Biokraft International

As press released on 2 February 2024, the two previously largest shareholders of Biokraft International AB (publ) ("Biokraft" or the "Company"), Aneo Renewables Holding AS and St1 Sverige AB, have consolidated their ownership in Biokraft into a jointly co-owned limited liability company, 1Vision Biogas AB, which triggered a "Change of Control Event" under the terms and conditions of the Company's outstanding senior secured green bonds with ISIN SE0015812441. As a result, the bondholders have up to and including 6 March 2024 the right to request that the Company repurchase all, or a number of, their bonds at a price of 101 percent of the nominal amount together with accrued but unpaid interest. The maximum total amount that the Company may be required to pay when repurchasing all outstanding bonds amounts to approximately SEK 650 million (including interest and other fees). For bondholders requesting repurchase of bonds, the proceeds shall be paid out no later than 6 May 2024. As a result of the above, the Board of Directors of Biokraft announces its intention to resolve on issue of shares in order to at least cover this capital requirement. The issue amount has not yet been determined as it depends, among other things, on the number of bonds that are requested to be repurchased. The Board of Directors therefore proposes that the Extraordinary General Meeting authorizes the Board of Directors to resolve on a rights issue which can amount to a total maximum of approximately SEK 650 million, after deduction of transaction costs, to cover the funds the Company is obliged to pay to the bondholders who have requested repurchase of the bonds in accordance with the terms and conditions of the bond (the "Rights Issue"). The Company has received a subscription commitment from the Company's largest shareholder 1Vision Biogas AB, corresponding to its pro rata share, of approximately 55 percent of the Rights Issue, or the higher ownership stake that 1Vision Biogas AB will have on the record date for the Rights Issue as a result of the ongoing mandatory offer which is expected to end on 11 March 2024 (see separate press release on 2 February 2024). In addition, 1Vision Biogas AB has provided a guarantee undertaking that covers the remainder of the Rights Issue up to 100 percent. Both the subscription commitment and the guarantee undertaking relate to the Rights Issue and are subject to that the subscription price in the Rights Issue is determined on market terms no later than one day before the Extraordinary General Meeting and that the subscription period in the Rights Issue ends no later than 30 April 2024. In addition, the Board of Directors proposes that the Extraordinary General Meeting authorizes the Board of Directors to resolve on a share issue, with or without pre-emptive rights, of approximately a maximum of SEK 150 million, before deduction of transaction costs, to be used for investments in the Company's ongoing operations as well as for further growth and expansion, replacing the current existing issue authorization as resolved at the Annual General Meeting 2023. An Extraordinary General Meeting is planned to be held on 27 March 2024 to resolve to amend the limits for the number of shares and share capital in the Company's articles of association and to resolve on the issue authorizations, as described above. The subscription price in the Rights Issue is expected to be determined no later than one day before the Extraordinary General Meeting and be announced through a separate press release. The Rights Issue, including full terms and conditions, will thereafter be resolved by the Board of Directors based on the authorization given by the Extraordinary General Meeting around 4 April 2024. Due to the Rights Issue, the Board of Directors has decided to postpone the publication of the Company's interim report for the first quarter of 2024 until 31 May 2024.

Summary of share issue

• The Board of Directors of Biokraft proposes that the Extraordinary General Meeting authorizes the Board of Directors to resolve on a rights issue which can amount to a total maximum of approximately SEK 650 million, after deduction of transaction costs, to cover the funds (including interest and other fees) the Company is obliged to pay to the bondholders who have requested repurchase of the bonds in accordance with the terms and conditions for the bond.
• Provided that the subscription price in the Rights Issue has been determined on market terms no later than one day before the Extraordinary General Meeting, that the Extraordinary General Meeting resolves to amend the limits for the number of shares and share capital in the Company's articles of association and authorizes the Board of Directors to resolve on the Rights Issue, and that the Board of Directors thereafter resolves on the Rights Issue with a subscription period that ends no later than 30 April 2024:
  • 1Vision Biogas AB, the Company's largest shareholder, has, in respect of the Rights Issue, undertaken to subscribe for shares corresponding to its pro rata share in the Rights Issue. The subscription commitment corresponds to approximately 55 percent of the Rights issue or the higher ownership stake that they will have on the record date for the Rights Issue as a result of the ongoing mandatory offer;
  • 1Vision Biogas AB has entered into a guarantee undertaking that covers the remaining part of the Rights Issue that is not secured by subscription obligations. For the guarantee commitment, a guarantee fee of 2.0 percent will be paid; and
  • 1Vision Biogas AB has furthermore undertaken to vote at the Extraordinary General Meeting for the first (i.e., the authorization to resolve on the Rights Issue) of the proposed issue authorizations described above and an amendment of the Company's articles of association. The voting commitment corresponds to approximately 55 percent of outstanding shares and votes in the Company, or the higher share 1Vision Biogas AB will have on the record date for the Extraordinary General Meeting as a result of the ongoing mandatory offer.
• The subscription period in the Rights Issue is expected to take place from and including 12 April 2024 up to and including 26 April 2024.
• The Rights Issue, including complete terms and conditions, such as number of newly issued shares and increase of the share capital, is expected to be resolved by the Company's Board of Directors around 4 April 2024 utilizing the authorization given by the Extraordinary General Meeting.
• As a result of the Rights Issue, the Company has decided to postpone the publication of the interim report for the first quarter of 2024 to 31 May 2024 in order to enable members of the Board of Directors, senior executives and other insiders to participate in the Rights Issue.
• In addition, the Board of Directors of Biokraft proposes that the Extraordinary General Meeting authorizes the Board of Directors to resolve on a share issue, with or without pre-emptive rights for the Company's existing shareholders, of approximately a maximum of SEK 150 million, before deduction of transaction cost, to be used for investments in the Company's ongoing operations as well as for further growth and expansion, replacing the current existing issue authorization as resolved at the Annual General Meeting 2023. Such equity authorization can also be utilised to up-size the Rights Issue.
• An Extraordinary General Meeting of the Company, which is intended to be held on 27 March 2024, is proposed to resolve on the issue authorizations as described above. Notice of the Extraordinary General Meeting will be published through a separate press release.

Background and reasons for share issue

Biokraft, founded in 2005, is a Nordic greentech company that produces bioenergy and plant nutrients in a circular process by recycling organic waste and residues in large-scale biorefineries. The biogas is CO2 neutral and reduces GHG emissions by up to over 100 percent when it replaces fossil fuels. Biokraft currently has five production facilities in Sweden, Norway and Korea with an annual capacity to produce approximately 500 GWh of biogas.

Biokraft has a clear growth plan that focuses on expanding the Company's capacity to produce liquefied biogas for sale in the Northern European market where it is expected that the European market for liquefied biogas will tenfold by 2030. To meet the sharply increased demand for biogas, Biokraft has previously communicated clear production targets for 2024 and 2026 where production capacity will amount to at least 600 GWh by the end of 2024 and at least 1.2 TWh by the end of 2026. Furthermore, the Company has a long-term ambition to achieve a production capacity of at least 3 TWh by the end of 2030.

To achieve the Company's ambitious production targets, Biokraft is actively working on a number of development projects in various stages of completion. Biokraft's communicated portfolio of development projects consists of plants in Sweden and Germany with a combined production capacity of approximately 700 GWh. To ensure the Company's ability to carry out the planned growth journey and achieve its ambitions of a production capacity of at least 1.2 TWh by the end of 2026 and 3 TWh by the end of 2030, additional capital will be needed. The Company's production of biogas in 2023 amounted to 348 GWh and the Company estimates that the investment cost for one GWh in production capacity amounts to SEK 4-6 million. A production facility of approximately 120 GWh, such as the ongoing project in Mönsterås, is estimated to have a total investment cost corresponding to approximately SEK 700 million. As previously communicated, there is a risk that the commissioning of Mönsterås will be delayed by six to twelve months as the timetable is dependent on the connection to the electricity grid. The Company is investigating several alternatives for possible interim solutions to be able to put the facility into commission according to plan, which would entail increased costs until the connection to the electricity grid is made.

The next step in the growth journey is to carry out certain improvement projects and make the investment decision for the next new project in Skåne's Fagerhult. The financing need for improvements in existing production facilities, including Mönsterås, Skåne's Fagerhult and to repurchase the bonds is estimated to be approximately SEK 1,800 million during the period 2024 to 2026, which is intended to be financed through a combination of equity and debt.

Furthermore, the Company's previously two largest shareholders, Aneo Renewables Holding AS and St1 Sverige AB, have consolidated their ownership in Biokraft into a jointly co-owned limited liability company, 1Vision Biogas AB, which triggered a "Change of Control Event" under the terms and conditions of the Company's outstanding senior secured green bonds. As a result, the bondholders have up to and including 6 March 2024 the right to request that the Company repurchase all, or a number, of their bonds at a price of 101 percent of the nominal amount together with accrued but unpaid interest. The Company itself currently holds bonds with a total nominal value of SEK 63.75 million, which is why the maximum total amount that the Company may be required to pay when repurchasing all outstanding bonds amounts to approximately SEK 650 million. For bondholders requesting repurchase of bonds, the proceeds shall be paid out no later than 6 May 2024.

In light of the above, Biokraft's Board of Directors assesses that the Company needs additional capital. The need for capital arises in connection with the above-mentioned obligation to repurchase bonds and will depend on how many bondholders request repurchase of the bonds. The maximum amount is approximately SEK 650 million. Against this background, the Board of Directors of Biokraft announces its intention to resolve on the Rights Issue. An Extraordinary General Meeting of the Company, which is intended to be held on 27 March 2024, is proposed to resolve on an authorization for the Board of Directors that enables resolving on the Rights Issue.

The net proceeds from the Rights Issue are intended to be used to repurchase the Company's bonds, in accordance with what is stated above. Depending on how many bondholders that request the Company to repurchase their bonds, and which authorization the Extraordinary General Meeting resolves on and that is utilized by the Board of Directors, any remaining part of the net proceeds will be used for investments in the Company's ongoing operations as well as for further growth and expansion.

If the Rights Issue, despite received subscription commitment and guarantee undertaking, is not subscribed for to a sufficient extent, the Company may be forced to seek alternative financing in the form of debt financing or additional equity raise to be able to repurchase the bonds from the bondholders that requests the Company to do so. There are no guarantees that the Company will succeed in obtaining such alternative financing.

Extraordinary General Meeting

An Extraordinary General Meeting, planned to be held on 27 March 2024, is proposed to decide on issue authorization for the Board of Directors as described above. Notice of the Extraordinary General Meeting will be published through a separate press release. 

Subscription commitments, guarantee undertakings and voting commitments

Provided that the subscription price in the Rights Issue has been determined on market terms (as determined by the Company, in consultation with the advisors of the Company and the advisors of 1Vision Biogas AB) no later than one day before the Extraordinary General Meeting, that the Extraordinary General Meeting authorizes the Board of Directors to resolve on the Rights Issue, and that the Board of Directors thereafter resolves on the Rights Issue with a subscription period that ends no later than 30 April 2024, the Company's largest shareholder, 1Vision Biogas AB, has, in respect of the Rights Issue, undertaken to subscribe for shares corresponding to its pro rata share in the Rights Issue. The subscription commitment corresponds to approximately 55 percent of the Rights Issue, or the higher ownership stake that 1Vision Biogas AB will have on the record date for the Rights issue as a result of the ongoing mandatory offer.

In addition to the above-mentioned subscription commitment, 1Vision Biogas AB has, under the same conditions as above, provided a guarantee undertaking that covers the remaining part of the Rights Issue that is not secured by subscription commitments. For the guarantee undertaking, a guarantee fee of 2.0 percent will be paid.

1Vision Biogas AB has furthermore undertaken, provided that the subscription price in the Rights Issue has been determined on market terms no later than one day before the Extraordinary General Meeting, to vote at the Extraordinary General Meeting for the Rights Issue authorization and amendment of the Company's articles of association. The voting commitment corresponds to approximately 55 percent of outstanding shares and votes in the Company, or the higher share 1Vision Biogas AB will have on the record date for the Extraordinary General Meeting as a result of the ongoing mandatory offer.

Provided that the Extraordinary General Meeting resolves on both proposed issue authorizations and the amendment of the Company's articles of association, the Board of Directors may resolve to up-size the Rights Issue.             

The subscription commitment and guarantee undertaking are not secured by bank guarantees, escrow funds, pledges or similar arrangements. Further information about the subscription commitment and guarantee undertaking will be included in the prospectus that will be published prior to the commencement of the subscription period.

Postponement of interim report

As a result of the Rights Issue, the Company has decided to postpone the publication of the interim report for the first quarter of 2024 to 31 May 2024 to enable Board members, senior executives, and other insiders to participate in the Rights Issue.

Prospectus

Complete information regarding the Rights Issue and information about the Company will be provided in a prospectus that is expected to be published on the Company's website before the subscription period begins.

Preliminary timetable for the Rights Issue

Extraordinary General Meeting      27 March 2024

The Board of Directors is expected to resolve on the Rights Issue   4 April 2024

Expected publication date of the prospectus and record date   11 April 2024

Expected subscription period       12 April - 26 April 2024

Expected announcement of the outcome of the Rights Issue   30 April 2024

Advisors

The Company has engaged ABG Sundal Collier AB as financial advisor and Cirio Advokatbyrå AB as legal advisor.

This information is such that Biokraft International 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 below, at 7:30 a.m. CET on 26 February 2024.