Techstep ASA — M&A Activity 2016

Mar 9, 2016

BIRDSTEP TECHNOLOGY ASA: SALE OF BIRDSTEP TECHNOLOGY AB, NEW PARTNERS, PRIVATE PLACEMENT, REPAIR ISSUE AND CONTEMPLATED MERGER

BIRDSTEP TECHNOLOGY ASA: SALE OF BIRDSTEP TECHNOLOGY AB, NEW PARTNERS, PRIVATE PLACEMENT, REPAIR ISSUE AND CONTEMPLATED MERGER

Sale of Birdstep Technology AB

Birdstep Technology ASA ("BIRD") has on 8 March 2016 entered into an agreement to

sell its wholly owned subsidiary Birdstep Technology AB ("Birdstep AB") to Smith Micro

Software, Inc. ("Smith Micro") for USD 2.0 million. The transaction is subject to approval

by the shareholders of BIRD at an extraordinary general meeting expected to take place

on or about 31 March 2016 (the "EGM").

Partner/cooperation agreements with Smith Micro and Teki Solutions AS

Concurrently with the entering into of the agreement for the sale of Birdstep AB, BIRD

and Smith Micro have entered into a letter of intent with the aim that BIRD shall be

granted certain rights to distribute and utilise Smith Micro's products (including the

products of Birdstep AB) in the Nordic markets in cooperation with a qualified partner.

BIRD has furthermore entered into a principal terms agreement with Teki Solutions AS,

with the aim that Teki Solutions shall be appointed as BIRD's qualified partner in the

cooperation with Smith Micro, and that BIRD and Teki Solutions shall share the profits

from the cooperation with Smith Micro on a 50/50 profit split basis. Definitive distribution

and partner agreements are to be negotiated, and are expected to be entered into prior

to the EGM.

Completion of private placement

Furthermore, BIRD has on 8 March 2016 completed a private placement (the "Private

Placement") directed at Middelborg Invest AS, the company's single largest shareholder.

The Private Placement was resolved by the board of directors of BIRD based on an

authorization granted by BIRD's extraordinary general meeting on 29 January 2016 to

issue shares in connection with private placements and share issues to suitable investors

to raise additional capital for the company. The Private Placement comprises 34,000,000

shares, each with a nominal value of NOK 0.10, at a subscription price per share of NOK

0.22, resulting in gross cash proceeds to BIRD of NOK 7.48 million. Following the Private

Placement, the total number of issued and outstanding shares in BIRD will be

135,621,630, each with a nominal value of NOK 0.10. After the completion of the 10:1

share consolidation (reverse split) as resolved by the extraordinary general meeting on

29 January 2016, which will become effective on 11 March 2016, as previously

announced, the total number of issued and outstanding shares in BIRD will be

13,562,163.

The share capital increase in connection with the Private Placement will be registered in

the Register of Business Enterprises (Foretaksregisteret) as soon as practicably possible,

and the new shares will be delivered immediately thereafter. The new shares will be

listed at Oslo Børs following the approval and publication of a prospectus to be prepared

with due regard to applicable prospectus requirements and in accordance with

applicable laws and regulations. The prospectus will be published as soon as reasonably

practicable; provided, however, given the nature and extent of the transactions

comprised by this stock exchange announcement, as well as the prospectus control to

be undertaken by The Norwegian Financial Supervisory Authority (Finanstilsynet), it is

anticipated that the publication of the prospectus will take place during Q2 2016 (a

prospectus requirement would also apply to the repair issue, see "Repair Issue" below).

Following the Private Placement, Middelborg Invest's ownership stake in BIRD is 33.24%

(45,080,402 shares, which is 4,508,040 shares after completion of the 10:1 share

consolidation effective on 11 March 2016).

Cash position

After completion of the sale of Birdstep AB and before the Private Placement, BIRD is

expected to have a cash position net of transaction and other related costs of

approximately NOK 26.2 million.

Repair issue

In connection with the Private Placement, and in order to facilitate the principle of equal

treatment of BIRD's shareholders, it is the intention of the board of directors that BIRD

will carry out a repair issue (the "Repair Issue") directed towards shareholders in BIRD,

who were not given an opportunity to participate in the Private Placement and who are

not resident in a jurisdiction where such offering would be unlawful or (other than

Norway) would require any filing, registration or similar action, in the form of a

subsequent offering comprising up to 6,800,000 shares, each with a nominal value of

NOK 1.00 (after the share consolidation), representing approximately 5 % of the shares

issued after the Private Placement. The subscription price will be NOK 2.20 per share,

equaling the subscription price in the Private Placement (adjusted for the share

consolidation). The Repair Issue will be subject to approval by BIRD's general meeting

and the publication of an offer prospectus.

Contemplated merger

BIRD has also on 8 March 2016 entered into a letter of intent with Middelborg AS (a

company holding all the shares in Middelborg Invest) to pursue the possibility of a

merger between BIRD and a subsidiary of Middelborg to be established ("MergerCo"),

into which Middelborg will place its ownership interests in Teki Solutions and certain

other financial assets, including cash. If completed, the Merger will be based on the

following key principles:

- The assets, rights and obligations of MergerCo shall be transferred to BIRD, with

BIRD as the surviving entity, in exchange for shares in BIRD to be issued to Middelborg.

- When fixing the exchange ratio, BIRD shall be valued based on the pricing in the

Private Placement, which is NOK 0.22 per share. The value of MergerCo shall be based

on an valuation of MergerCo and its underlying assets, to be completed during a due

diligence period. However, the exchange ratio shall not exceed 5:1 in favour of

MergerCo. The board of directors of BIRD will obtain a third party fairness opinion on the

exchange ratio.

It is the intention to conclude a merger agreement during the second quarter of 2016. A

merger will be subject to the approval of the shareholders of BIRD at a general meeting.

Background and rationale

Despite continuous efforts, BIRD faced challenges that required rapid adjustments

throughout 2015 and into 2016. After BIRD lost it main revenues with Sprint in November

2015, accounting for 87 % of total revenue 2015, the financial outlook has become

critical. BIRD had no other choice than to intensify its efforts to look for strategic

alternatives in order to avoid default. The Transaction with Smith Micro will secure a

future for both the technology and the majority of BIRD's employees under the

ownership of Smith Micro.

After completion of the contemplated sale of Birdstep AB, BIRD will need to pursue

alternative strategies to create values for its shareholders. The contemplated

cooperation with Smith Micro and the partnership with Teki Solutions will enable BIRD to

profit from the continued development and extended distribution of products based on

the same and familiar technology to the one that it is now disposed of through the sale of

Birdstep AB, at a substantially reduced risk.

Furthermore, there is an industrial potential in combing the competence, network, assets

and financial resources of BIRD, Teki Solutions and Middelborg to create new growth

opportunities and drive consolidation in the Nordic telecom and IT sector.

BIRD has lately been suffering from lack of active ownership. The Private Placement will

secure a long term strategic ownership for BIRD. Based on Middelborg's track record and

ownership in other companies in the IT and telecom sector, the board of directors of

BIRD is convinced that Middelborg is both able and committed to take an active role in

the future development of BIRD and in securing a potential for new growth, in the joint

interest of all shareholders.

The subscription price in the Private Placement is a result of negotiations between the

parties and applies as a starting point the volume weighted average trading price over

the last 30 trading days on Oslo Børs, being NOK 0.27. The subscription price ultimately

offered by Middelborg takes into consideration the fact that the remaining assets in the

Company after consummation of the sale of Birdstep AB, except for the agreements

facilitated by Middelborg, will be the Company´s cash holding and the listing on the

stock exchange. This cash holding will also be reduced as a result of the transaction

costs being incurred in connection with the ongoing transactions.

Transaction fees

BIRD will have a total cost of NOK 9.8 million in transaction fees. Besides M&A advisors

and legal advisors, included in the above total, there is a retention remuneration for the

CEO with a total cost of NOK 3.7 million and the same for the COO with a total cost

around NOK 1.6 million.

About Smith Micro

Smith Micro is a leading software and services company listed on NASDAQ. Smith Micro

provides software to simplify and enhance the mobile experience. As a leader in wireless

connectivity, Smith Micro applications help improve network Quality of Experience for

mobile users while optimizing resources for service providers and enterprises. The

company's intelligent policy-on-device platform, along with premium voice, video and

content monetization services, create new opportunities to engage consumers and

capitalize on the growth of connected devices. In addition to wireless and mobility

software, Smith Micro develops innovative Productivity and Graphics products for

professional artists and general consumers. The company is headquartered in Aliso

Viejo, CA, with additional development centers in Santa Cruz, CA, Pittsburgh, PA and

Belgrade, Serbia. For further information, please see www.SmithMicro.com.

About Birdstep Technology AB

Birdstep is a company that develops HetNet optimization solutions for operators and

OEMs to deliver Experience Continuity to their customers. Our cutting edge solutions

lead the industry in helping our customers develop strategies to maximize the potential

of Heterogeneous Networks (HetNets) in order to bring better quality service, value

added services, and a more satisfactory experience to their customers.

About Teki Solutions

Teki Solutions is one of Norway's largest telecom retailers towards the business

segment, with 12 offices at locations in Eastern Norway and headquarters in Oslo. Teki

Solutions has two main business areas. The first is sale of mobile solutions, hardware

and mobile subscription packages for cooperations through the Nordialog franchise in

eastern Norway. The second is development of customized solutions and product

through the in-house advisor, software designer and solution architect Smartworks, a

wholly owned subsidiary. Teki Solutions works in close partnership with Telenor and its

customers, including several of the largest cooperations in Norway. Teki Solution has a

strategy to work very closely with its customers in order to deliver value added solutions

helping the customers to perform their core business activities. Teki Solutions

continuously work to maintain strong relations both on the product and customer side,

enabling the company to take part in problem solving for its customers as well as

product development for its suppliers. This makes Teki Solutions an attractive

distribution partner to many solution and software providers. For more information,

please see www.tekisolutions.no.

Teki Solutions had a turnover of approximately NOK 700 millions in 2015, with an annual

growth rate of approximately 15% since Teki Solutions was formed through a number of

mergers in 2013. The company has approximately 140 employees.

About Middelborg

Middelborg is a private investment company focusing on long term value creation.

Through active ownership, Middelborg seeks to create added value through strategical

and organisational changes, transactions and M&A driven growth and industrial

synergies. Middelborg has significant ownership stakes in several companies in the

Nordic IT and telecom distribution sector, and has been a contributor to recent

consolidation within this industry. Middelborg is a significant and strategic owner in Teki

Solutions.

Middelborg Invest is a wholly owned subsidiary of Middelborg.

Statements

Ian Jenks, Chairman of the board of BIRD comments: "We are very satisfied that we, as

part of the deal with Smith Micro, has managed to create a strong industrial partnership

that could create value for Birdstep's shareholders going forward. Teki Solutions has a

number of high quality customer and supplier relationships where Birdstep's and Smith

Micro's technology has an interesting potential. Teki Solutions also have access to

product development forums which Birdstep, as an independent company, has not been

able to achieve. Through Middelborg we secure a solid and long term industrial

ownership as well as a strong link to Teki Solutions which I believe will be an important

part of the partnership."

"Smith Micro's product portfolio, including Birdstep AB's technology now to be further

developed by Smith Micro, is interesting in number of ways. We look forward to working

closely with both Birdstep and Smith Micro to explore the opportunities within the Nordic

telecom and IT sector. We believe we have many customers which can take advantage of

this technology and we work with several products where this technology might be

integrated", says Mads Vårdal, head of business development at Teki Solutions.

Kristian Lundkvist, owner and CEO of Middelborg, says: "We are very happy to have

been able to, together with the board and management of the company, secure a future

for Birdstep. We believe the combination of the partnership with Smith Micro and Teki

Solutions and the contemplated merger, as well as Middelborg as an active and

committed owner, will create many exciting opportunities going forward".

For further information, please contact:

Chairman of the Board, Ian Jenks

Email: ian@ianjenks.com

Phone: +44 7771 880980