Borgestad ASA — Capital/Financing Update 2023

Nov 6, 2023

Borgestad ASA: Contemplated private placement

Borgestad ASA: Contemplated private placement

NOT FOR DISTRIBUTION, PUBLICATION OR RELEASE, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, HONG KONG, SOUTH AFRICA OR THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH THE DISTRIBUTION, PUBLICATION OR RELEASE WOULD BE UNLAWFUL. THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER OF ANY OF THE SECURITIES DESCRIBED HEREIN.

Borgestad, 6 November 2023: Borgestad ASA (the "Company") hereby announces a contemplated private placement of new shares in the Company (the "Offer Shares") to raise gross proceeds of up to NOK 250 million (the "Private Placement"). The subscription price per Offer Share (the "Subscription Price"), and the number of Offer Shares to be issued, in the Private Placement will be determined by the Company's board of directors (the "Board") on the basis of an accelerated bookbuilding process conducted by the Managers (as defined below).

The Company has engaged Arctic Securities AS and SpareBank 1 Markets AS as managers for the Private Placement (the "Managers").

The net proceeds from the Private Placement will be used (i) to repay the outstanding debt under the Company's bond loan (BOR04) with a principal amount of approximately NOK 100 million (the "Bond Loan"), by carrying out a full redemption of the issued bonds at a price equal to 100% of the nominal value, (ii) to repay EUR 10 million (approximately NOK 120 million) of the group's investment loan with Pekao S.A. Bank with a principal amount of approximately EUR 40.4 million (the "Agora Bytom Loan"), in connection with a contemplated refinancing of such loan, and (iii) for general corporate purposes.

The Private Placement forms part of a contemplated refinancing of the Borgestad group as further described in the Company's quarterly report for the third quarter of 2023 published on 6 November 2023 and in the attached company presentation. Another important element of the contemplated refinancing is the conditional sale-leaseback transaction for the two properties in Bjuv municipality in Sweden, where the group's factory and other production facilities for refractory products are located, as announced through the Company's stock exchange announcement dated 27 October 2023 (the "Sale-leaseback Transaction").

The Company has received significant interest from both existing shareholders and new investors to subscribe for Offer Shares in the Private Placement. The following existing shareholders and primary insiders have, subject to certain conditions, committed to participate in the Private Placement as follows, at a Subscription Price at market if not otherwise specified:

- NOK 75 million from Kontrari AS (represented on the Board by Jan Erik Sivertsen).

- NOK 85 million from Ses AS (represented on the Board by Helene Steen).

- NOK 15 million from Gross Management AS (represented by the chairperson of the Board, Glen Ole Rødland) at a Subscription Price with a maximum limit of NOK 0.15 per Offer Share.

- NOK 10.6 million from Dione AS and Ploot Invest AS (represented on the Board by Jacob Møller).

- NOK 1.2 million from CEO Pål Feen Larsen (his pro rata portion of the Private Placement).

- The NOK equivalent of EUR 100,000 from Jawendel AS (represented on the Board by Wenche Kjølås).

- NOK 0.25 million from Frode Martinussen, Group CEO of Höganäs Borgestad.

The bookbuilding period in the Private Placement (the "Bookbuilding Period") commences today, 6 November 2023, at 16:30 hours (CET) and closes on 7 November 2023 at 08:00 (CET). The Managers and the Company may, however, at any time resolve to close or extend the Bookbuilding Period at their sole discretion and on short or no notice. If the Bookbuilding Period is shortened or extended, any other dates referred to herein may be amended accordingly.

The Private Placement will be directed towards Norwegian and international investors, in each case subject to and in compliance with applicable exemptions from relevant prospectus, filing and other registration requirements. The minimum application and allocation amount in the Private Placement has been set to the NOK equivalent of EUR 100,000. The Company may, however, at its sole discretion, allocate an amount below EUR 100,000 to the extent applicable exemptions from the prospectus requirement pursuant to applicable regulations, including Regulation (EU) 2017/1129 (the Prospectus Regulation) and ancillary regulations, are available.

Conditions for completion

Completion of the Private Placement is subject to approval by the Company's extraordinary general meeting expected to take place on or around 28 November 2023 (the "EGM"), in addition to the registration of the share capital increase pertaining to the Private Placement in the Norwegian Register of Business Enterprises, and issuance of the Offer Shares in the VPS.

Pursuant to the Norwegian Public Limited Companies Act, the Subscription Price cannot be lower than the nominal value of the Company's shares. If the Subscription Price is set below NOK 1 (which is equivalent to the current nominal value), completion of the Private Placement will further be made conditional upon the completion of a share capital reduction where the nominal value per share is reduced from NOK 1 to an amount equal to the Subscription Price (the "Share Capital Reduction"). The Share Capital Reduction will not require creditor notification.

Given the importance of the Sale-leaseback Transaction for the contemplated refinancing of the Borgestad group, completion of the Private Placement will also be made conditional upon approval of the Sale-leaseback Transaction from the Municipal Council of Bjuv. Such approval is a condition for completion of the Sale-leaseback Transaction. In addition, completion of the Sale-leaseback Transaction is conditional upon the approval from the Municipal Council becoming final and binding, which will occur if the approval is not appealed within a three-week appeal period. The Private Placement is, however, only made conditional upon the initial approval by the Municipal Council (and not upon such approval having become final and binding). Consequently, there is a risk that the Private Placement will be completed without the Sale-leaseback Transaction being completed (and without the Borgestad group receiving the purchase price from this transaction).

Completion of the Private Placement will lastly be conditional upon the prefunding agreement between the Company and the Managers described below not having been terminated, and approval by the EGM of a subsequent repair offering in the Company as described below (the "Subsequent Offering").

The Private Placement will not be completed if the above conditions (the "Conditions") are not fulfilled by 15 December 2023, and the Board may also decide not to complete the Private Placement for any other reason. Neither the Company nor the Managers will be liable for any losses incurred by applicants if the Private Placement is cancelled, irrespective of the reason for such cancellation.

Investors who are allocated Offer Shares in the Private Placement undertake to vote in favour of the Share Capital Decrease (if relevant), the Private Placement (including the Board's proposed allocation) and the Subsequent Offering at the EGM.

Although not a condition for completion of the Private Placement, the Board will, in connection with, and subject to completion of, the Private Placement, also propose to redeem the Company's 8,010 treasury shares.

Allocation, payment and delivery of Offer Shares

Conditional allocation of the Offer Shares will be determined by the Board, in consultation with the Managers, following the expiry of the Bookbuilding Period. Information about conditional allocation will be sent from the Managers to the subscribers who have received conditional allocation, on or around 7 November 2023, subject to any shortening or extension of the Bookbuilding Period. Final allocation will be resolved by the EGM, and information on final allocation will be sent from the Managers to the subscribers who have received conditional allocation, on or around 29 November 2023, subject to any shortening or extension of the Bookbuilding Period and subject to the fulfilment of the Conditions.

Settlement of the Offer Shares is expected to take place on a delivery versus payment basis ("DvP") on or around 30 November 2023, provided that the Conditions are fulfilled. The DvP settlement will be facilitated through a prefunding agreement expected to be entered into between the Company and the Managers. The Offer Shares cannot be traded on the Oslo Stock Exchange until the share capital increase pertaining to the Private Placement has been registered in the Norwegian Register of Business Enterprises and the Prospectus (as defined below) has been published.

The Company will publish a prospectus for the listing of the Offer Shares, as well as the offer and listing of new shares in connection with the Subsequent Offering (the "Prospectus"), on or around 4 December 2023. If the Offer Shares are issued before the Prospectus is published, they will be delivered to investors under a separate ISIN and will only be tradable on the Oslo Stock Exchange after the Prospectus has been published.

Assessment of the transaction structure and equal treatment

The Board has carefully considered the Private Placement in light of the equal treatment rules under the Norwegian Public Limited Companies Act, the Norwegian Securities Trading Act, the Oslo Stock Exchange's Rule Book II and the Oslo Stock Exchange's guidelines for equal treatment, and is of the opinion that the proposed Private Placement is in compliance with these requirements.

The Bond Loan matures on 8 January 2024, and the Board considers it necessary to complete a capital raise as swiftly as possible to ensure that the Company can repay the Bond Loan at or prior to maturity. The Company's financial position will be very serious if such repayment cannot be made.

It is further noted that the Agora Bytom Loan matures on 30 June 2024, but that the Company has entered into a term sheet with Pekao S.A. Bank, which, among other things, entails that the maturity date for the loan will be postponed until 31 December 2028, provided that the Company repays approximately NOK 120 million of the loan, that a final amendment agreement is entered into and that certain additional conditions for completion are fulfilled. Therefore, it is also desirable to carry out the Private Placement to secure capital for such repayment and thereby an extension of the Agora Bytom Loan.

The need for prompt clarification of whether it will be possible to raise sufficient equity to repay the Bond Loan at maturity and carry out the partial repayment of the Agora Bytom Loan makes it, in the Board's opinion, necessary to conduct the capital raise as a private placement rather than a rights issue. A rights issue would take substantially longer to complete, and this could significantly impair the Company's options in the period up to the maturity of the Bond Loan.

Subject to the successful completion of the Private Placement, the Board will propose to the EGM that a Subsequent Offering is carried out, directed at shareholders in the Company as of 6 November 2023 (as registered in the VPS on 8 November 2023) who (i) were not contacted during the "wall-crossing phase" of the Private Placement, (ii) were not allocated Offer Shares in the Private Placement, and (iii) are not domiciled in a jurisdiction where such an offer would be unlawful or, for jurisdictions other than Norway, require any prospectus, filing, registration or similar action. Such shareholders will be granted non-transferable subscription rights to subscribe for and be allocated new shares in the Subsequent Offering. The subscription price in the Subsequent Offering will be equal to the Subscription Price in the Private Placement. Oversubscription will be permitted, but subscription without subscription rights will not be permitted. The net proceeds from the Subsequent Offering will be used for general corporate purposes.

Against this background, and based on an assessment of the current conditions in the stock markets, the Board has considered the Private Placement to be in the common interest of the Company and its shareholders. Due to the structure of the Private Placement, the shareholders' preferential rights will be waived.

For further information, please contact:

Pål Feen Larsen, CEO Borgestad ASA, +47 488 45 333

This information is considered to be inside information pursuant to the EU Market Abuse Regulation and is subject to the disclosure requirements pursuant to section 5-12 the Norwegian Securities Trading Act.

This stock exchange announcement was published by Pål Feen Larsen, CEO in Borgestad ASA on 6 November 2023 at 16:32 CET on behalf of the Company.

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About Borgestad| www.borgestad.no

Borgestad ASA (OSE:BOR) is an investment company focused on real estate and industry. The key investments include Agora Bytom shopping center and the leading refractory manufacturer Höganäs Borgestad.

About Höganäs Borgestad | https://hoganasborgestad.com/

Höganäs Borgestad develops, manufactures and delivers refractory products, installations and turnkey solutions that enhance the productivity and competitiveness of industrial customers. The aim is to contribute to the customers' profitability by providing high-value refractory solutions to their challenges. Today, the company is a leading supplier in the refractory market of the Nordic countries and has a global presence in a number of selected application areas.

IMPORTANT NOTICE:

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy, fairness or completeness. Neither Arctic Securities AS nor SpareBank 1 Markets AS (the "Managers") or any of their affiliates or any of their respective directors, officers, employees, advisors or agents accepts any responsibility or liability whatsoever for, or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or any other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available, or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith. This announcement has been prepared by and is the sole responsibility of the Borgestad ASA (the "Company").

Neither this announcement nor the information contained herein is for publication, distribution or release, in whole or in part, directly or indirectly, in or into or from Australia, Canada, Japan, Hong Kong, South Africa or the United States (including its territories and possessions, any State of the United States and the District of Columbia) or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction. The publication, distribution or release of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

This announcement is not an offer for sale of securities in the United States. The securities referred to in this announcement have not been and will not be registered under the U.S. Securities Act, and may not be offered or sold in the United States absent registration with the U.S. Securities and Exchange Commission or an exemption from, or in a transaction not subject to, the registration requirements of the U.S. Securities Act and in accordance with applicable U.S. state securities laws. The Company does not intend to register any securities referred to herein in the United States or to conduct a public offering of securities in the United States.

This announcement is an advertisement and is not a prospectus for the purposes of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14 June 2017 (the "EU Prospectus Regulation") (together with any applicable implementing measures in any Member State). All of the securities referred to in this announcement will be made by means of a set of subscription materials provided to potential investors, except for the subsequent repair offering which will be made on the basis of a listing and offering prospectus. Investors should not subscribe for any securities referred to in this announcement except on the basis of information contained in the aforementioned subscription materials or for the subsequent repair offering, the prospectus.

In any EEA Member State, this communication is only addressed to and is only directed at qualified investors in that Member State within the meaning of the EU Prospectus Regulation, i.e. only to investors who can receive the offer without an approved prospectus in such EEA Member State.

This communication is only being distributed to and is only directed at persons in the United Kingdom that are "qualified investors" within the meaning of the EU Prospectus Regulation as it forms part of English law by virtue of the European Union (Withdrawal) Act 2018 and that are (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "Order") or (ii) high net worth entities, and other persons to whom this announcement may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as "relevant persons"). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. Persons distributing this communication must satisfy themselves that it is lawful to do so.

This announcement is made by, and is the responsibility of, the Company. The Managers and their affiliates are acting exclusively for the Company and no-one else in connection with the transactions described in this announcement. They will not regard any other person as their respective clients in relation to the transactions described in this announcement and will not be responsible to anyone other than the Company, for providing the protections afforded to their respective clients, nor for providing advice in relation to the transactions described in this announcement, the contents of this announcement or any transaction, arrangement or other matter referred to herein.

In connection with the transaction described in this announcement, the Managers and any of their affiliates, acting as investors for their own accounts, may subscribe for or purchase securities and in that capacity may retain, purchase, sell, offer to sell or otherwise deal for their own accounts in such securities of the Company or related investments in connection with the transactions described in this announcement or otherwise. Accordingly, references in any subscription materials to the securities being issued, offered, subscribed, acquired, placed or otherwise dealt in should be read as including any issue or offer to, or subscription, acquisition, placing or dealing by, the Managers and any of their affiliates acting as investors for their own accounts. The Managers does not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

Matters discussed in this announcement may constitute forward-looking statements. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "aim", "expect", "anticipate", "intend", "estimate", "will", "may", "continue", "should" and similar expressions. The forward-looking statements in this release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although the Company believes that these assumptions were reasonable when made, these assumptions are inherently subject to significant known and unknown risks, uncertainties, contingencies, and other important factors which are difficult or impossible to predict and are beyond its control. Such risks, uncertainties, contingencies, and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. Forward-looking statements speak only as of the date they are made and cannot be relied upon as a guide to future performance. The Company, the Managers and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this announcement whether as a result of new information, future developments or otherwise. The information, opinions and forward-looking statements contained in this announcement speak only as at its date and are subject to change without notice.