Permascand’s application for delisting has been approved

As previously announced, Permascand Top Holding AB (”Permascand” or the ”Company”) has applied for delisting of the Company’s shares from Nasdaq First North Premier Growth Market.

Nasdaq Stockholm has today approved the application for delisting and resolved that the last day of trading in Permascand’s shares on Nasdaq First North Premier Growth Market will be 29 February 2024.

Q4: An eventful year focusing on the future

Fourth quarter 2023 (Q4 2022)

  • Order intake amounted to SEK 117 million (107), up 9 per cent compared to the same period in the previous year
  • Sales decreased 36 per cent to SEK 94 million (147)
  • Operating profit totalled SEK -9 million (18)
  • Adjusted operating profit totalled SEK -2 million (14)
  • Profit after tax totalled SEK -9 million (15)
  • Earnings per share amounted to SEK -0.09 (0.25)
  • Cash flow from operating activities totalled SEK 27 million (-5)

Jan – Dec 2023 (Jan – Dec 2022)

  • Order intake increased year-on-year by 3 per cent to SEK 456 million (445)
  • Sales decreased 21 per cent to SEK 451 million (569)
  • Operating profit totalled SEK 23 million (105), corresponding to 5 per cent (18) of revenue
  • Adjusted operating profit totalled SEK 29 million (95)
  • Profit after tax totalled SEK 13 million (81)
  • Earnings per share amounted to SEK 0.22 (1.37)
  • Cash flow from operating activities totalled SEK -7 million (113)

Key events in the fourth quarter of 2023

  • On 19 December, Altor PC presented a public cash offer to the shareholders of Permascand. The Board of Directors of Permascand announced its recommendation to shareholders to accept the offer.

CEO comment

In 2023, we achieved strong growth in Electrification & Renewables and Industrial Solutions, while Water Treatment slowed significantly. During the year we also boosted our pipeline of hydrogen projects, and are well positioned for large-scale manufacture of components for the production of green hydrogen on a commercial scale.

Order intake for the fourth quarter totalled SEK 117 million and is mainly attributable to aftermarket services in Industrial Solutions. This is an increase of 9 per cent year-on-year. After a good start to the period, we experienced a slight slowdown in order intake towards the end of the quarter, mainly in Electrification & Renewables due to the postponement of major investment decisions for hydrogen projects.

Sales for the quarter totalled SEK 94 million. This is a decrease of 36 per cent year-on-year. The lower sales are attributable to reduced sales in Water Treatment, as well as the weak order intake at the beginning of the year.

Gross profit for the quarter totalled SEK 29 million, corresponding to a gross margin of 31 per cent. The gross margin in the quarter is in line with the previous year and is expected to increase as we achieve higher sales volumes and thus better capacity utilisation.

Our development projects in electrode development and manufacturing technology to strengthen Permascand for the future have proceeded according to plan. Our innovation centre – to be inaugurated in June – will play a key role in our ability to continue and also accelerate our efforts in technology development. These developments are necessary to produce and deliver products of even greater efficiency on a large scale.

Electrification & Renewables
Sales in Electrification & Renewables were SEK 25 million in the quarter, which is in line with the corresponding period last year. Although we received a commercial hydrogen order totalling SEK 17 million and a development order amounting to SEK 3 million during the quarter, several hydrogen customers postponed their investment decisions, with increased capital costs, delayed infrastructure and unclear investment support and subsidies referred to as the most compelling reasons. So while we are seeing the number of hydrogen projects announced globally continuing to grow, the timeline for their realisation is moving forward. We are seeing a clear trend of increasing demand for the highly efficient electrodes for advanced alkaline electrolysis that Permascand supplies. These high-performance, long-life electrodes are a necessity for our customers in terms of ensuring that they are able to remain within their budgets for investment and operations. We are well positioned for when the market takes off in this area. Within the segment, we are witnessing greater interest in electrowinning and electricity transmission. These areas are also central to the green transition.

Industrial Solutions
Sales in Industrial Solutions totalled SEK 67 million, which meant sales in this segment were also in line with the corresponding period last year. We are seeing our profitable aftermarket business continue to grow steadily, partly due to our success in increasing our market share in the North American market. In parallel, new projects for new installations, known as greenfield projects, are being negotiated.

Water Treatment
The significant decrease in order intake and revenue in Water Treatment is due to a decline in the global market linked to the installation cycle and customer stockpiling. With the exception of smaller supplementary orders, we are delivering existing orders, with the order book not expected to grow until after 2026, when the aftermarket business in the segment is expected to achieve more significant volumes.

Outlook
The order book amounted to SEK 373 million at the end of the year, of which it is planned that about 80 per cent will be delivered in 2024, while the second half of the year is expected to be stronger, with increasing sales. In terms of order intake, 2024 has started as cautiously as 2023 ended. Due to the postponement of hydrogen projects around the world, we do not expect to receive any commercial-scale hydrogen orders until the second half of 2024 at the earliest. These are likely to be small orders initially.

In terms of the next few years, we are well equipped with good production capacity for strong growth when the production volumes arrive. In line with the global green transition, our long-term ambition is to expand with our customers and follow their plans for establishment around the world so we can provide them with high-efficiency electrodes on a large scale for green hydrogen production. This will require us to meet customer needs for local manufacturing and support, as well as subsequent aftermarket services, no matter where they are located in the world.

In December, Permascand’s Board of Directors issued its recommendation to shareholders to accept Altor’s public cash offer. Altor announced on 5 February that the offer had been accepted by shareholders representing approximately 95 per cent of the total number of outstanding shares and votes in Permascand. The management team remains focused on developing the business and strengthening the company to ensure long-term, sustainable and profitable growth, as well as playing an important role in the green energy transition.

Peter Lundström, CEO Permascand

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

Altor PC initiates compulsory redemption and Permascand applies for delisting

Altor PC AB (“Altor PC”), a company controlled by Altor Fund VI (No. 1) AB and Altor Fund VI (No. 2) AB[1], declared the public takeover of Permascand Top Holding AB (“Permascand” or the “Company”) unconditional on 5 February 2024. Altor PC controls more than 90 percent of the shares in Permascand and has initiated compulsory redemption proceedings in respect of the remaining shares in Permascand. Against this background, and at the request of Altor PC, the Board of Directors of Permascand has resolved to apply for delisting of the Company’s shares from Nasdaq First North Premier Growth Market.

On 19 December 2023, Altor PC announced a public cash offer to the shareholders of Permascand to tender all their shares in Permascand to Altor PC for a consideration of SEK 17 per share (the “Offer”). On 5 February 2024, Altor PC declared the Offer unconditional and that the Offer will be completed. Following the Offer, Altor PC controls approximately 95 percent of the shares and votes in the Company. Altor PC has extended the acceptance period to 16 February 2024 to provide remaining shareholders an opportunity to accept the Offer.

Against the above background, Altor PC has initiated compulsory redemption proceedings in accordance with the Swedish Companies Act in order to acquire all remaining shares in Permascand. As a result of this, the Board of Directors of Permascand will publish an announcement in the Swedish Official Gazette (Sw. Post- och Inrikes Tidningar) and Dagens industri and distribute letters to relevant shareholders, in accordance with Chapter 22 Sections 7 and 28 of the Swedish Companies Act, with a request to shareholders to notify Permascand in writing if they wish to represent themselves and state their arbitrator.

If all shareholders entered in the share register have not appointed a joint arbitrator within the time specified in the announcement, the Board of Directors of Permascand will request the Swedish Companies Registration Office to appoint a trustee with the task of appointing a joint arbitrator for the minority shareholders and to protect the rights of the absent shareholders in the dispute. The complete announcement is expected to be published in the Swedish Official Gazette and Dagens industri on 20 February 2024.

In the light of the above, and at the request of Altor PC, the Board of Directors of Permascand has resolved to apply for delisting of the Company’s shares from Nasdaq First North Premier Growth Market. The last day of trading in Permascand’s shares on Nasdaq First North Premier Growth Market will be announced as soon as Permascand has received confirmation thereof from Nasdaq.

[1] Managed by Altor Fund Manager AB.

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.