Notice to an extraordinary general meeting of IRRAS AB with a proposal for a set-off issue of shares for the settlement of short-term loan financing

The shareholders of IRRAS AB (publ), org.nr 556872-7134 (”the Company”), are hereby invited to the Extraordinary General Meeting to be held on Friday 13 October 2023 at 4.00 p.m at the premises of Setterwalls Advokatbyrå at Sturegatan 10 in Stockholm.

Notice of Attendance

A shareholder who would like to participate in the General Meeting shall:

(i)                 be entered in the register of shareholders maintained by Euroclear Sweden AB by the record date Thursday 5 October 2023; and

(ii)               notify the Company of their intention to attend the General Meeting no later than than Monday 9 October 2023.

Notification of participation shall be sent by mail to IRRAS AB, Attn: Tore Linghede, P.O Box 160, 101 23 Stockholm or by e-mail to EGM@irras.com. The notification shall state name, personal registration number/company registration number, address and telephone number, number of shares held and proxies if applicable.

In order to be entitled to participate in the General Meeting, a shareholder who has registered their shares in the name of a nominee, in addition to announcing their intention to participate, must temporarily request that their shares be registered in their own name so the shareholder is entered into the register of shareholders by 5 October 2023. This registration may be temporary (so-called voting right registration) and is requested with the nominee in accordance with the nominee’s procedures and in advace as determined by the nominee. Voting right registrations made no later than the 9 October 2023, will be considered when preparing the shareholder register.

Proxies

Shareholders represented by proxy shall issue a written and dated power of attorney. The power of attorney may not be older than one year unless indicated that it is valid for a longer period, not exceeding five years. If the proxy is issued by a legal person, a certified copy of the registration certificate or similar papers of authorisation are also required. Power of attorney, registration certificates and other authorisation documents must be available for the Meeting and, in order to facilitate entry to the Meeting, sent to the Company at the above address, no later than 9 October 2023. Proxy forms for shareholders who wish to participate in the Meeting by proxy will be made available on the Company's website www.irras.com.

Proposed agenda

1. Election of Chairman of the Meeting
2. Election of one person or two persons to certify the minutes
3. Preparation and approval of the voting list
4. Approval of the agenda
5. Establishment of whether the Meeting has been duly convened
6. Resolution on issue of new shares
7. Closing of the Meeting

Proposals

Resolution on issue of new shares (item 6)

The shareholder IR Holding Bidco Inc. (“IR Holding”), holding approximately 87.2 percent of the total number of shares and votes in the Company, proposes that the General Meeting resolves to increase the Company's share capital by a maximum of SEK 10,147,945.20 through a new issue of a maximum of 338,264,840 ordinary shares, each with a quota value of SEK 0.03.

The new shares may, with deviation from the shareholders’ preferential right, only be subscribed for by IR Holding, with the obligation for the subscriber to make payment for subscribed shares by way of set-off against loans amounting to SEK 60,000,000 plus accrued interest as of 12 September 2023 of SEK 887,671. The subscription price is SEK 0.18 per ordinary share. The subscriber may not subscribe for fewer shares than such share subscriber is entitled to subscribe for according to above.

Subscription must take place no later than 14 October 2023. The set-off will be considered executed immediately in connection with subscription of the new shares. The Board of Directors shall have the right to extend the subscription period and the time of payment. The new shares give the right to a dividend from and including the first record day regarding dividends that occur after the registration of the new shares with the Swedish Companies Registration Office. The amount that exceeds the quota value must be added to the free premium fund.

The purpose of the new issue and the reason for the deviation from the shareholders’ preferential right is to enable the Company to settle outstanding loan amounts of a total of SEK 60,887,671 according to the short-term financing originally provided by Bacara Holdings Ltd. and which, in connection with the completion of the ongoing public takeover offer of the shares in the Company, has been transferred to IR Holding. On 24 August 2023, through the independent bid committee, the Company reported on the Company’s challenges in finding alternative financing to be able to repay the short-term loan, which initially was due for payment on 15 September 2023 but has been extended to 15 October 2023. Through the proposed set-off share issue, a loan amount of SEK 60,000,000 plus accrued interest will be settled and the Company thereby avoids becoming insolvent, which would otherwise have been imminent. The subscription price amounts to the bid price in the public takeover offer.

The company's managing director is authorized to make minor formal adjustments to the issue resolution that may prove necessary in connection with registration of the new shares with the Swedish Companies Registration Office or Euroclear Sweden AB.

For a valid decision of the General Meeting according to the above proposal, it is required that the resolution be supported by shareholders who represent at least two thirds of both the votes cast and the shares represented at the General Meeting.

The shareholders’ right to submit questions

The shareholders are reminded of their right, in accordance with Chapter 7 Section 32 of the Swedish Companies Act, to request information from the Board and the CEO at the Meeting.

Other information

As per 18 September 2023, the total number of shares and votes in the Company amounts to 794,813,400. The Company holds no shares in the Company. For information about how your personal data will be processed, see
https://www.euroclear.com/dam/ESw/Legal/Privacy-notice-bolagsstammor-engelska.pdf.

The Board of Directors of the Company will issue a separate press release to be announced in connection with the announcement of this notice to convene the Extraordinary General Meeting. The press release will also be available at the Company’s website, www.irras.com.

Documents

The complete proposal according to item 6 above, together with documents according to the Swedish Companies Act (2005:551) will be available at the Company’s office at the address set out above and will be sent free of charge to shareholders who so request and provide their postal address or e-mail address. The documents will also be available at the Company’s website, www.irras.com.  

_____

Stockholm in September 2023

The Board of Directors

This disclosure contains information that IRRAS is obliged to make public pursuant to the EU

Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication,

through the agency of the contact person, on 18-09-2023 20:30 CET.

 

For more information, please contact:

Will Martin

President and Chief Executive Officer

ir@irras.com

 

About IRRAS

IRRAS is a global medical care company focused on delivering innovative medical solutions to improve the lives of critically ill patients. IRRAS designs, develops, and commercializes neurocritical care products that transform patient outcomes and decrease the overall cost of care by addressing complications associated with current treatment methodologies. IRRAS markets and sells its comprehensive, innovative IRRAflow and Hummingbird ICP Monitoring product lines to hospitals worldwide through its direct sales organization in the United States as well as an international network of distribution partners.

IRRAS maintains its headquarters in Stockholm, Sweden, with corporate offices in San Diego, California, USA. For more information, please visit www.irras.com.

IRRAS is listed on Nasdaq Stockholm (ticker: IRRAS).

 

Stockholm, Sweden (September 15, 2023) – IRRAS AB (publ) (“IRRAS” or the “Company”) today announced an extension of its short-term financing agreement with Bacara Holdings, its second largest shareholder, which is led by Marios Fotiadis, the company’s Chairman of the Board of Directors. The total loan facility has been increased from SEK 60 million to SEK 80 million with the added amount paid immediately in a tranche of SEK 20 million and will continue to carry an interest rate in the amount of 6.00% on an annual basis.

Under this extension, the total loan facility will now fall due on 15 October 2023.  Repayment of the loan will continue to be secured by a pledge over the company’s patents and the shares of the company’s United States subsidiary, IRRAS USA Inc. In addition, IRRAS USA Inc. have guaranteed all obligations of IRRAS AB under the loan agreement, and IRRAS AB have entered into a license agreement with IRRAS USA Inc. (which such agreement being collaterally assigned to the lender) under which IRRAS AB grants IRRAS USA Inc. an exclusive, royalty-free, fully-paid, irrevocable, perpetual license to all of IRRAS’s intellectual property everywhere in the world other than Sweden, Denmark Norway and Finland.

This disclosure contains information that IRRAS is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 15-09-2023 08:00 CET.

 IRRAS Secures Extended Short-Term Loan Agreement

Stockholm, Sweden (24 August 2023) – This statement is made by the Independent Bid Committee (the “Committee”) of IRRAS AB (publ) (the “Company” or ”IRRAS”). The Committee consists of the Board Members Anita Tollstadius (chairperson) and Catherine Gilmore-Lawless.

 

The Offer

On 30 June 2023, Legacy Capital, Spetses, Bacara Holdings, Lexington Holding Assets, Kleanthis G. Xanthopoulos, Panormos, Philippe Audi, and Nicolas Murat (the ”Bid Consortium”), through IR Holding Bidco Inc. (”IR Holding”), announced a public offer to acquire all shares in IRRAS for SEK 0.18 in cash per share (the ”Offer”).

 

On 21 August 2023, IR Holding announced that the Offer had been accepted by shareholders holding 20.9 percent of the total number of shares and votes in IRRAS. Members of the Bid Consortium already owned 59.5 percent of the total number of shares and votes in IRRAS prior to the announcement of the Offer. In total, the number of shares tendered in the Offer and the shares already owned by the members of the Bid Consortium equal 80.4 percent of the total number of shares and votes in IRRAS. As set out in IR Holding’s press release announcing the Offer and the offer document regarding the Offer, completion of the Offer is conditional upon, inter alia, the Offer being accepted to such extent that IR Holding becomes the owner of more than 90 percent of the shares in IRRAS.

 

On 21 August 2023, IR Holding also announced an extension of the acceptance period until 1 September 2023 to allow shareholders that have not yet responded to the Offer an opportunity to do so. Further, IR Holding announced that it will not increase the price per share in the Offer.

 

The Independent Bid Committee’s Consideration of the Latest Announcement by IR Holding

The Committee reiterates that IRRAS is in immediate need of funding. The Company’s current cash on hand results from a short-term loan facility from Bacara Holdings, the Company’s second largest shareholder, which is also part of the Bid Consortium. There is an imminent risk that the Company will default on the short-term loan agreement, which is due on 15 September 2023, and become insolvent, and this risk has increased due to the announced extension of the Offer acceptance period. At the current time, no known alternative financing options are available that would provide IRRAS needed capital to repay the loan facility.

 

Under the short-term loan facility, the Company has pledged its patents and shares in its United States subsidiary, IRRAS USA Inc., to Bacara Holdings as collateral. The terms of the loan also outline that IRRAS USA Inc. will guarantee all remaining obligations of IRRAS AB in exchange for IRRAS AB entering into a license agreement with IRRAS USA Inc. (which would be collaterally assigned to the lender) that will grant IRRAS USA Inc. an exclusive, royalty-free, fully-paid, irrevocable, perpetual license to all of IRRAS’ intellectual property everywhere in the world other than Sweden, Denmark, Norway, and Finland.

 

In order to prepare for the possibility that the Offer will not be approved by 90 percent of IRRAS’ shareholders by the expiration of the extended acceptance period on 1 September 2023, the Company has continued to seek other potential investors that would be willing to lead an equity financing or secure a rights issue to provide IRRAS sufficient funds to repay its current loan obligation and continue its operations for a sufficient period of time that would allow other long-term financing options to be fully explored.

 

As a thorough process to identify financing alternatives has been underway since the beginning of this year with no concrete alternatives identified other than the current Offer, the Committee would like to stress that the chances of securing such alternative financing are low for the Company.

 

Based on these factors, the Committee reiterates its recommendation to the shareholders of IRRAS to accept the Offer.

__________

 

This statement by the Independent Bid Committee is governed by and shall be interpreted in accordance with Swedish law. Disputes arising from this statement shall be settled exclusively by a Swedish court. 

 

Stockholm, 24 August 2023

 

The Independent Bid Committee for IRRAS AB (publ)

 

For additional information, please contact:

Anita Tollstadius

Chairperson of the Independent Bid Committee for IRRAS AB

anita@tollstadius.com

 Supplemental statement from the Independent Bid Committee of IRRAS regarding the public offer from IR Holding Bidco

An extensive evaluation of different financing alternatives was initiated at the beginning of 2023, and, to date, this process has not identified any tangible financing options other than the public cash offer. During the ongoing public cash offer process, the Company has continued to explore alternative financing options, which would provide IRRAS needed capital to repay the short-term loan facility, but to date, no alternative financing options have been identified, and there is an imminent risk of the Company defaulting on the short-term loan agreement and becoming insolvent.

 

Additionally, under the short-term loan facility, the Company has pledged its patents and shares in its United States subsidiary, IRRAS USA Inc., to Bacara Holdings as collateral. The terms of the loan also outline that IRRAS USA Inc. will guarantee all remaining obligations of IRRAS AB in exchange for IRRAS AB entering into a license agreement with IRRAS USA Inc. (which would be collaterally assigned to the lender) that will grant IRRAS USA Inc. an exclusive, royalty-free, fully-paid, irrevocable, perpetual license to all of IRRAS’ intellectual property everywhere in the world other than Sweden, Denmark, Norway, and Finland.

 IRRAS Publishes Update on Financial Situation

Second quarter, April – June 2023

Net revenue amounted to 10.3 MSEK (9.7).

Operating loss (EBIT) amounted to -40.5 MSEK (-35.8).

Loss after tax amounted to -40.8 MSEK (-36.9).

Earnings per share before and after dilution amounted to  SEK -0.06 (-0.46).

CEO Statement

The company’s overall revenue of MSEK 10.3 during the 2nd quarter decreased from the previous quarter, but it did represent growth of 6% from the same period during 2022.  More importantly, though, during the quarter, we have initiated steps to improve our financial position and decrease our quarterly cash burn.

During the quarter, IRRAS announced a shift in our commercial strategy that will primarily focus our resources on the United States market opportunity.  The launch of our products in the US is more mature than other global markets and will continue to contribute most of our revenue, especially with the expected expansion of our commercial partnership with Medtronic.  As part of this shift, we will close our European subsidiaries and increasingly support customers around the globe with our existing network of distribution partners.  IRRAS investors are well aware of the challenges that the evolving regulatory landscape in Europe and the COVID-19 pandemic have posed, and we are now making decisions to improve control of the company’s costs and maximize our activity in the markets that are most important to our long-term success.

The other key area of focus during the 2nd quarter was resolving our current financial situation.  The financial environment remains difficult for early-stage companies, and we’ve seen these challenges throughout our fundraising process.  Our company’s current cash runway has become extremely limited, and we must imminently finalize our long-term financing plan to fully secure ongoing operations.  The recent public offer to IRRAS shareholders confirms that optimism regarding the company’s long-term prospects still exists. We look forward to the resolution of the bid period to determine the appropriate path forward for IRRAS, our customers, and the patients that our products treat every day. 

Will Martin, CEO

Important events during the quarter

• A public offer of SEK 0.18 in cash per share to the shareholders was made on 30 June by Legacy Capital, Spetses Investments, Bacara Holdings, Lexington Holding Assets, Kleanthis G. Xanthopoulos, Panormos Holding, Philippe Audi, and Nicolas Murat, through IR Holding Bidco Inc.
• The AGM resolved on a reverse share split 1:100, amendment of the articles of association whereby the share capital shall amount to not less than SEK 20,000,000 and not more than SEK 80,000,000 and the number of shares shall be not less than 7,000,000 and not more than 28,000,000, and approved a multiyear incentive program (Program 9).
• The company announced a shift in commercial strategy to prioritize the launch of IRRAflow system in the US.  As part of this shift, IRRAS will prioritize its operations within the US and begin the process of closing its wholly owned commercial subsidiaries in Europe. The background to the shift is the extended impact of COVID-19 pandemic restrictions and the evolving regulatory landscape in Europe, which have contributed to a slower commercial development in Europe.
• In order to assess the received takeover offer, an Independent Bid Committee was appointed which, in turn, has appointed Carnegie Investment Bank AB (publ) as financial advisor, and Setterwalls Advokatbyrå AB as legal advisor in connection with the Offer. The Committee has also engaged Grant Thornton Sweden AB to provide a so-called fairness opinion regarding the Offer.

Important events after the end of the quarter

• Secured additional bridge financing of MSEK 20, which will provide working capital through the completion of ongoing financing process.
• The company stands by its previously communicated financial targets, but has decided to reassess the time horizon. The shift in the timeline is a consequence of the announced strategic shift to change its European commercial strategy. The company currently chooses to refrain from publishing a specific timeline.
• Based on Grant Thornton’s fairness opinion, its own assessment of IRRAS’ current strategic and financial position, available opportunities to obtain necessary financing for continued operations, and several other factors, the Independent Bid Committee recommends that the shareholders of IRRAS accept the public offer made by IR Holding Bidco Inc. on 30 June 2023. Grant Thornton has, based on an assessment of IRRAS market value, including an income approach, analysis of the historic share price, publicly available information, and information from the company’s management, deemed the offer as fair to IRRAS shareholders. The offer of SEK 0.18 per share corresponds to a premium of 30 percent compared to the volume weighted average share price of the IRRAS share on Nasdaq Stockholm during the 30 latest trading days up to and including 29 June 2023 of SEK 0.1387. The acceptance period in the Offer expires on 11 August 2023. IR Holding has reserved the right to extend the acceptance period.

 

The full report is available on the company’s website:  https://investors.irras.com/en/reports-presentations

 

Q2 Report 2023 – conference call and audiocast

IRRAS will host a conference call and an online presentation of its Q2 2023 interim report on August 4 at 9.00 CET. The presentation will be held in English.

 

Dial-in number to the teleconference will be received by registering on the link below. After the registration you will be provided phone numbers and a conference ID to access the conference:

 

https://conference.financialhearings.com/teleconference/?id=200794

 

The presentation will be webcast and can be accessed from the following web address:

 

https://ir.financialhearings.com/irras-q2-2023

This disclosure contains information that IRRAS is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 04-08-2023 08:00 CET.

 IRRAS Interim Report Q2 2023

As a result of its recently announced change in commercial strategy to close its wholly owned European subsidiaries and prioritize its activities in the United States market, the company has decided that additional time is required to assess the full impact of these changes and the associated impact on the time horizon of its financial outlook. The previously communicated financial targets remain but, for these reasons, the company currently chooses to refrain from publishing a specific timeline.

 

Financial outlook

•          Revenue is expected to, long term, exceed SEK 350 million per year. 

•          Gross margin is expected to, long term, exceed 60%.

 

This disclosure contains information that IRRAS is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 04-08-2023 07:55 CET.

 IRRAS announces reassessment of financial outlook

The loan will fall due on 15 September 2023.  Repayment of the loan will be secured by a pledge over the company’s patents and the shares of the company’s United States subsidiary, IRRAS Inc.  In addition, IRRAS Inc. shall guarantee all obligations of IRRAS AB under the loan agreement, and IRRAS AB shall enter into a license agreement with IRRAS Inc. (which such agreement shall be collaterally assigned to the lender) under which IRRAS AB grants IRRAS Inc. an exclusive, royalty-free, fully-paid, irrevocable, perpetual license to all of IRRAS’s intellectual property everywhere in the world other than Sweden, Denmark Norway and Finland.

 

 

 

 

 

 

This disclosure contains information that IRRAS is obliged to make public pursuant to the EU Market Abuse Regulation (EU nr 596/2014). The information was submitted for publication, through the agency of the contact person, on 04-08-2023 07:45 CET.

 IRRAS Secures Extended Short-Term Loan Agreement

Dial-in number to the teleconference will be received by registering on the link below. After the registration you will be provided phone numbers and a conference ID to access the conference:

 

https://conference.financialhearings.com/teleconference/?id=200794

 

The presentation will be webcast and can be accessed from the following web address:

 

https://ir.financialhearings.com/irras-q2-2023

 

Speakers: President and CEO Will Martin, and Interim CFO Griffen Stapp

 

 

 

 

 

 

 

 

 Invitation to conference call and audiocast Q2 2023

 

The Offer

On 30 June 2023, Legacy Capital, Spetses, Bacara Holdings, Lexington Holding Assets, Kleanthis G. Xanthopoulos, Panormos, Philippe Audi, and Nicolas Murat (the ”Bid Consortium”), through IR Holding Bidco Inc. (”IR Holding” or the ”Offeror”), announced a public offer to acquire all shares in IRRAS for SEK 0.18 in cash per share (the ”Offer”). The Offer values all shares in IRRAS at approximately SEK 143 million (based on 794,813,400 shares in IRRAS). IR Holding is a newly formed Delaware Corporation that currently is wholly-owned by Legacy Capital and will, at completion of the Offer, be owned by the members of the Bid Consortium.

 

The consideration offered in the Offer corresponds to a premium of:

• 18 per-cent compared to the closing price of the IRRAS share on Nasdaq Stockholm on 29 June 2023 of SEK 0.1531; and
• 30 per-cent compared to the volume weighted average share price of the IRRAS share on Nasdaq Stockholm during the 30 latest trading days up to and including 29 June 2023 of SEK 0.1387.

 

The acceptance period for the Offer commenced on 7 July 2023 and expires on 11 August 2023. IR Holding has reserved the right to extend the acceptance period for the Offer. Completion of the Offer is conditional upon, among other things, IR Holding obtaining the required regulatory clearance and that the Offer is accepted to such extent that IR Holding becomes the owner of more than 90 per-cent of the shares in IRRAS (on a fully diluted basis). IR Holding has reserved the right to waive one or more conditions, including completing the Offer at a lower acceptance level.

 

The Independent Bid Committee and the process for evaluating the Offer

As the Board members Marios Fotiadis and Kleanthis G. Xanthopoulos are shareholders of IRRAS and are participating in the Offer as part of the Bid Consortium, they have not participated in the Board’s evaluation of, or in the handling of or decisions regarding, the Offer. The Independent Bid Committee of IRRAS (the ”Committee”) consists of Anita Tollstadius (chairperson) and Catherine Gilmore-Lawless.

 

The Committee has appointed Carnegie Investment Bank AB (publ) as financial advisor and Setterwalls Advokatbyrå AB as legal advisor in connection with the Offer. The Committee has also engaged Grant Thornton Sweden AB (”Grant Thornton”) to provide a so-called fairness opinion regarding the Offer. Grant Thornton’s statement is attached to this press release.

 

The Committee’s perception of the Offer is based on an assessment of several factors that the Committee considers to be relevant in relation to the evaluation of the Offer. These factors include, but are not limited to, IRRAS’ current strategic and financial position, opportunities to obtain necessary financing for continued operations in the near term, prevailing market conditions, operational opportunities and challenges, the Company’s expected future development and opportunities and risks related to these factors.

 

In the evaluation of the Offer, the Committee has analysed the Offer using methods that are normally used to evaluate public offers regarding listed companies, including IRRAS’ valuation in relation to comparable listed companies and comparable transactions, bid premiums in previous public takeover offers on Nasdaq Stockholm, stock market expectations regarding IRRAS’ development, the Company’s share price and the Committee’s view of IRRAS’ ability to deliver value to shareholders in the long term based on the updated financial plan developed by management.

 

In addition, the Committee has considered that members of the Bid Consortium control 59.5 per-cent of the share capital and votes in the Company, where IRRAS’ main owners Spetses, Bacara Holdings and Lexington Holding Assets have stated that the Offer is the only alternative they are willing to support at this stage. Currently, the Company is dependent on a short-term loan facility from Bacara Holdings to finance its ongoing operations.

 

The Committee has also engaged with potential alternative bidders with the purpose of finding a more attractive offer. These contacts have not resulted in any competing takeover offer. The Committee notes that the significant shareholding that Spetses, Bacara Holdings and Lexington Holding Assets hold in IRRAS and the compressed timeline that the Company’s immediate capital needs entail, limit potential bidders’ interest in the Company. Therefore, as of the date of this statement, the Committee considers that the probability that another bidder will submit an alternative offer is low.

 

Upon written request from IR Holding, the Committee has permitted IR Holding to review limited information for confirmatory purposes in connection with preparation for the Offer. The insider information that has been exchanged in connection with the investigation was made public through a press release on 29 June 2023 by IRRAS.

 

The Committee’s considerations

IRRAS was listed in November 2017 and has since the listing worked according to a strategy to establish IRRAS with the main product IRRAflow as an innovative solution to manage brain haemorrhages with a focus on commercialisation and increasing sales. The increase in sales has taken significantly longer than expected, heavily influenced by external factors such as Covid-19, which has been communicated to the market and resulted in the Company revising its long-term financial goals on several occasions since the listing.

 

The slow increase in sales combined with high costs for regulatory preparations, developing production capacity and supporting clinical evaluations has resulted in a lack of profitability, and since the listing, the Company has financed its operations through the public capital market through both rights issues and directed share issues corresponding to a total amount of SEK 893 million. The latest capital raise, conducted as a rights issue, was completed in August 2022 and provided the Company with gross proceeds of SEK 215 million. Participation from IRRAS’ shareholders, excluding the main shareholders Bacara Holdings and Lexington Holding Assets, amounted to approximately 40 per-cent.

 

In the year-end report for the fourth quarter of 2022, the Company reported that they did not have sufficient funds to cover the planned operations for the next 12 months and that the Board of IRRAS had initiated a process to evaluate possible financing alternatives. An extensive process to secure continued financing for the Company has been ongoing during the spring 2023. As part of this process, Legacy Capital among many others was contacted to probe their interest in investing in IRRAS. After extensive discussions regarding a capital raise in the spring of 2023, Legacy Capital announced in June 2023 that it instead intended to, together with certain large shareholders of the Company, explore the possibilities of a take-private transaction, which ultimately resulted in the current Offer. Otherwise, the evaluation conducted during the spring of 2023 to find a financing solution has not resulted in any alternatives.

 

On 29 June 2023, IRRAS announced a change in its commercial strategy to focus resources towards market opportunities in the United States, including the closure of its wholly owned commercial subsidiaries in Europe. In line with the updated financial plan that the Company’s management has produced, it is estimated that additional funding of at least SEK 250 million is required to reach cash flow break-even and that break-even is not expected to be reached before 2026. Regardless of the Committee’s view of IRRAS’ ability from a long-term perspective, shareholders must be aware of the fact that all assumptions of future growth and profitability are associated with uncertainty regarding a number of factors, which individually or in combination, may cause the actual growth or profitability to deviate from the forecasted growth or profitability. Particular emphasis should be placed on uncertainty in forecasting the market’s acceptance of the Company’s main product IRRAflow.

 

IRRAS’ share price has over time reflected the market’s assessment of the Company’s results and growth prospects, and the Committee sees the negative share price development that has followed over time as a consequence of the uncertainty that exists among market participants as a result of the lack of sales growth in relation to the Company’s communicated financial targets from time to time, as well as the Company’s future financial development and immediate financing needs.

 

The Offer of SEK 0.18 per share implies a premium compared to the share price before the publication of the Offer and the Offer is also above the target price published before the publication of the Offer by the equity research analyst who covers IRRAS.

 

The Independent Bid Committee’s recommendation

The Board has a strong belief in the Company’s long-term prospects but is estimated to need additional funding of at least SEK 250 million to reach a positive cash flow.

 

The Committee also notes that the Company is in immediate need of funding. An extensive evaluation of different financing alternatives was conducted during the spring of 2023, which did not result in any concrete alternatives other than the Offer. The Company is currently dependent on a short-term loan facility from Bacara Holdings, which is part of the Bid Consortium. Unless the short-term loan facility is extended, there is a high risk of the Company becoming insolvent.

 

Risks associated with the development of the Company’s sales growth and future profitability, as well as the difficulty for the market to estimate the Company’s opportunities for financing, are factors that were reflected in IRRAS’ share price prior to the publication of the Offer. The same elements are reflected in Grant Thornton’s fairness opinion that considers the Offer to be reasonable from a financial perspective for the shareholders of IRRAS.

 

Consequently, the Committee has decided to recommend the shareholders of IRRAS to accept the Offer.

 

Effects for IRRAS and its employees

According to the Takeover rules, the Board must report its opinion on the impact that the fulfilment of the Offer may have on IRRAS, particularly employment, and its opinion on IR Holding’s strategic plans for the company and the effects that these can be expected to have on employment and the places where IRRAS conducts its business. IR Holding states the following in the press release regarding the Offer:

 

”The Consortium and IR Holding support the strategy set by the management team of focusing on developing a strong U.S. presence. Given the Consortium members’ and IR Holding’s knowledge of IRRAS, the Consortium and IR Holding do not intend to implement any material changes to IRRAS’ employees and management team, nor to the existing organisation and locations of the operations, except to optimise current spending plans and better align this with IRRAS’ long term strategy which, among other things, may involve an evaluation of IRRAS’ operational presence in Europe and Sweden going forward. As a result of the depressed stock price and IRRAS being incorporated in Sweden, the talented U.S. based management team is unable to receive stock based compensation at levels commensurate with their market value. The Consortium and IR Holding regard the continuity of management as vital to the ongoing growth and development of IRRAS’ business, and accordingly plan to retain the management team on competitive and attractive terms.”

 

The Committee assumes that IR Holding’s description is correct and, in relevant respects, has no reason to have any other opinion.

 

__________

 

 

This statement by the independent committee is governed by and shall be interpreted in accordance with Swedish law. Disputes arising from this statement shall be settled exclusively by a Swedish court.

 

 

Stockholm the 23 of July 2023

 

The Independent Bid Committee for IRRAS AB (publ)

 

 

For additional information, please contact:

Anita Tollstadius, chairperson of the Independent Bid Committee for IRRAS AB, email anita@tollstadius.com

 

This information is information that IRRAS 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 above contact person, at 22:30 CET on 23 July 2023.

 

 IRRAS fairness opinion (eng)

The Annual General Meeting in IRRAS AB (publ) has been held on 30 June 2023 and in particular the following resolutions were made.

Adoption of the annual report and the auditor’s report, resolution regarding appropriation of the Company’s results and discharge of liability for the Board of Directors and CEO

The Annual General Meeting resolved to adopt the balance sheet, income statement, consolidated income statement and consolidated balance sheet for 2022. Furthermore, it was resolved that no dividend will be distributed and disposable profits as of 31 December 2022 are carried forward. The Annual General Meeting also resolved to discharge the board members and the CEO from liability for 2022.

Determination of fees to the Board of Directors and election of the Board of Directors and auditor

The Annual General Meeting resolved that the total Board remuneration shall amount to SEK 1,786,000 of which SEK 540,000 shall be paid to the Chairman of the Board of Directors and SEK 265,000 shall be paid to each of the other Board members elected by the General Meeting and who are not employees of the group. Board members who are residents in the United States shall be paid an additional amount of SEK 106,000. For work in the Audit Committee, the remuneration to the Chairman of the Committee amounts to SEK 130,000 and SEK 65,000 to the other member of the Committee. For work in the Remuneration Committee, the remuneration to the Chairman of the Committee amounts to SEK 100,000 and SEK 50,000 to the other member of the Committee. No extra compensation will be paid for participating in other committees. The Annual General Meeting also resolved that the remuneration to the auditor, as previous, shall be paid in accordance with approved invoices.

The Annual General Meeting resolved that the Board until the end of the next Annual General Meeting will consist of the members Kleanthis G. Xanthopoulos, Marios Fotiadis, Anita Tollstadius and Catherine Gilmore-Lawless. Eva Nilsagård has declined re-election. Marios Fotiadis was elected Chairman of the Board. KPMG AB was re-elected as the company’s auditor, with Stefan Lundberg as auditor in charge, until the end of the Annual General Meeting of 2024.

Resolution on guidelines for remuneration to senior executives and approval of remuneration Report

The Annual General Meeting approved the Board’s report on remunerations.

Resolution to implement a long-term incentive scheme

The Annual General Meeting resolved, in accordance with the Board’s proposal, to introduce a multiyear incentive program (“Program 9”) consisting of employee stock options to be transferred to employees and consultants within the IRRAS Group (the “Employee Stock Options”). The Employee Stock Options are granted free of charge to the participants no later than 36 months after the Annual General Meeting. The Employee Stock Options shall vest one-third annually from the grant date.

The Employee Stock Options, after being vested in accordance with the above, can be exercised for acquisition of ordinary shares from the third anniversary of the grant date up until the seventh anniversary of the grant date.

Each Employee Stock Option granted entitles the holder to acquire one ordinary share in the Company at a strike price corresponding to 110 percent of the average of the volume-weighted share price of the Company’s share measured over ten trading days prior to the grant date.

The principle for allocation is that each participant is granted a yearly allocation as a percentage of the base salary. Allocation is limited to not more than 500 per cent of the yearly base salary for the CEO, not more than 200 per cent of the yearly base salary to members of global senior management and not more than 100 per cent of the yearly base salary for other employees and consultants.

The number of Employee Stock Options under the Programs, including any options outstanding according to previous incentive programs, shall be limited in such way that the options at full dilution at any given time shall not exceed a dilution of 10 per cent of the total number of shares in the Company calculated on a fully diluted basis.

The Annual General Meeting resolved to authorize the Board to resolve on a directed issue and repurchase of a maximum of 88,312,600 class C shares in order to secure the Company’s commitments according to all of the Company’s outstanding incentive programs. The Annual General Meeting also resolved on the transfer of ordinary shares to the participants within the framework of Program 9.

Resolution on a reverse share split

The Annual General Meeting resolved on a reverse share split 1:100, whereby one hundred (100) existing shares becoming one (1) share. The resolution by the Annual General Meeting regarding the reverse share split is conditional upon the registration of the proposed amendments of the Articles of Association below with the Swedish Companies Registration Office. The resolution to implement a reverse share split shall furthermore be conditional upon the acceptance of Bacara Holdings Limited, one of the largest shareholders of the Company, to transfer shares for no consideration to shareholders of the Company whose number of shares is not evenly divided by 100. The Board of Directors proposes that the Board of Directors shall be authorised to determine the record date for the reverse share split.

Resolution on an amendment of the articles of association

The Annual General Meeting resolved to amend the articles of association whereby the share capital shall amount to not less than SEK 20,000,000 kroner and not more than SEK 80,000,000 and the number of shares shall be not less than 7,000,000 and not more than 28,000,000. The resolution is conditional on the Annual General Meeting’s resolution on the reverse share split above.

Resolution in respect of authorisation for the Board of Directors to resolve to issue shares, warrants and/or convertible bonds

The Annual General Meeting resolved to authorise the Board of Director’s to, on one or several occasions during the period until the next Annual General Meeting, with or without deviation from the shareholders’ preferential rights, resolve on the issue of new shares, warrants and/or convertibles.                                                             

Complete proposals regarding the Annual General Meeting’s resolutions are available on IRRAS AB:s website www.irras.com. 

 Release