Zutec Proposes a Fully Guaranteed Rights and Directed Share Issue

The Board of Zutec Holding AB (publ) (“Zutec” or the “Company”) has today inter alia proposed, for the extraordinary general meeting to resolve on a new issue of shares with preferential rights for the Company’s existing shareholders of approximately SEK 40.4 million (the “Rights Issue”) and a new issue of shares without preferential rights for the Company’s existing shareholders of approximately SEK 2 million (the “Directed Share Issue”).

Shareholders representing up to 61.5 per cent of the votes have expressed their support for the Board’s proposed resolutions at the extraordinary general meeting to be held on 22 May 2020, in accordance with the notice that was announced earlier today.

Background and purpose with the Rights Issue and the Directed Share Issue

Zutec is a SaaS company that develops and markets cloud-based software services for the construction sector. The construction sector is seen as the least digitised industry globally and has long been lagging the economy as a whole in terms of GDP and especially in comparison to other sectors and industries that are more active within digitalisation.

Zutec’s software help users to manage, store and share data and to manage processes and workflows effectively, and as a result contributes to cost efficiency, decrease errors and helps construction companies to avoid delays, that is otherwise very common in the construction industry.

Zutec primarily offers the products to the construction sector:

• Zutec Cloud: a cloud-based web platform used by office personnel to manage and store data from construction projects and to obtain detailed reports from data management for the construction process.
• Zutec Field: an app used by personnel on construction projects to perform construction inspections, detect errors and perform quality controls.
• Zutec BIM: a 3D model (web and cellphone) which allows the user to view drawings in 3D and store and manage data based on information from such 3D drawings.

The Company has recently implemented changes in the Board and the management team and has made changes in both strategic direction and initiated a savings package. The Board considers that a larger injection of growth and working capital would enable Zutec to once again start growing and return to profitability. Thus, the Board proposes that the Company carries out the Rights Issue and the Directed Share Issue. Furthermore, the purpose of the Directed Share Issue is to diversify the ownership of the Company and to increase the proportion of qualified shareholders in accordance with the regulations on the Nasdaq First North Growth Market.

Use of issue proceeds

The Company’s existing working capital is, in the opinion of the Board, not sufficient for Zutec’s current needs in the coming twelve-month period.  The Rights Issue and the Directed Share Issue will, upon full subscription, add SEK 42.4 million to the Company, before issue and guarantee costs. Issue and guarantee costs are estimated to amount to SEK 4.5 million. Issue costs consist mainly of costs to legal advisers and issuing agent. The net liquidity of approximately SEK 35.9 million is estimated to be sufficient to meet the Company’s working capital requirements for at least the coming twelve-month period and the net liquidity is intended to be used as working and growth capital and for repayment of loan and interim interest rate to Athanase Industrial Partners II Kommanditbolag and Athanase Industrial Partners Fund II, (together “Athanase”).

Main terms and conditions of the Directed Share Issue

• The Directed Share Issue will, upon full subscription, provide the Company with approximately SEK 2,000,000.

• The right to subscribe for shares in the issue shall, with deviation from the shareholders’ pre-emption right be directed to the general public.

• The subscription price shall be SEK 1.14 per share, which is equal to a discount of 15 per cent of the average volume-weighted share price as quoted on Nasdaq First North Growth Market during the period ten (10) trading days calculated from 6 April to 21 April 2020.

• Subscription of the newly issued shares shall take place during the period from 1 June 2020 until and including 15 June 2020. The Board of Directors has the right to extend the subscription period.

• Subscription may be made of a minimum of 5,000 shares, which corresponds to a minimum investment of SEK 5,700 per subscriber.

• The number of shares in the Company increases by maximum 1,754,385 shares and the Company’s share capital increases by maximum SEK 350,877 through the issue.

• The new shares shall be entitled to dividend for the first time on the record date for dividends that occur after the shares have been registered with the Swedish Companies Registration Office and the shares have been registered in the share register kept by Euroclear Sweden AB.

• The purpose of the directed share issue and the reasons for the deviation from the shareholders’ pre-emption right is to diversify the shareholding base among Swedish and non-Swedish investors and to secure the fulfilment of the requirements on the number of qualified shareholders under the rulebook for issuers traded on Nasdaq First North Growth Market.
• The Directed Share Issue is guaranteed up to 100 per cent by the Guarantors (see below section Guarantors).

Main terms and conditions of the Rights Issue

The Board of Zutec proposes that the Rights Issue shall be performed on the following main terms and conditions.

• The record date for participation in the Rights Issue shall be 28 May 2020.

• The right to subscribe for new shares shall belong to those persons who are registered as shareholders in the Company on the record date for the new share issue, whereby the holding of one (1) share entitles to five (5) subscription rights. One (1) subscription right entitles to subscription of one (1) share.

• In the event that all shares are not subscribed for with the support of subscription rights, the Board shall, within the maximum amount of the rights issue, resolve on the allocation of shares subscribed without the support of subscription rights, whereby such shares shall primarily be allocated to those who also subscribe for shares with support of subscription rights, whether they were shareholders on the record date or not, pro rata in relation to the number subscribed. Any remaining shares shall be allocated to those who have guaranteed the rights issue in accordance with the terms and conditions set forth in their respective guarantee commitments, whereby the allocation shall primarily be made pro rata in relation to the guarantee commitments. To the extent that allotment according to the above, cannot be pro-rata, allotment shall be made by lottery.

• Subscription of the newly issued shares shall take place during the period from 1 June until and including 15 June 2020. The Board has the right to extend the subscription period.

• The subscription price shall be SEK 1.14 per share, which is equal to a discount of 15 per cent of the average volume-weighted share price as quoted on Nasdaq First North Growth Market during the period ten (10) trading days calculated from 6 April to 21 April 2020.

• The number of shares in the Company increases by maximum 35,416,670 shares and the company’s share capital increases by maximum SEK 7,083,344 through the issue.

• Payment of the shares shall be made in cash. Payment of shares subscribed for with pre-emption right shall take place at the same time as the subscription is made during the period from 1 June until and including 15 June 2020. Payment of shares subscribed for without pre-emption right shall be made no later than three (3) banking days following the day the notice of allotment was sent to the subscriber. The Board has the right to extend the payment period.

• The new shares shall be entitled to dividend for the first time on the record date for the dividend that occurs after the share issue has been registered with the Swedish Companies Registration Office and entered into the share register kept by Euroclear Sweden AB.

• The Rights Issue is guaranteed up to 100 per cent by the Guarantors (see below section Guarantors).

• A resolution pursuant to the Board’s proposal is conditional upon that the extraordinary general meeting also resolves in accordance with the Board’s proposal to amend the Company’s articles of association.

Shares and share capital

Upon full subscription in the Rights Issue and the Directed Share Issue, the Company’s share capital will increase by a total of SEK 7,434,221, from SEK 1,416,666.80 to a total of SEK 8,850,887,80. Furthermore, the Company’s number of shares, upon full subscription in the Rights Issue and the Directed Share Issue, will increase by a total of 37,171,055 shares, from 7,083,334 shares to a total of 44,254,389 shares.

Prospectus

On the basis of the Rights Issue and the Directed Share Issue and under the assumption that the extraordinary general meeting will approve the same, the Company will draw up a prospectus. The prospectus will be published when the Swedish Financial Supervisory Authority has reviewed and approved the prospectus, which is expected to take place on at the end of May 2020.

Guarantors

Both the Rights Issue and the Directed Rights Issue are guaranteed to 100 per cent by Athanase and Erik Gabrielson (collectively the “Guarantors”).The Rights Issue and the Directed Share Issue are secured through guarantee commitments corresponding to approximately 100 per cent provided by the Guarantors. A guarantee commission of 7.5 per cent of the guaranteed amount is paid in cash for the guarantee commitments.

Extraordinary general meeting

The extraordinary general meeting is scheduled to be held on Friday, 22 May 2020. Notice of the extraordinary general meeting has been published in a separate press release.

Preliminary timetable

Advisors

Eversheds Sutherland Advokatbyrå AB is acting as legal advisor in connection to the Rights Issue and the Directed Share Issue. Avanza Bank AB is acting as issuing agent in connection to the Rights Issue and the Directed Share Issue.

Important information of LEI and NID

As a result of MiFID II/MIFIR, all legal and natural persons need a Legal Entity Identifier (LEI) number and NID (National ID) number, respectively, to carry out securities transactions after January 3, 2018. A LEI number is a global identification code for legal persons and NID is a global identification code for natural persons. Investors who wish to apply for subscription of shares without preferential right must obtain a LEI for legal persons and natural persons must find out their NID code. Avanza Bank AB has the right to disregard subscription applications, without any liability towards the applicant, if a LEI or NID (as applicable) has not been provided in the subscription application.

For more information, please contact:

Gustave Geisendorf, CEO at Zutec, gustave.geisendorf@zutec.com, +353 1 201 3565

About Zutec

Zutec is a niche provider of cloud-based construction management software.

Zutec Holding AB (publ) is listed on Nasdaq First North Growth Market and Mangold Fondkommission AB is the Company’s acting Certified (Tel. + 46 8 5030 1550, CA@mangold.se, www.mangold.se).

Important information

The information in this press release does not constitute an offer to acquire, subscribe or otherwise trade in shares, subscription rights or other securities in Zutec. No action has been taken and measures will not be taken to allow an offer to the public in any jurisdiction other than Sweden. The invitation to interested persons to subscribe for shares in Zutec will only be made through the prospectus the Company plans to publish at the end of May 2020.

Neither subscription rights, paid subscribed shares (“BTA”) nor newly issued shares have been recommended or approved by any US federal or state securities authority or regulatory authority. No subscription rights, BTAs or newly issued shares have been registered or will be registered under the United States Securities Act of 1933 in its current wording, or under any other applicable law in the United States, Australia, Hong Kong, Japan, Canada, New Zealand, Switzerland, Singapore, South Africa or in any other country where the Rights Issue or Directed Share Issue or distribution of the press release is contrary to applicable laws or regulations or requires that further prospectuses be prepared, registered or that any other measure is taken in addition to what is required by Swedish law. Accordingly, the press release, as well as the prospectus, application form and other documents attributable to the Rights Issue and Directed Share Issue, may not be distributed to or within any such jurisdiction.

This press release may contain some forward-looking information that reflects Zutec’s current outlook on future events, as well as financial and operational development. Such words are e.g. “intended”, “will”, “assessed”, “expected”, “can”, “plan”, “estimate” and other expressions that imply indications or predictions regarding future developments or trends constitute forward-looking information. Forward-looking information is inherently associated with both known and unknown risks and uncertainties, as it is dependent on future events and circumstances. Forward-looking information does not constitute a guarantee regarding future results or development and actual results may differ materially from what is stated in forward-looking information.

This information, the opinions and the forward-looking statements contained in this press release are valid only at this date and are subject to change without notice. Zutec makes no commitment to publish updates or revisions of forward-looking information, future events or similar circumstances other than as provided by applicable law.

Not for publication, distribution or announcement, directly or indirectly, in or into the USA (including the District of Columbia) (the “USA”), Australia, Japan, New Zealand, Singapore, Hong Kong, Canada or any other jurisdiction in which publication, distribution or announcement of this press release is unlawful or is subject to legal restrictions other than those required by Swedish law. Additional restrictions apply, please see the important information in the end of this press release.