Background and rationale for the Loan
In connection with a directed issue conducted on April 9, 2024, the board of iZafe Group, with the authorization granted by the annual general meeting on May 16, 2023, decided to issue 25,053,288 warrants of series TO14B. These warrants were intended to be issued free of charge to the Company, which would then transfer them free of charge to the shareholders of the Company in proportion to the number of shares each shareholder owned on the record date for the warrant issue.
Since the decision was made, new information has been provided to the Company, revealing that the warrant issue would entail significantly higher costs than previously indicated. Given the financial uncertainty associated with the outcome of the warrants, the board of iZafe Group has decided that it is more advantageous for the Company to cancel the issued Warrants and instead secure the Loan.
iZafe Group's CEO, Anders Segerström, comments on the Loan: "Considering the new information we have received and the uncertainty that the warrant exercise would entail, we are convinced that the decision to replace the warrant exercise with this loan is the best solution for iZafe Group. This decision ensures the necessary financing to continue our growth journey and meet the increasing demand for our products. By scaling up production and strengthening our recurring revenue, which is at the core of our business model, we are creating significant value over time.
Our original ambition with the directed issue and the warrant exercise was to raise SEK 10 million, and although the conditions have changed, we have found a stable and sustainable solution with this loan. This will provide us with the financial stability and resources we need to increase sales and strengthen our recurring license revenue, which is crucial for achieving a cash flow-positive result."
Loan terms
The Loan amounts to SEK 5.5 million. The payment occurs upon signing of the loan agreement. The Loan matures for payment on June 30, 2025.
The Loan is subject to a set-up fee of 5.0 percent of the Loan amount and carries a monthly interest rate of 1.3 percent on the borrowed amount. Interest accrues from the payment until the loan amount and accrued interest are fully repaid. The Company has the option to repay the Loan before the maturity date without any redemption fee. The Lender has the right to convert the Loan into shares of the Company at any time during the term at a subscription price of SEK 0.24 per share. The board has assessed the loan terms as market competitive and considers taking the Loan to be in the best interest of both the Company and its shareholders.
Use of the Loan
The net proceeds from the Loan are intended to be used for the following purposes:
- Ensuring larger production volumes
- Sales and marketing activities to boost sales in existing and new markets
Advisor
Mangold Fondkommission AB is financial advisor to the Company in connection with the Loan.
Important information
The publication, disclosure, or distribution of this press release may be subject to restrictions under law in certain jurisdictions. Recipients of this press release in jurisdictions where it has been published, disclosed, or distributed should acquaint themselves with and comply with such legal restrictions. The recipient of this press release is responsible for using this press release and the information herein in accordance with applicable rules in their respective jurisdiction. This press release does not constitute an offer to, or an invitation to, acquire or subscribe for any securities in iZafe Group in any jurisdiction, either from the Company or any other entity.
This press release does not constitute an offer or invitation to acquire or subscribe for securities in the United States. The securities mentioned herein may not be sold in the United States without registration or an applicable exemption from registration under the U.S. Securities Act of 1933 ("Securities Act"), and may not be offered or sold in the United States without being registered, exempt from registration, or in a transaction not subject to the registration requirements of the Securities Act. There is no intention to register any securities mentioned herein in the United States or to make a public offering of such securities in the United States. The information in this press release may not be published, disclosed, copied, reproduced, or distributed, directly or indirectly, in whole or in part, in or to the United Kingdom, the United States, Canada, Japan, Australia, Belarus, Hong Kong, New Zealand, Russia, Switzerland, Singapore, South Africa, South Korea, or any other jurisdiction where such publication, disclosure, or distribution of this information would violate applicable laws and regulations.
Within the European Economic Area, no offer is made to the public of securities in any country other than Sweden. In other member states of the European Union, such an offer can only be made in accordance with an exception in the Prospectus Regulation (EU) 2017/1129.
Forward-Looking statements
This press release contains certain forward-looking information that reflects the Company's current view of future events as well as financial and operational development. Words such as "intended", "assessed", "expected", "may", "plans", "believes", "estimates", and other expressions that imply indications or predictions about future development or trends, and which are not based on historical facts, constitute forward-looking information. Forward-looking information is by its nature associated with both known and unknown risks and uncertainty factors because it depends on future events and circumstances. Forward-looking information does not constitute any guarantee regarding future results or development, and the actual outcome may materially differ from what is stated in the forward-looking information.
