Serstech receives a new major shareholder through a directed share issue of SEK 40 million

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The Board of Directors of Serstech AB (publ) (“Serstech” or the “Company”), listed on Nasdaq First North Growth Market, has today, on 25 November 2024, resolved to carry out a directed share issue of SEK 40 million before transaction costs (the “Directed Share Issue”) at a subscription price of SEK 0.84 per share. The Directed Share Issue is carried out to finance and enable an expansion of the Company’s production and marketing capacity and to expand strategic partner relationships in sales, technology and marketing. Investors in the Directed Share Issue consist of both Swedish and international professional investors, including Martin Bjäringer, who subscribes for 11,904,762 shares, thereby becoming the single largest shareholder in the Company, after completion of the Directed Share Issue. The Board of Directors’ resolution on the Directed Share Issue is subject to approval by an Extraordinary General Meeting, which is intended to be held on 16 December 2024. Notice of the Extraordinary General Meeting will be published through a separate press release.

The Directed Share Issue

The Board of Directors of Serstech has today, subject to the Extraordinary General Meeting’s subsequent approval, resolved on the Directed Share Issue of 47,619,047 shares at a subscription price of SEK 0.84 per share. The subscription price corresponds to a discount of approximately 20 percent compared to the volume-weighted average price of Serstech’s share on Nasdaq First North Growth Market during the last 30 trading days, i.e. 12 October – 22 November. Through the Directed Share Issue, Serstech will receive proceeds of SEK 40 million before deduction of transaction costs. The subscription price in the Directed Share Issue has been decided by the Board of Directors after arm’s length negotiations with the investors and in consultation with the Company’s financial advisor North Point Securities. The subscription price is, according to the Board of Directors’ and the financial advisor’s assessment, on market terms.

Martin Bjäringer, JEQ Capital AB, Måsskäret Invest AB, the funds Elementa and Meriti Ekorren Global, Ole Christiansen, Sunda Holding i Stockholm AB, Johan Stein, private and through company, Mathias Nimlin and Per Rosell participate in the Directed Share Issue. Through the Directed Share Issue, Martin Bjäringer subscribes for 11,904,762 shares in Serstech (corresponding to approximately 4.7 percent of the total number of shares after the Directed Share Issue) and, subject to subsequent approval by the Extraordinary General Meeting, thereby becomes the single largest shareholder in the Company.

“We have followed Serstech for a long time and now we had the opportunity to invest and support the company after a period of negotiations. We see a clear value in supporting entrepreneurial cutting-edge companies that operate in a global market, have a solid base and growing demand in order to help create new industrial stars. The Directed Share Issue will provide Serstech with the financial strength required to fully focus on growth”, says Mathias Nimlin, who is an investor and also represents Martin Bjäringer and Måsskäret Invest AB (Carl Rosvall).

“With this capital injection, we will significantly strengthen our sales and marketing efforts. We can also enhance our solutions and further improve our gross margins by increased efforts in RDI and production. We are honoured by the trust and confidence that these prominent investors have placed in Serstech”, says Serstech CEO Stefan Sandor.

Through the Directed Share Issue, the number of shares and votes in the Company will increase by 47,619,047 from 206,700,000 to 254,319,047 and the share capital will increase by approximately SEK 1,382,265.52, from SEK 6,000,000 to approximately SEK 7,382,265.52. The Directed Share Issue entails a dilution of approximately 18.7 percent of the number of shares and votes in the Company, based on the total number of shares in the Company after the Directed Share Issue.

In connection with the Directed Share Issue, lock-up agreements have been entered into with Martin Bjäringer, JEQ Capital AB, Måsskäret Invest AB, Ole Christiansen, Sunda Holding i Stockholm AB, Johan Stein, private and through company, Mathias Nimlin and Per Rosell. These investors have undertaken, on customary terms, not to sell any shares in the Company for a period of six months from the settlement date of the Directed Share Issue. Elementa and Meriti Ekorren Global funds cannot enter into lock-up agreements due to their fund rules.

Background to the Directed Share Issue and the reasons for deviation from shareholders’ pre-emptive rights

Over the years, Serstech has carried out a number of rights issues to build the foundation of the Company. 2023 was a record year for Serstech with 268 percent growth, profitability and positive operating cash flow. 2024 will show slightly lower sales than 2023, but still with historically very good numbers. As reported several times, Serstech expects a large variation in sales between quarters and partly also years, which also explains the decrease in 2024. Serstech has in recent years shown that there is a clear demand for the Company's products from customers all over the world. In 2023 Serstech received four major orders and seven have been received so far in 2024. The orders are generated by public tenders, which often do not offer any transparency, which in turn makes it very difficult to predict when an order will arrive. Due to the uncertainty of revenues in time, Serstech needs a liquidity buffer, so that the natural variation of orders does not affect the daily work with sales, product development and production.

Serstech has started to expand its sales and marketing team, supporting and developing 170 partners spread across 66 countries. The partner network needs to be further developed, and there is a clear link between the support Serstech can give a partner and how successful they are in their sales. Serstech has started the development of next generation products, aimed at reaching new target groups and segments, which will significantly increase the size of the addressable market. Over the past few years, Serstech has built a development team that is highly competent but still somewhat undersized.

Today, Serstech can finance its day-to-day operations through sales, but Serstech has much bigger ambitions than that. To accelerate sales and at the same time build for the future, Serstech needs additional capital. Both the Board of Directors and management are confident that these investments will provide a good long-term return and ensure a profitable future for Serstech.

The reasons for the deviation from the shareholders’ pre-emptive rights are thus to raise capital in the most time- and cost-efficient manner to finance and enable an expansion of the Company’s production and marketing capacity and to expand strategic partner relationships in sales, technology and marketing, in accordance with what has been stated above. A rights issue would, in the opinion of the Board of Directors, be significantly more time-consuming, which may cause the Company to miss out on potential development opportunities and partner relationships. In addition, a rights issue would entail significantly higher costs for the Company, mainly related to the procurement of a guarantee consortium, an increased exposure to potential market volatility and that the issue would likely have to be carried out at a lower subscription price than in the Directed Share Issue, which would be to the detriment of the Company’s shareholders. Unlike a rights issue, the Directed Share Issue will expand the Company’s shareholder base with Swedish and international professional investors, which is considered beneficial for the Company, the Company’s long-term development, and the liquidity of the share. Against this background, Serstech’s Board of Directors has determined that the Directed Issue is in the best interest of the Company and its shareholders.

Extraordinary General Meeting

The Board of Directors’ resolution on the Directed Share Issue is subject to approval by an Extraordinary General Meeting, which is intended to be held on 16 December 2024. Notice of the Extraordinary General Meeting will be published by way of a separate press release.

Advisor

North Point Securities is acting as financial advisor and Advokatfirman Vinge is acting as legal advisor to Serstech in connection with the Directed Share Issue.

For more information:

Stefan Sandor,

CEO, Serstech AB, telephone: +46 739 606 067

E-mail:

or

Thomas Pileby,

Chairman of the Board, Serstech AB, telephone: +46 702 072 643

E-mail:

or visit:

Certified advisor to Serstech is Svensk Kapitalmarknadsgranskning AB (SKMG).

This is information that Serstech AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out above, on 25 November 2024 at 8.30 CET.

About Serstech

Serstech develops and sells equipment for the identification of dangerous chemicals, such as drugs, bombs and chemical warfare agents. The Company’s customers are mainly law enforcement agencies and include the United Nations, the World Customs Organization (WCO) and customs and police authorities worldwide. Serstech has distributors in 66 countries. The Company is headquartered in Lund and all manufacturing is done in Sweden.

Serstech is listed on Nasdaq First North Growth Market. More information is available at

Important information

The publication, release or distribution of this press release may be restricted in certain jurisdictions. Recipients of this press release in the jurisdictions in which this press release has been published, released or distributed should inform themselves about and observe such restrictions. This press release does not constitute an offer, or a solicitation of any offer, to buy or subscribe for any securities in Serstech in any jurisdiction.

This press release does not identify or attempt to identify any risks (direct or indirect) that may be associated with an investment in securities of Serstech. The information contained in this press release is published for background purposes only and does not purport to be complete.

This press release does not constitute an offer or invitation 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 applicable exemption from registration under the U.S. Securities Act of 1933, as amended. The information contained in this press release may not be announced, published, copied, reproduced or distributed, directly or indirectly, in whole or in part, in or into the United States, Australia, Belarus, Canada, Hong Kong, Japan, New Zealand, Russia, Singapore, South Africa, South Korea, Switzerland or any other jurisdiction where such announcement, publication or distribution of this information would be contrary to applicable laws and regulations.

This press release is not a prospectus as defined in Regulation (EU) 2017/1129 (the “Prospectus Regulation”) and has not been approved by any regulatory authority in any jurisdiction. Serstech has not authorized any offer of securities to the public in any member state of the European Economic Area ("EEA"). Within the EEA, this communication is only addressed to “qualified investors” within the meaning of the Prospectus Regulation.

In the United Kingdom, this document and any other materials in relation to the securities described herein are only being distributed to, and are 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 Prospectus Regulation which is part of United Kingdom law following 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"), (ii) high net worth entities etc. falling within Article 49(2)(a) to (d) of the Order, or (iii) such other persons to whom such investments or investment activities may lawfully be made available under 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 announcement and should not act or rely on it.

This press release contains certain forward-looking statements that reflect the Company’s current views with respect to future events and financial and operational performance. Words such as “intends”, “expects”, “anticipates”, “may”, “plans”, “believes”, “estimates” and other expressions that are indicative or predictive of future developments or trends, and that are not based on historical facts, constitute forward-looking statements. By its nature, forward-looking information involves known and unknown risks and uncertainties because it is dependent on future events and circumstances. Forward-looking statements are not guarantees of future performance or development and actual results may differ materially from those expressed in the forward-looking statements.