Hexagon Composites — M&A Activity 2018

Nov 8, 2018

Hexagon to acquire Agility Fuel Solutions

Hexagon to acquire Agility Fuel Solutions

Hexagon Composites (OSE:HEX) ("Hexagon") has signed an agreement to acquire the

remaining 50% of Agility Fuel Solutions  ("Agility"). This investment

strengthens Hexagon's position as the globally leading gas fuel solutions

provider.

"We are really happy to have reached this milestone", says Jon Erik Engeset, CEO

and President of Hexagon. "We believe the timing to be optimal. Fuel price

spreads are back at attractive levels, payback times are favorable, and the

global focus on the environment has never been stronger. Our combined solutions

portfolio and expert teams represent a unique value proposition to the markets."

The increasing alignment of economic and environmental benefits is driving

market adoption of cleaner drivetrain alternatives. Heavy-duty truck, transit

bus and refuse truck fleet owners are acting on their emissions reduction

strategies with greater investment in alternative fuel vehicles and

infrastructure. In turn, vehicle manufacturers are motivated to provide more

offerings, including bio- and natural gas, propane, battery electric and

hydrogen fuel cell electric vehicles.

"Hexagon has been a strong, supportive investor in Agility for the last two

years. We share a common vision, values and strategic goals and look forward to

an exciting future together," stated Kathleen Ligocki, CEO of Agility. "For our

customers, this will provide Agility access to greater global resources and

scale across a broad portfolio of sustainable energy technologies."

Agility Fuel Systems and Hexagon's medium and heavy duty CNG automotive

businesses merged in 2016 to create Agility, resulting in Hexagon owning 50% of

Agility. The companies have delivered more than half a million cylinders and

over forty thousand fuel systems to customers around the globe.

Agility has production facilities in Salisbury, North Carolina, Lincoln,

Nebraska, Fontana, California and Raufoss, Norway with technology centers in

Lincoln, Nebraska, Wixom, Michigan and Kelowna, British Columbia. Agility

maintains sales offices in North America, South America, India, the United

Kingdom and Norway. The Company will report Agility's financial results as a

separate business area, fully consolidated into Hexagon's accounts.

Agility reported revenues of USD 157.3 million (NOK 1.3 billion) in 2017, with

adjusted EBITDA of USD 14.7 (NOK 122) million and reported EBITDA of USD 9.5

(NOK 79) million. The fiscal year 2018 financial results are expected to exceed

those of 2017, with a strong uptick in the second half of 2018. The positive

trajectory is also expected to continue in 2019.

"This acquisition is significantly accretive to our consolidated results and,

accordingly, it should be simpler for investors to value Hexagon," says David

Bandele, CFO of Hexagon.

The transaction values Agility's equity at USD 250 million (NOK 2.1 billion) on

a 100% basis. The signing of the agreement took place on 8 November with closing

expected in January 2019.

The acquisition is fully financed through a secured facility with DNB Bank ASA.

The Company intends, however, to issue an unsecured bond for the long-term

financing of the group and has mandated DNB Markets for this purpose.

The following additional information is provided in accordance with Continuing

Obligations of listed companies section 3.4.2:

1.)   Transaction and parties: Hexagon USA Holdings, Inc., a wholly owned

subsidiary of Hexagon Composites ASA ("Hexagon"), will acquire the remaining

ownership interest of Agility Fuel Solutions Holdings, Inc., parent company of

Agility Fuel Solutions LLC ("Agility") from the Seller, AFS HoldCo LLC. Hexagon

currently holds 50% of the ownership interests in Agility. The transaction is

subject to third party approvals and completion, which are anticipated in

January 2019.

2.)   Consideration: Total consideration to be paid by Hexagon for the

remaining interest in Agility is USD 124.2 million (approx. NOK 1.0 billion).

3.)   Further description of the companies and transaction: Please refer to

the attachments to this notice, which give the relevant financial information of

Agility. Please also refer to previous quarterly and annual reports and

presentations to the market made by Hexagon where financial information of

Agility has been disclosed. The total number of employees in Agility is 415. The

current board of directors representing Hexagon will continue in their capacity

until further notice. Other existing Board members not representing the Company

will resign upon closing. The current executive management will continue either

in their current or a transitory capacity. For further information on management

and board of directors, visit https://agilityfuelsolutions.com/

4.)   Consequences of the transaction: The investment secures Hexagon's

strategic goal to become the leading integrated fuel solutions provider in the

alternative fuel vehicle market, serving the light-, medium- and heavy-duty

segments.  In addition to the strengthened strategic impacts disclosed above,

the transaction will trigger a move from the current equity accounting to

consolidation accounting for Agility. This will mean that profit and loss items

previously reported in net terms as share of profit or loss from joint ventures

and associates will, going forward, be reported in gross terms in the Income

Statement. As a result of the transaction, excess value over book value

(including Goodwill) currently estimated to be of the magnitude of NOK 340

million is expected to be recognized on the Statement of Financial Position. A

one-time extraordinary profit currently estimated to be of the magnitude of NOK

80 million, representing the revalued current interest holding in Agility, will

be realized in the Income statement. Final quantification of impacts and

accounting classification will only be available post-closing so these may vary

from the estimates provided. An updated statement, together with pro forma

financial statements of the new entity, will be prepared in time for Hexagon's

Q1 2019 quarterly report and presentation.

5.)    Agreements with directors or senior executives in relation to the

transaction: No such agreements with senior employees or members of the board of

directors of Hexagon or Hexagon USA Holdings, Inc., have been entered into in

relation to this transaction. A management retention plan agreement has been

entered into with senior management personnel of Agility to ensure continuity of

key personnel.

For more information:

David Bandele, CFO, Hexagon Composites ASA

Telephone: +47 920 91 483 | david.bandele@hexagon.no

Jon Erik Engeset, CEO, Hexagon Composites ASA

Telephone: +47 916 30 550 | jon.erik.engeset@hexagon.no

Investor Relations:

Hiva Ghiri, VP Investor Relations, Hexagon Composites ASA

Telephone: +47 958 66 790 | hiva.ghiri@hexagon.no

Media:

Solveig Saether, Communication Manager, Hexagon Composites ASA

Telephone: +47 906 34 977 | solveig.saether@hexagon.no

About Agility Fuel Solutions

Agility Fuel Solutions is a leading global provider of clean fuel solutions for

medium- and heavy-duty commercial vehicles. Its product offerings include

natural gas, hydrogen, and battery electric energy storage and delivery systems,

Type 4 composite natural gas cylinders, propane and natural gas fuel systems,

and propane dispensers. Agility offers solutions for a variety of vehicle types,

including Class 8 trucks, refuse trucks, transit buses, school buses, concrete

mixers, and delivery trucks. Agility has been manufacturing and servicing safe

and reliable clean fuel solutions for commercial vehicle fleets and OEMs for

more than 20 years, logging billions of kilometers on the road per year.

About Hexagon Composites ASA

Hexagon Composites delivers safe and innovative solutions for a cleaner energy

future. We are adapting our leading composite pressure vessel technology for a

wide range of mobility and storage applications.

For more information, please visit www.hexagon.no

Follow us on Twitter: @HexagonASA

This information is subject to the disclosure requirements pursuant to section

5 -12 of the Norwegian Securities Trading Act.