August – 9 September 2016

30 August 2016
Trading period for the Subscription Rights

Trading starts in Intermediary Shares (BTA)
30 August – 13 September 2016 The Subscription Period for the Offering in Sweden
30 August – 15 September 2016 The Subscription Period for the Offering in Finland
19 September 2016 Announcement of outcome of the Offering
Week 38, 2015 Last day of trading in the Temporary Shares on First North Finland
Week 39, 2015 Last day of trading in the Temporary Shares on First North Sweden
   

Advisers

Mangold Fondkommission AB and G&W Fondkommission are acting as financial advisors to the Company in the Offering. Smartius Oy is acting as the legal adviser to the Company on aspects of the Offering related to the Finnish law.

For more information:

Savo-Solar Plc
Managing Director Jari Varjotie
Phone: +358 400 419 734
E-mail: jari.varjotie@savosolar.fi

Savo-Solar in brief

Savo-Solar with its highly efficient collectors and large-scale solar thermal systems has taken solar thermal technology to the next level. The company’s collectors are equipped with the patented nano-coated direct flow absorbers, and with this leading technology, Savo-Solar helps its customers to produce competitive clean energy. Savo-Solar’s vision is to be the first-choice supplier to high performance solar installations on a global scale. Focus is on large-scale applications like district heating, industrial process heating and real estate systems – market segments with a big potential for rapid growth. The company primarily delivers complete systems from design to installation, using the best local partners. Savo-Solar is known as the most innovative company in the business, and aims to stay as such. The company has sold and delivered its products to 17 countries on four continents. Savo-Solar’s shares are listed on Nasdaq First North Sweden with the ticker SAVOS and on Nasdaq First North Finland with the ticker SAVOH. www.savosolar.fi.

The company’s Certified Adviser is Mangold Fondkommission AB, phone: +46 8 5030 1550.

IMPORTANT NOTICE

This release or the information contained therein shall not be distributed, directly or indirectly, in Australia, Canada, Hong Kong, Japan, New Zealand, Singapore, South Africa or the United States. The information contained in this release do not constitute an offer of, or invitation to purchase any securities in any area, where offering, procurement of or selling such securities would be unlawful prior to registration or exemption from registration or any other approval required by the securities regulation in such area. This release is not an offer for sale of securities in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933, as amended, and the rules and regulations issued by virtue of it. Savo-Solar has not registered, and does not intend to register, any offering of securities in the United States. No actions have been taken to register the shares or the offering anywhere else than in Finland and Sweden.

The information contained herein shall not constitute an offer of, or invitation to purchase any securities in any jurisdiction. This release is not a prospectus and does not constitute any offer, invitation or investment advice to subscribe for or purchase securities. Investors should not subscribe for or purchase any securities or make any investment decisions referred to herein except on the basis of information contained in a prospectus issued by Savo-Solar.

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