Episurf Medical announces outcome of the rights issue

Episurf Medical AB (publ) ("Episurf", "Episurf Medical" or the "Company"), (NASDAQ Stockholm: EPIS B) announced on 22 April 2024 that the Board of Directors had resolved to carry out a partially guaranteed new issue of units with preferential rights for existing shareholders of up to approximately SEK 120 million (the "Rights Issue"). The Board of Directors' resolution of the Rights Issue was approved by an extraordinary general meeting held on 22 May 2024. Episurf hereby announces that the final result of the Rights Issue shows that 19,316,005 units, corresponding to approximately 57.9 percent of the Rights Issue, were subscribed for with and without unit rights. Accordingly, approximately 17.2 percent of the Rights Issue will be allocated to the parties who entered into guarantee undertakings, whereby the Rights Issue is subscribed to in aggregate approximately 75.0 percent. Episurf will receive proceeds amounting to approximately SEK 90 million before deduction of costs attributable to the Rights Issue.

The outcome of the Rights Issue shows that 17,467,044 units, corresponding to approximately 52.3 percent of the offered units, have been subscribed for by exercise of unit rights. In addition, 1,848,961 units have been subscribed for without unit rights, corresponding to approximately 5.5 percent of the Rights Issue. 5,728,157 units, corresponding to approximately 17.2 percent of the Rights Issue, have been allotted to the parties who entered into guarantee undertakings in relation the Rights Issue. The Rights Issue has thus been subscribed for a total of approximately 75.0 percent and Episurf will receive proceeds of approximately SEK 90 million before deduction of cost attributable to the Rights Issue.

The purpose of the Rights Issue is primarily to finance the ongoing commercialization of the Episealer® Patellofemoral System on the US market and the US regulatory process for the Episealer® MTP-System, the ongoing commercialization of the Episealer® Knee and Episealer® Talus Systems in different geographies and the continuation of clinical development besides general corporate purposes.

With the Rights Issue being successfully completed, Episurf has now adopted a financial target to reach annual sales of SEK 150-200 million in the medium term, at which point the Company expects to become cash flow positive.

"We are concluding an important financing at an important point in time, and we are grateful for the support from both existing and new shareholders. We are focused on executing on our strategy, and we have several important milestones ahead of us", says Pål Ryfors, CEO Episurf Medical.

As confirmation of allotment of units subscribed for without unit rights, a contract note will be distributed on or about 14 June 2024. Subscribed and allotted units must be paid in cash in accordance with the instructions in the contract note. The allotment of units subscribed for without preferential rights (i.e., without unit rights) has been carried out in accordance with the allotment principles set out in the prospectus published by Episurf on 24 May 2024. Nominee-registered shareholders will receive notice of allotment and payment in accordance with the procedures of the nominee. 

Following registration of 375,662,430 new class B shares issued in the Rights Issue, Episurf's share capital will be SEK 84,427,278.77 and the total number of shares will increase from 267,065,447 shares to 642,727,877 shares, divided into 473,357 class A shares and 642,254,520 class B shares.

BTUs (Sw. Betald Tecknad Unit) will be subject to trading on Nasdaq Stockholm until the Rights Issue has been registered with the Swedish Companies Registration Office (the "SCRO") and BTUs have been converted into class B shares. The last day of trading with BTUs is expected to occur on or about 24 June 2024.

The new class B shares subscribed for with, and without, unit rights are expected to be registered with the SCRO on or about 24 June 2024 and are expected to begin trading on Nasdaq Stockholm on or about 28 June 2024.

Each unit in the Rights Issue consist of fifteen (15) class B shares and six (6) warrants of series TO13 B which, upon full exercise, will contribute with additional proceeds corresponding to approximately SEK 36 million. The first day of trading on Nasdaq First North Growth Market for the warrants of series TO13 B is expected to be on or about 28 June 2024. Upon full exercise of the warrants of series TO13 B that are issued in the Rights Issue, the number of shares will increase by 150,264,972 class B shares and the share capital will increase by approximately SEK 19,738,467 (not taking into account the reduction of share capital which was resolved at the extraordinary general meeting in the Company on 22 May 2024 and which requires permission from the Swedish Companies Registration Office or public court).

In connection with the Rights Issue a number of external investors have undertaken to guarantee the Rights Issue at a guarantee commission of 12.0 percent of the guaranteed amount in cash or 14.0 percent of the guaranteed amount in units, where the subscription price for such units will be equivalent to the subscription price per unit in the Rights Issue. Should any of the guarantors request to receive their compensation in units, this will be done through a separate new issue of units to such guarantors.

Advisors

Pareto Securities is Sole Manager and Bookrunner in the Rights Issue. Hannes Snellman Advokatbyrå AB is legal adviser to Episurf in connection with the Rights Issue. Advokatfirman Vinge KB is legal adviser to the Sole Manager and Bookrunner in connection with the Rights Issue. Nordic Issuing acts as issuing agent in connection with the Rights Issue.

For more information, please contact:

Pål Ryfors, CEO, Episurf Medical
Tel:+46 (0) 709 62 36 69
Email: pal.ryfors@episurf.com

Veronica Wallin, CFO, Episurf Medical
Tel:+46 (0) 700 37 48 95
Email: veronica.wallin@episurf.com (pal.ryfors@episurf.com)

About Episurf Medical

Episurf Medical is endeavoring to bring people with painful joint injuries a more active, healthier life through the availability of minimally invasive and individualised treatment alternatives. Episurf Medical's Episealer® individualised implants and Epiguide® surgical drill guides are developed for treating localised cartilage injury in joints. Episurf Medical's μiFidelity® system enables implants to be cost-efficiently tailored to each individual's unique injury for the optimal fit and minimal intervention. Episurf Medical's head office is in Stockholm, Sweden. Its share (EPIS B) is listed on Nasdaq Stockholm. For more information, go to the company's website: www.episurf.com.

This information is information that Episurf Medical AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 13.45 CEST on 13 June 2024.

Important information

The release, announcement or distribution of this press release may, in certain jurisdictions, be subject to restrictions. The recipients of this press release in jurisdictions where this press release has been published or distributed shall inform themselves of and follow such legal restrictions. The recipient of this press release is responsible for using this press release, and the information contained herein, in accordance with applicable rules in each jurisdiction. This press release does not constitute an offer, or a solicitation of any offer, to buy or subscribe for any securities in Episurf Medical in any jurisdiction, neither from Episurf Medical nor from someone else.

This press release is not a prospectus for the purposes of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 (the "Prospectus Regulation") and has not been approved by any regulatory authority in any jurisdiction. A prospectus, prepared in accordance with the simplified disclosure regime for secondary issuances as set forth in the Prospectus Regulation, regarding the Rights Issue described in this press release has been prepared by the Company, reviewed and approved by the Swedish Financial Supervisory Authority and published on the Company's website.

This announcement does not identify or suggest, or purport to identify or suggest, the risks (direct or indirect) that may be associated with an investment in the Company. The information contained in this announcement relating to the Rights Issue is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. Pareto Securities are acting for Episurf Medical in connection with the Rights Issue and no one else and will not be responsible to anyone other than Episurf Medical for providing the protections afforded to its clients nor for giving advice in relation to the Rights Issue or any other matter referred to herein. Pareto Securities are not liable to anyone else for providing the protection provided to their customers or for providing advice in connection with the Rights Issue or anything else mentioned herein.

This press release does not constitute or form part of an offer or solicitation to purchase or subscribe for securities in the United States. The securities referred to herein may not be sold in the United States absent registration or an exemption from registration under the US Securities Act of 1933, as amended (the "Securities Act"), and may not be offered or sold within the United States absent registration or an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There is no intention to register any securities referred to herein in the United States or to make a public Rights Issue of the securities in the United States. The information in this press release may not be announced, published, copied, reproduced or distributed, directly or indirectly, in whole or in part, within or into the US, the United Kingdom, Australia, Belarus, Canada, Hong Kong, Israel, Japan, New Zeeland, Russia, Singapore, South Africa, South Korea, Switzerland or in any other jurisdiction where such announcement, publication or distribution of the information would not comply with applicable laws and regulations or where such actions are subject to legal restrictions or would require additional registration or other measures than what is required under Swedish law. Actions taken in violation of this instruction may constitute a crime against applicable securities laws and regulations.

In the United Kingdom, this document 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 Prospectus Regulation as it forms part of domestic law in the United Kingdom by virtue of the European Union (Withdrawal) Act 2018) who are (i) persons having professional experience in matters relating to investments who fall within the definition of "investment professionals" in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the "Order"); or (ii) high net worth entities falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). In the United Kingdom, any investment or investment activity to which this communication relates is available only to, and will be engaged in only with, relevant persons. Persons who are not relevant persons should not take any action on the basis of this press release and should not act or rely on it.

Forward-looking statements

This press release contains forward-looking statements that reflect the Company's intentions, beliefs, or current expectations about and targets for the Company's and the group's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company and the group operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "expect", "anticipate", "intend", "may", "plan", "estimate", "will", "should", "could", "aim" or "might", or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors 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 guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors and readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither the Company nor anyone else undertake to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release, unless it is required by law or Nasdaq Stockholm's rule book for issuers.

Information to distributors

Solely for the purposes of the product governance requirements contained within: (a) EU Directive 2014/65/EU on markets in financial instruments, as amended ("MiFID II"); (b) Articles 9 and 10 of Commission Delegated Directive (EU) 2017/593 supplementing MiFID II; and (c) local implementing measures (together, the "MiFID II Product Governance Requirements"), and disclaiming all and any liability, whether arising in tort, contract or otherwise, which any "manufacturer" (for the purposes of the MiFID II Product Governance Requirements) may otherwise have with respect thereto, the offered shares have been subject to a product approval process, which has determined that such shares are: (i) compatible with an end target market of retail investors and investors who meet the criteria of professional clients and eligible counterparties, each as defined in MiFID II; and (ii) eligible for distribution through all distribution channels as are permitted by MiFID II (the "Target Market Assessment").

Notwithstanding the Target Market Assessment, distributors should note that: the price of the shares in the Company may decline and investors could lose all or part of their investment; the shares in the Company offer no guaranteed income and no capital protection; and an investment in the shares in the Company is compatible only with investors who do not need a guaranteed income or capital protection, who (either alone or in conjunction with an appropriate financial or other adviser) are capable of evaluating the merits and risks of such an investment and who have sufficient resources to be able to bear any losses that may result therefrom. The Target Market Assessment is without prejudice to the requirements of any contractual, legal or regulatory selling restrictions in relation to the Rights Issue. Furthermore, it is noted that, notwithstanding the Target Market Assessment, the Sole Manager and Bookrunner will only procure investors who meet the criteria of professional clients and eligible counterparties.

For the avoidance of doubt, the Target Market Assessment does not constitute: (a) an assessment of suitability or appropriateness for the purposes of MiFID II; or (b) a recommendation to any investor or group of investors to invest in, or purchase, or take any other action whatsoever with respect to the shares in the Company.

Each distributor is responsible for undertaking its own target market assessment in respect of the shares in the Company and determining appropriate distribution channels.