Rosier S.A. — Capital/Financing Update 2022

Feb 9, 2022

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Rosier SA

Société anonyme Route de Grandmetz (MO) 11 box a 7911 Frasnes-lez-Anvaing 0401.256.237 (RLE Tournai)

(the Company)

ADVICE FROM THE COMMITTEE OF INDEPENDENT DIRECTORS TO THE BOARD OF THE COMPANY IN ACCORDANCE WITH ARTICLE 7:97 §3 OF THE BCCA

In accordance with article 7:97 §§1-2 of the Belgian Code of Companies and Associations (the BCCA), for any envisaged resolution of the board of directors or any transaction in execution of a board resolution in a listed company that relates to such listed company's related party within the meaning of IAS 24 (except if the related party is a subsidiary of that listed company), the procedure as set out in article 7:97 §§3-4/1 must be applied (the so-called "related party procedure"). This procedure must also be followed in the context of an envisaged board resolution to propose to the extraordinary general meeting to conduct a capital increase through a contribution in kind by such related party (see article 7:97 §2, 1° of the BCCA).

Pursuant to article 7:97 §3 of the BCCA, any envisaged resolution or transaction as referred to in article 7:97 §§1-2 of the BCCA must be submitted beforehand to a committee of three independent directors. This committee is required to issue a written advice to the board of directors in respect of such resolution or transaction. If the committee deems it necessary, it can appoint one or more independent experts to assist.

The written advice must contain at least the following information: (i) a description of the nature of the relevant resolution or transaction, (ii) a description and computation of the financial consequences and a description of any other consequences and (iii) a description of the advantages and disadvantages of the decision or transaction for the company, if applicable in the long term. Furthermore, the committee is required to (iv) describe how the proposed resolution or transaction fits within the company's policy and, in case this resolution or transaction causes disadvantages to the company, an indication whether the resolution or transaction compensates with other elements of the company's policy or whether it is manifestly illegitimate in view to the company's policy. Any comments from the expert(s) are also incorporated in or attached to the advice of the committee.

The present advice of the Company's committee of three independent directors (the Committee) has been prepared in accordance with this article 7:97 §3 of the BCCA.

1. NATURE OF THE ENVISAGED DECISIONS OR TRANSACTIONS AND APPLICATION OF ARTICLE 7:97 §3 OF THE BCCA

1.1 Proposed Transaction

(a) Capital Increase

The board of directors of the Company (the Board) is considering a recapitalisation of the Company that will consist of a capital increase through contribution in kind by Borealis AG (Borealis), the Company's controlling shareholder, of (i) its receivables under the following shareholder loans that Borealis (as lender) entered into with the Company (as borrower): (A) the EUR 25 million intercompany loan agreement dated 16 July 2020, effective as from 22 July 2020, amended for the last time in February 2021 and expiring on 30 June 2022 and (B) the EUR 25 million intercompany loan agreement dated 16 July 2020, effective as from 28 August 2020, amended for the last time in February 2021 and expiring on 30 June 2022 (together, the Borealis' Loans) and

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(ii) a portion of the receivables under the current account (the Current Account) between Borealis Financial Services NV and the Company (receivables assigned by Borealis Financial Services NV to Borealis). The receivables under the Borealis' Loans and the Current Account would each be contributed at nominal value in the Company's capital, for an aggregate amount of EUR 55 million and against the issuance of 2,750,000 new ordinary shares (the Capital Increase). Following the proposed Capital Increase, a debt of approx. EUR 5 million shall be outstanding under the Current Account. This debt, together with any accrued interests on the Borealis' Loans up to the termination of the Borealis' Loans (see (b) below) and any accrued interests on the Current Account shall be repaid by the Company through the new intra-group financing facility as described in more detail below.

(b) New Committed Facility

It is further envisaged that the Borealis' Loans and the Current Account will be terminated immediately after the Capital Increase and that a new committed unsecured intra-group financing facility of up to EUR 15 million (which will, amongst other, be used to refinance the remaining outstanding debt balance of approx. EUR 5 million under the Current Account to Borealis Financial Services NV) will be entered into between Borealis (as lender) and the Company (as borrower), a draft of which is set out in Annex 1 (the New Committed Facility; together with the Capital Increase, the Transaction).

1.2 Application of article 7:97 of the BCCA

Borealis, as controlling shareholder of the Company (with a participation of approx. 77.47% in the Company (i.e. 197,550 shares)), is a "related party" of the Company within the meaning of IAS 24. Borealis Financial Services NV, as a wholly owned subsidiary of Borealis, is a "related party" of the Company within the meaning of IAS 24.

The proposed Capital Increase would result from a contribution in kind of (part of) the receivables under the Borealis' Loans and the Current Account by Borealis. As a result, the envisaged Board resolution to propose to the extraordinary general meeting to approve the Capital Increase falls within the scope of article 7:97 §2, 1° of the BCCA (as aforementioned).

In addition, the New Committed Facility would be entered into between the Company and Borealis. Therefore, the approval by the Board of entry into this New Committed Facility falls within the scope of article 7:97 §1 of the BCCA (as aforementioned).

In light of the above, the Board has decided to apply the procedure provided for in article 7:97 of the BCCA, before any decision is made in the context of the proposed Capital Increase or in relation to the envisaged New Committed Facility.

Accordingly, the Board has assigned the Committee with the responsibilities set out in article 7:97 §3 of the BCCA. The Committee has the possibility, as it deems necessary, to appoint any independent expert to support the Committee in the exercise of these responsibilities.

The Committee is composed of the following directors:

• Anba BV, represented by Anne-Marie Baeyaert ;
• Exploration BV, represented by Dina De Haeck; and
• NADECE BV, represented by Nathalie De Ceulaer.

The above directors are independent directors within the meaning of article 7:87 §1 of the BCCA.

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The Committee has appointed the following independent expert in accordance with article 7:97 §3 of the BCCA to provide a valuation report regarding the Company (the Valuation Report), ahead of the Capital Increase: KBC Securities (the Expert). The Committee has assessed the independence of the Expert within the meaning of the aforementioned article at the time of appointment of the Expert.

Prior to the preparation of its advice, the Committee was provided with the Valuation Report of the Expert, which the Expert has presented to the Committee.

Following the receipt of the Valuation Report, the Committee convened to discuss and evaluate the Capital Increase and the New Committed Facility on 8 February 2022, through a virtual "Teams" meeting.

2. FINANCIAL AND OTHER CONSEQUENCES OF THE TRANSACTION

2.1 Financial consequences

(a) Capital Increase

As indicated above, the receivables under the Borealis' Loans and the Current Account would each be contributed in kind at nominal principal value in the Company's capital (i.e., respectively, (i) EUR 25 million, (ii) EUR 25 million and (iii) EUR 5 million). The total value of the contribution would be EUR 55 million. In exchange for the contribution, 2,750,000 new ordinary shares in the Company would be issued to Borealis, at an issue price equal to EUR 20 per share.

From an accounting perspective, the aggregate amount of the Capital Increase (with issue premium) resulting from the issue of the new ordinary shares shall be allocated for amount of EUR 27,500,000 to the Company's share capital and EUR 27,500,000 as issue premium.

In the framework of the Valuation Report, the Expert has commented the following:

"KBC Securities has assessed the equity value of the Company to be negative. KBC Securities has come to its valuation conclusions based on three valuation methodologies, i) a Discounted Cash Flows Analysis on the cash flows forecast as per the final draft of the business plan of the Company, ii) a Comparable Trading Analysis using a peer group of listed peers on 2021 actual and 2022 expected EBITDA adjusted for one-offs and, lastly, iii) a Previous Transaction Analysis on 2021 actual EBITDA adjusted for one-offs."

Based on the Valuation Report, the Committee acknowledges that the issue price of EUR 20 per share offered by Borealis in the framework of the Capital Increase is significantly higher than the (negative) equity value of the Company set out in the Valuation Report.

The Committee further observes that, as a result of the Capital Increase, Borealis would become the holder of more than 95% of the share capital of the Company (i.e. 98.09%). As a consequence, Borealis would have the right (but not the obligation) to launch a "naked" squeeze-out bid pursuant to applicable Belgian takeover regulations at any time following the Capital Increase, and to delist the Company from Euronext Brussels. No concrete steps have been taken in this respect.

(b) New Committed Facility

The New Committed Facility between Borealis (as lender) and the Company (as borrower) will be effective as of the date of the Capital Increase for a maximum amount of EUR 15 million. The final maturity date of the New Committed Facility would be the earliest of (i) 14 March 2023 or (ii) the date of any refinancing agreement between the Company and a third party creditor/investor.

The other key terms and conditions of the New Committed Facility would be as follows:

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Drawdown:

• o Minimum drawdown amount;
• o Maximum number of advances;
• o Consolidation of advances, each as to be defined in the facility agreement.
• Base rate would be 3m EURIBOR floored at 0.
• Interest payment would be defined in the facility agreement.
• Accrued interests on the Borealis Loans up to the termination and accrued interests on the Current Account will be repaid by the Company at the latest on 14 March 2023.
• Margin would be 230 bps.
• No security package would have to be provided by the Company to secure the repayment of its obligations.
• The Company would have the option to voluntary prepay all or part of the New Committed Facility without any break costs due to Borealis.

3. ADVANTAGES AND DISADVANTAGES OF THE TRANSACTION

The expected advantages and disadvantages of the Capital Increase and the New Committed Facility for the Company could be described as follows:

3.1 Advantages

(a) The Capital Increase

The Capital Increase aims at improving the Company's equity and solvency position.

On the basis of the (unaudited) annual results for the financial year ending 31 December 2021, the Board has established that the net assets of the Company (i.e. amounting to EUR -32,909,449.95) have fallen below one quarter of its share capital (amounting to EUR 2,550,000), which triggers the application of the "alarm bell procedure" in accordance with article 7:228 of the BCCA.

Pursuant to the alarm bell procedure under article 7:228 of the BCCA, the Board is required to convene an extraordinary general shareholders' meeting within two (2) months from the time when the loss was ascertained or should have been ascertained by virtue of the legal or statutory provisions to deliberate and resolve on (the measures announced in the agenda to ensure) the continuity of the company's activities based on a special report drawn up by the company's board of directors or the company's dissolution. In its special report to be submitted to the extraordinary general shareholders' meeting, the board of directors must propose either the continuation or the dissolution of the Company. If the board of directors proposes the continuation of the Company, the special report must set out the measures proposed by the Board to ensure the continuity of the Company's activities.

The Committee further acknowledges that, according to article 7:229 of the BCCA, if the net assets of a company limited by shares have fallen below EUR 61,500, any interested party or the public prosecutor may apply to the court for the dissolution of the company. The court may, if necessary, grant the company a binding time limit to regularise its situation.

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In this context, the Capital Increase, together with the New Committed Facility, is being proposed as a major recovery measure to ensure the continuity of the Company's activities, given the financial difficulties it is facing, the current alarm bell situation and in view of improving the Company's current debt level situation. The Capital Increase would restore the net assets of the Company to above EUR 61,500. As a result of the Capital Increase, the Company's share capital would amount to EUR 30,050,000 and, hence, the amount of the net assets would be higher than half of the Company's share capital.

The Committee notes that the Company's current level of debt of approx. 183% of the net assets is untenable. As a result of the Capital Increase, the Company's debt position would be improved significantly as the Company's debt level would be reduced to approx. 14% of the net assets. Such reduction in the Company's debts would be expected to also have a positive impact on the financing costs related to these debts, i.e. such financing costs would expectedly decrease as a result of the decrease in debts.

An alternative to the Capital Increase, as a measure to enhance to Company's current equity and solvency situation, could consist of a rights issue by the Company with the publication of a prospectus. However, such rights issue would involve a lengthy, cumbersome and costly procedure and without guarantee of success as its results would be subject to market risks. Therefore, the Committee deems a rights issue not to be a feasible alternative for the Company at present. Contrary to this alternative, the Capital Increase offers a more short-term solution for the Company's current situation with a certain result. Given the current financial difficulties the Company, the very high level of debt and the alarm bell procedure, short term redress measures are required by the Company.

(b) New Committed Facility

The Committee notes that the maturity date of the New Committed Facility will be the earliest of (i) 14 March 2023 or (ii) the date of any refinancing agreement between the Company and a third party creditor/investor. The New Committed Facility is being proposed to safeguard the Company's liquidity position and ensure the Company's ability to continue as a going concern until such maturity date, including for the purposes of articles 3:69 and 7:228 of the BCCA, without relying on any other financial support from the Borealis group going forwards (including under the existing support letter which will terminate on the date of the Capital Increase). Approximately EUR 5 million under the New Committed Facility will be used by the Company to repay to Borealis Financial Services NV, on the date of the Capital Increase, any amounts outstanding on that date under the Current Account between the parties. As a condition precedent to the New Committed Facility, the Company shall undertake its best efforts to secure external financing by 14 March 2023 at the latest. The New Committed Facility is also subject to the resolution of the general meeting of shareholders of the Company approving the Contribution in Kind and to an amendment agreement between Borealis Financial Services NV and the Company whereby the maximum limit under the Current Account existing between the parties is set at zero.

The margin set out in the New Committed Facility is deemed to not be unusual and in line with market rates and previous financing arrangements entered into with Borealis. The Company would not need to provide a security package to secure the repayment of its obligations. The fact that the Company is part of the Borealis group explains the need to comply with this group's financial policy, the provisions of which are not deemed unreasonable.

The Committee believes that it is not feasible for the Company to obtain debt financing at reasonable market conditions with an external financing provider.

3.2 Disadvantages

(a) Capital Increase

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As a result of the Capital Increase, by issuing the new shares in the context of the Capital Increase, the economic and voting rights of the existing shareholders would be diluted with 91.51% (i.e. as determined on the basis of the following formula: 1 – (255,000 shares prior to the Capital Increase divided by 3,005,000 shares after the Capital Increase).

The existing shares would also be subject to financial dilution as a result of the issuance of the new shares. This dilution could be determined on the basis of the following formula:

1 – ((market price x number of existing Shares + Issue Price x number of New Shares) (number of existing shares + number of New Shares) x market price)

Assuming a hypothetical market price of EUR 62 per Share (i.e. market price at closing of market on 18 January 2022), this formula would result in 61.99 % financial dilution. However, especially given the financial difficulties the Company is currently facing, the market price is not representative of the actual value of the Company. This is further the case because of the limited liquidity of the Company's shares. The discount vis-à-vis the current market price reflects this and has to be considered as a necessary recovery measure in order to ensure the continuity of the Company. The disconnect between the issue price and the market price of the Company's shares is further to be considered in the context that the new BCCA has generally relaxed requirements in this respect to allow for this type of financial rescue operations.

Based on the (unaudited) 2021 annual results, the net equity value of the existing shares of the Company before the Capital Increase amounted to approx. EUR -129 per share. After the Capital Increase, the net equity value of the then existing shares of the Company (including the New Shares) will amount to approx. EUR 7.35 per share.

The Capital Increase requires the convocation of an extraordinary general meeting and the preparation of all relevant corporate documentation required for the Capital Increase (including appropriate Board and auditor reports, and a notarial deed). This implies additional fees and other costs for the Company (e.g. legal, notary and audit fees, publication costs etc.), including with respect to the preparation and submission of a listing prospectus after the Capital Increase.

New Committed Facility

As indicated above, the maturity date of the New Committed Facility will be the earliest of (i) 14 March 2023 or (ii) the date of any refinancing agreement between the Company and a third party creditor/investor. The Committee takes note that a longer term for the New Committed Facility was not achievable for Borealis.

The Committee notes that, as a condition precedent under the New Committed Facility, the Board is required to confirm that the Company shall undertake best efforts to secure external financing by 14 March 2023 at the latest. While no assurances can be made in respect to the obtaining of such third party refinancing, the Committee does deem this condition to not necessarily be to the detriment of the Company as the obtaining of such third party financing would diversify the Company's debt portfolio (i.e. as a result of which the Company would no longer be solely relying on Borealis' support).

The entry into the New Committed Facility would result in an increase of the Company's debt level compared to its debt level immediately following the Capital Increase. However, this would not be to the same extent as the situation prior to the Capital Increase and, for the avoidance of doubt, would not trigger an alarm bell situation.

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3.3 Other considerations

As described in section 2.1 above, as a consequence of the Capital Increase, Borealis would have the right (but not the obligation) to launch a "naked" squeeze-out bid pursuant to applicable Belgian takeover regulations and to delist the Company from Euronext Brussels. The Committee deems that it is not yet possible at this stage to make a detailed assessment as to whether such squeeze-out and subsequent delisting would be in the interest/to the advantage of the Company. Such assessment would depend on a number of factors, which are currently unknown (including the Company's position and market circumstances at the time of the pursuit of the transaction, terms of the transaction, etc.). It is currently unclear if such transaction would actually be pursued by Borealis and, if so, at which point in time.

3.4 Determination of whether the decision will result in a disadvantage for the Company which, in light of the strategy of the Company, is manifestly unreasonable.

On the basis of a thorough assessment of the proposed Capital Increase and the New Committed Facility (including the above-described consequences and (dis)advantages) and taking into account the Valuation Report, the Committee is of the opinion that the expected advantages of the Transaction exceed the expected disadvantages thereof, in particular, considering the current solvency and liquidity needs and the alarm bell situation of the Company. The Transaction is in line with the Company's strategic policy and is not manifestly unreasonable.

4. CONCLUSION

Taking into account the various elements of the rescue package by Borealis (being the Capital Increase and the New Committed Facility), the Valuation Report, the current financial situation of the Company and the fact that the issue price of EUR 20 per share offered in the framework of the Capital Increase is significantly higher than the (negative) equity value of the Company set out in the Valuation Report, the Committee has assessed the envisaged Transaction in the light of the criteria included in article 7:97 of the BCCA and concluded that the expected advantages of the Transaction exceed the expected disadvantages thereof, which leads to the conclusion that the Transaction is to the advantage and in the interest of the Company, in particular, considering the current solvency and liquidity needs and the alarm bell situation of the Company. The Transaction is in line with the Company's strategic policy and is not manifestly unreasonable.

Therefore, the Committee provides a positive advice in relation to the Transaction.

[signature page follows]

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Signed on 8 February 2022.

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Anba BV, represented by Anne-Marie Baeyaert Independent director

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Exploration BV, represented by Dina De Haeck Independent director

_____________________ NADECE BV, represented by Nathalie De Ceulaer Independent director

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ANNEX 1

NEW COMMITTED FACILITIES