Statement from the Board of Directors of Permascand Top Holding AB in relation to Altor PC AB[1]’s public offer

The Board of Directors of Permascand Top Holding AB (“Permascand” or the “Company”) has unanimously resolved to recommend the shareholders of Permascand to accept Altor PC AB’s public offer.

This statement is made by the Board of Directors[2] of Permascand pursuant to section II.19 of the Takeover rules for certain trading platforms (the “Takeover rules”).

Background
Altor PC AB (“Altor PC”), a company controlled by Altor Fund VI (No. 1) AB and Altor Fund VI (No. 2) AB (“Altor Fund VI”)[3], has today, on 19 December 2023, announced a public cash offer to the shareholders of Permascand to tender all their shares in the Company to Altor PC (the “Offer”). Altor PC offers a cash consideration of SEK 17 per share in Permascand, corresponding to a value of all shares in the Company of SEK 1,008 million[4].

The Offer represents a premium of:

• 58 percent compared to the closing price of SEK 10.75 on Nasdaq First North Premier Growth Market on 18 December 2023, which was the last trading day prior to the announcement of the Offer.

• 94 percent compared to the volume-weighted average price of SEK 8.78 on Nasdaq First North Premier Growth Market during the last 90 trading days prior to the announcement of the Offer.

The acceptance period for the Offer is expected to commence on or around 19 December 2023 and end on or around 19 January 2024, subject to any extensions. Completion of the Offer is subject to customary conditions, inter alia, that Altor PC becomes the owner of more than 90 percent of the total number of shares in the Company. Altor PC reserves the right to waive, in whole or in part, these and other conditions for completion.

The Board of Directors has, upon written request from Altor PC, allowed Altor to, on behalf of Altor PC, conduct a limited confirmatory due diligence review of the Company in connection with the preparations for the Offer and Altor has in connection therewith also met with the Company’s management. Altor has not received any inside information from Permascand in connection with its due diligence review.

A number of shareholders in the Company[5], including the Board member Ingar Jensen through Ulven Invest AB, with a total holding of approximately 68 percent of the shares and votes in the Company, have entered into irrevocable undertakings to accept the Offer. Given that Ingar Jensen has undertaken to accept the Offer, he has not participated, and will not participate, in the Board of Directors’ handling of or resolutions regarding matters related to the Offer.

For further information regarding the Offer, please refer to the press release published by Altor PC today and the offer document regarding the Offer that will be published prior to the commencement of the acceptance period.

The Board of Directors has retained Carnegie Investment Bank AB (publ) as financial advisor and Törngren Magnell & Partners Advokatfirma KB as legal advisor in connection with the Offer.

As part of the Board of Directors’ evaluation of the Offer, the Board of Directors has also retained Grant Thornton Sweden AB (”Grant Thornton”) to issue a fairness opinion regarding the Offer. The fairness opinion issued by Grant Thornton, which is attached to this press release, states that Grant Thornton considers the Offer to be fair from a financial point of view, based on the assumptions and considerations set forth in the opinion. For the fairness opinion, Grant Thornton will receive a fixed fee irrespective of the size of the offer consideration, the acceptance level of the Offer, and whether or not the Offer is completed.

The Board of Directors’ evaluation of the Offer

The Board of Directors’ opinion of the Offer is based on a number of factors that the Board of Directors has considered relevant in relation to the evaluation of the Offer. These factors include, but are not limited to, the Company’s current financial position, prevailing market conditions, the expected future development of the Company and related opportunities and risks.

Further, the Board of Directors has evaluated the Offer using methods generally used when evaluating public offers for listed companies, including Permascand’s valuation relative to comparable listed companies and comparable transactions, offer premiums in previous public offers, equity analysts’ and the stock market’s expectations regarding the development of Permascand’s share price as well as Permascand’s long-term value based on expected future cash flows. In evaluating the Offer, the Board of Directors has considered the fairness opinion issued by Grant Thornton, according to which the Offer is fair to Permascand’s shareholders from a financial point of view, based on the assumptions and considerations set forth in the opinion.

In view of the above, the Board of Directors considers the Offer to be attractive to the shareholders. Against this background, the Board of Directors unanimously recommends the shareholders of Permascand to accept the Offer.

Impact on Permascand and its organisation

Pursuant to the Takeover rules, the Board of Directors shall, based on the content of Altor PC’s announcement of the Offer, present its opinion regarding the impact that the implementation of the Offer may have on the Company, particularly in terms of employment, and its opinion regarding Altor PC’s strategic plans for Permascand and the effects it is anticipated that such plans will have on employment and on the locations where the Company conducts its operations. In the announcement of the Offer, Altor PC states the following:

Altor has followed Permascand closely over the last year and is highly impressed by the development of Permascand, and the work done by the management team and employees so far. Altor see Permascand as a true pioneer within electrochemistry and believe the Company’s long-term track record, research and development capabilities and experience within electrode manufacturing is unique.

Given the significant capex investments required to increase manufacturing capacity, particularly in relation to the renewables end-market, Altor strongly believes that the Company should be operated in a private setting. Altor shares the Company’s and management’s vision in developing Permascand to become a global leader in electrode manufacturing and supply within the fast-growing green hydrogen industry, and identify potential in several areas, including:

• further strengthening Permascand’s position in Europe and globally as a leading electrode manufacturer;

• leveraging Permascand’s advantageous market position to capture a significant market share in green hydrogen as a supplier of high efficiency electrodes within the Alkaline Water Electrolysis segment;

• expanding the existing capacity footprint to increase Permascand’s global market share within several end-markets;

• reinforcing the research and development department to sustain and bolster Permascand’s long-term competitive edge; and

• allocating investments towards employer branding initiatives and expand talent pool sourcing to attract top talent on a global scale.

Based on these intentions and Altor’s characteristics as an investor, Altor PC believe that Altor would be a suitable partner for Permascand for the next phase of growth.

Altor places great value on Permascand’s organisation and expects that the Offer will support growth and create long-term positive effects for employees, customers and other stakeholders impacted by the operations of Permascand. Altor PC has not made any resolutions that are expected to cause the Offer to have an impact on Permascand’s organisation, management teams or employees, including their terms of employment, or on the locations of Permascand’s operations.

The Board of Directors assumes that this is a correct description and has no reason to take a different view in relevant aspects.

This statement shall in all respects be governed by and construed in accordance with substantive Swedish law. Disputes arising from this statement shall be settled exclusively by Swedish courts.

Ljungaverk, 19 December 2023

Permascand Top Holding AB

The Board of Directors

_____

[1] Under name change from Goldcup 34285 AB.
[2] The Board member Ingar Jensen has, through Ulven Invest AB, undertaken towards Altor PC to accept the Offer. Taking into account the contractual relationship between Altor PC and Ulven Invest AB and the Takeover rules, Ingar Jensen has not participated, and will not participate, in the Board of Directors’ handling of or resolutions regarding matters related to the Offer.
[3] Managed by Altor Fund Manager AB (together with Altor Fund VI, “Altor”).
[4] Based on a total number of shares of 59,313,529.
[5] Shareholders in the Company refer to Norvestor VI L.P., Ingar Jensen through Ulven Invest AB, Fredrik Herlitz through 5J Holding AB, and Peter Lundström.

Permascand receives order for advanced electrodes for hydrogen production from a new customer

Permascand has received an order for high-efficiency electrodes for advanced alkaline electrolysis from a new European customer within the hydrogen business. The customer has placed a prototype order of SEK 3.3 million, with the intention of it being the first step of a long-term collaboration. The order will be included as order intake in the fourth quarter of 2023, within the business segment Electrification & Renewables. Delivery of the order is planned for the second quarter of 2024.

The customer offers innovative systems for the production of green hydrogen to accelerate the shift to a zero-emission economy. The order is a step forward toward their course to a commercial cost-effective, versatile, and scalable offer.

"We are happy to welcome a new and innovative customer within the hydrogen segment, ready to take an important step closer towards a commercial-scale production of Green Hydrogen. Green hydrogen can be produced on an affordable industrial scale with our world-leading technologies for highly efficient electrolysis. Permascand’s alkaline water electrodes are ready to meet the rising demand of the green hydrogen market. We are strategically well positioned with our advanced electrodes for water electrolysis technology”, says Peter Lundström, CEO of Permascand.

Q3 2023: Stronger order intake and improved gross margin

Third quarter 2023 (Q3 2022)

  • Order intake increased year-on-year to SEK 154 million (143)
  • Sales decreased 35 per cent to SEK 78 million (120)
  • Operating profit totalled SEK 7 million (11), corresponding to 10 per cent (9) of revenue
  • Adjusted operating profit totalled SEK 5 million (6)
  • Profit after tax totalled SEK 4 million (8)
  • Earnings per share amounted to SEK 0.07 (0.13)
  • Cash flow from operating activities totalled SEK 43 million (39)

January–September 2023 (January–September 2022)

  • Order intake totalled SEK 340 million (338) compared with the year-earlier period
  • Sales decreased 16 per cent to SEK 357 million (422)
  • Operating profit totalled SEK 33 million (87), corresponding to 10 per cent (13) of revenue
  • Adjusted operating profit totalled SEK 31 million (82)
  • Profit after tax totalled SEK 23 million (66)
  • Earnings per share amounted to SEK 0.38 (1.12)
  • Cash flow from operating activities totalled SEK -34 million (119)

Events during the third quarter of 2023

  • On 18 September, Permascand announced that it had received two orders from one of the world’s largest commodity trading companies regarding aftermarket services in electrowinning.
  • On 12 September it was announced that Permascand had joined Hydrogen Europe, a leading organisation in the world of hydrogen. The membership will enhance Permascand’s presence in the European green hydrogen ecosystem.

Significant events after the end of the reporting period

  • On 25 October, Permascand announced that the company had signed a letter of intent with a leading green hydrogen technology provider concerning high-performance electrodes for advanced alkaline electrolysis.
  • On 2 November, Permascand announced a SEK 17 million order for advanced electrodes for hydrogen production.

CEO comment

The third quarter of the year was characterised by a stronger order intake and progress in our Electrification & Renewables segment, which is continuing its robust growth and where we have advanced our positions in our hydrogen gas offering.

Order intake for the quarter totalled SEK 154 million, mainly consisting of two orders in Electrification & Renewables that we announced in September. These orders pertain to aftermarket services in electrowinning and confirm that our customer focus is leading to strong, long-term customer relationships. The orders will be delivered at regular intervals during 2024.

Sales for the third quarter totalled SEK 78 million. This is a decrease of 35 per cent year-on-year, which is attributable primarily to the sharp decrease in sales in Water Treatment in line with our forecasts. Sales were driven by deliveries in both Electrification & Renewables and Industrial Solutions, both of which grew compared with the year-earlier period.

Gross profit for the quarter totalled SEK 26 million, corresponding to a gross margin of 33 per cent (22). The main reason for the stronger gross margin is the product mix for the quarter in Industrial Solutions’ aftermarket business. We can also state that we have a positive cash flow of SEK 43 million from operating activities during the quarter, as a result of lower trade receivables and advance payments from customers in conjunction with new orders.

To stay on the leading edge and strengthen our offering, Permascand will continue to invest in research and development. Developing the market’s most efficient, high-quality products with energy efficiency, extended life cycle and stability as our areas of focus. These factors are increasingly in demand, are central to Permascand’s core technology offering as well as being necessary components in being able to reduce the costs of producing green hydrogen.

Electrification & Renewables
In Electrification & Renewables, sales increased 77 per cent to SEK 23 million. Sales comprise mainly of development projects with the long-term ambition to start serial production resulting in improved margins. We leave the quarter with a strong order book while the level of activity remains intensive in all areas: hydrogen, electrowinning and electricity transfer. In green hydrogen, we recently signed a letter of intent with a leading supplier of green hydrogen technology, with Permascand’s product and production offering being central to achieving future levels of ambition. After the end of the quarter, we won a commercial order of SEK 18 million for hydrogen from an unnamed customer. It pertains to high-efficiency electrodes for advanced alkali electrolysis of water, with planned delivery in 2024. We are seeing increased volumes of electrodes as an initial sign that hydrogen projects are nearing the commercialisation phase.

Industrial Solutions
Industrial Solutions accounted for the majority of sales, which increased 20 per cent to SEK 49 million. In the quarter, sales consisted mainly of aftermarket services, after having also delivered orders for major greenfield projects in the first half of the year. The gross margin performed positively because of this larger share of aftermarket business. The order intake varies between quarters, just as sales do. After the end of the quarter, a large aftermarket order of SEK 52 million was placed for delivery in 2024.

Water Treatment
The sharp decrease in the levels of order intake and revenue in Water Treatment was due to a decline in the global market linked to the installation cycle and stockpiling among customers. We are now delivering from our existing order book, which is not expected to grow substantially until after 2026 when the aftermarket business in the segment is estimated to achieve meaningful volumes.

Outlook
As regards order intake, the fourth quarter has gotten off to a good start with a commercial order for hydrogen as well as aftermarket business in Industrial Solutions, which strengthens Permascand’s order book for 2024 and beyond.

In line with previous assessments, sales for full-year 2023 are expected to be lower than in the preceding year as a result of the decrease in sales in Water Treatment. Over the short term, sales performance will be adversely impacted by the downturn within Water Treatment, but over time it is expected to be fully offset by Industrial Solutions and Electrification & Renewables.

We are experiencing a continued high level of activity and advanced dialogues with many of our customers, which means we see a favorable outlook for the order intake in the months ahead – including in the form of larger commercial orders in hydrogen, where we are pursuing far-reaching discussions with several operators, as well as in the form of aftermarket services in Industrial Solutions.

We enter the final quarter of the year with yet another profitable quarter of positive cash flows behind us. With a strengthened order book and commercial advances in hydrogen while Industrial Solutions is continuing its stable growth over time, we look forward with confidence to the end of the year and the quarters immediately following.

Peter Lundström, CEO Permascand

Report presentation
CEO Peter Lundström and CFO Linda Ekman will present the report in a conference call today at 10:30 CET. The presentation will be held in English and will conclude with a Q&A session.

Webcast
https://ir.financialhearings.com/permascand-top-holding-q3-report-2023

Registration
To participate via teleconference, please register via the link below. After registration, you will be provided with telephone numbers and a conference ID to access the conference. You can ask questions verbally via the telephone conference.

https://conference.financialhearings.com/teleconference/?id=5003308

After the presentation, a recording of the webcast will be available on the webcast link and on the company’s website www.permascand.com

Link to report
The report is attached to this announcement and can be found at: https://permascand.com/investors/financial-reports/

Permascand receives order of SEK 17 million for advanced electrodes for hydrogen production

Permascand has received an order from a global leader in hydrogen technology for high-efficiency electrodes for advanced alkaline electrolysis. The order value amounts to approximately SEK 17 million and will be included as order intake in the fourth quarter of 2023, within the business segment Electrification & Renewables. Delivery of the order is expected to be evenly distributed over the first three quarters of 2024.

The customer has been a recurring partner for over 20 years and focuses on clean energy technology with a broad spectrum of hydrogen technologies to support the shift to zero emissions.

"I am delighted that we continue to grow our business in alkaline water electrolysis – where our high-efficiency electrodes contribute to a more efficient hydrogen production. Our extensive experience in the field, together with our scalable production capacity, indicates that we are well placed to achieve our ambition to become one of the leading suppliers of high-efficiency electrodes for production of green hydrogen," says Peter Lundström, CEO of Permascand.

Invitation to presentation of Permascand’s Q3 2023 interim report

Permascand will publish its Q3 2023 interim report on 9 November 2023 at 07:45 CET. In connection with this, Permascand invites investors, analysts and media to a conference call and webcast on the same day at 10:30 CET.

The presentation will be held by CEO Peter Lundström and CFO Linda Ekman in English and will conclude with a Q&A session. Questions can be asked on the conference call or in written form through the webcast.

Date and time
9 November at 10:30 CET

Webcast
https://ir.financialhearings.com/permascand-top-holding-q3-report-2023

Registration
To participate via teleconference, please register via the link below. After registration, you will be provided with telephone numbers and a conference ID to access the conference. You can ask questions verbally via the telephone conference.

https://conference.financialhearings.com/teleconference/?id=5003308

After the presentation, a recording of the webcast will be available on the webcast link and on the company’s website www.permascand.com