Karolinska Development - Offer on a set-off share issue to convertible holders to strengthen the Company's equity position


STOCKHOLM - 6 February 2017. Karolinska Development AB (Nasdaq Stockholm: KDEV) announces that its Board of Directors will present a proposal to shareholders to approve its decision on a new issue of B-shares to the convertible holders offering the convertible holders to "set-off" their convertibles as payment for new B-shares. The decision will be submitted for approval at an Extraordinary General Meeting to be held on 8 March 2017.


Conference call and webcast to be held at 8.00 am CET, 7 February 2017


The Board has concluded that a reduction of the Company's convertible debt is an essential next step for Karolinska Development. This will lead to a necessary strengthening of the Company's equity position, thereby reducing the Company's overall financial risk profile and ensuring that its current cash resources can be used to invest in new portfolio companies. At the end of September 2016, Karolinska Development had SEK 256.3 million in cash and cash equivalents. However, despite these cash resources, the Company needs to strengthen its equity position to continue to comply with the Swedish Companies Act (Aktiebolagslagen).


Bo Jesper Hansen, Chairman of Karolinska Development, said: "The Board's decision on a directed set-off share issue to the convertible holders with the aim of strengthening the Company's equity position is a further important step for Karolinska Development to achieve a more robust financial structure.


"In the past 24 months, the Company has finalized its strategic re-organization, strengthened its investment expertise, focused its portfolio, attracted experienced leadership to its portfolio companies, and supported the financing of these companies through syndication with experienced international and domestic life science investors. The Board believes that reducing the Company's debt position will reduce its overall financial risk profile and ensure that the cash resources can be used to make and support a number of new investments and is therefore in the interest of all stakeholders in Karolinska Development."

Conference call and webcast


The Company will host a conference call and an online presentation tomorrow, 7 February 2017 at 08:00 am CET. Please dial in at one of the following numbers a few minutes before the start of the conference call:


From Sweden: +46 (0) 8 505 564 74

From the US: +1 855 753 22 30

From the UK: +44 (0) 20 336 453 74


The presentation can be accessed from the following web address:


QR Code:



Host: Jim Van heusden, CEO


On 4 December 2014, an Extraordinary General Meeting in the Company approved the Board of Directors' resolution to issue convertibles with a nominal amount of SEK 387 million. The convertibles are listed on Nasdaq Stockholm (ISIN: SE0006510103). The outstanding Convertible Loan, including interest, is expected to be approximately SEK 451 million as of 31 December 2016. The convertibles carry an annual interest rate of eight (8) percent and have a term of five (5) years. Convertible holders are entitled to call for conversion into B-shares up until 30 June 2019 at a conversion price of SEK 22.00. The Company's B-share closing price on 3 February 2017 was SEK 5.85.

The offer to the convertible holders to set off convertibles to B-shares

The Company's Board of Directors has on 6 February 2017 resolved on, subject to approval by the general meeting, a new issue of B-shares to the Company's convertible holders, with payment by set-off (set-off issue). The Board of Directors will convene an Extraordinary General Meeting, to be held on 8 March 2017, to approve the Board of Directors' resolution. To enable the set-off issue, the Company's Board of Directors has also proposed amendments to the share capital limits and number of shares in the Company's Articles of Association. If the Extraordinary General Meeting resolves in accordance herewith, the Company will notify the convertible holders about the possibility to, during the subscription period, set off the convertibles in accordance with the Extraordinary General Meeting's approval (the "Offer").

The subscription period is scheduled to run from 20 March 2017 to 31 March 2017. The increase of share capital, the maximum number of B-shares to be issued and the subscription price will be determined by the Board of Directors and is expected to be announced on 7 March 2017.

The Board of Directors will, when resolving on the subscription price per each new B-share, use the following principles. The subscription price shall correspond to the higher of the volume weighted average share price ("VWAP"), of the Company's share, 90 trading days ending (i) two trading days prior to announcement of the Board's resolution to convene the Extraordinary General Meeting (SEK 6.17 per share) or (ii) two trading days before the Extraordinary General Meeting. The above principles take into account the relatively low liquidity of the Company's share. Certain major shareholders have also expressed their support to vote in favour of a transaction on such terms. This ensures that the subscription price can be considered a fair market price.

The number of new shares in the Company to be issued to a single convertible holder is established by dividing the total nominal amount of the convertibles, and accrued interest, with the subscription price. According to the original terms and conditions for the convertibles, the interest accrued until the quarter preceding the quarter in which conversion is requested is charged, meaning, that for convertible holders accepting the Offer, interest on the convertibles will be accrued until 31 December 2016.

Convertible holders with convertibles registered on a VPC account (VP-konto) with Euroclear Sweden AB will receive information material on the Offer from the Company. If the holding is registered in the name of a nominee with a bank or brokerage firm the convertible holder will receive the information material from the nominee.

It is noted that if the Extraordinary General Meeting approves the Board of Directors' resolution and all convertible holders accepts the Offer, it will lead to the issuance of maximum 73,133,313 new B-shares, corresponding to a dilution of maximum 58 percent of the Company's shares and maximum 52 percent of the votes in the Company before the set-off issue, calculated on a subscription price based on the VWAP 90 trading days ending two trading days prior to announcement of the board's resolution to convene the Extraordinary General Meeting (SEK 6.17  per share).

The Offer to the convertible holders is subject to approval by the Company's shareholders at the Extraordinary General Meeting to be held on 8 March 2017 and will require support by shareholders holding not less than two-thirds of the votes cast and the shares represented at the Extraordinary General Meeting.

CP Group holds, indirectly via Sino Biopharmaceutical Limited and its subsidiaries, which companies are a part of CP Group and included when referring to CP Group in this press release, 9.08 percent of the capital and 7.24 percent of the votes in the Company and also holds 70.53 percent of the convertibles.

If CP Group would set off all of its convertible holdings to B-shares its total holding would exceed 30 percent of the votes in the Company, and CP Group would be obliged to launch a mandatory bid under Chapter 3, Section 1 of the Swedish Takeover Act (Sw. lagen (2006:451) om offentliga uppköpserbjudanden på aktiemarknaden).  

If CP Group requests and obtains an exemption from the mandatory bid obligation from the Swedish Securities Council (Sw. Aktiemarknadsnämnden), it would allow for CP Group to accept to set off all of its convertibles into B-shares in the Company without CP Group being obliged to launch a mandatory bid. Assuming that all convertible holders accept the Offer, resulting in a set-off of in total SEK 451 million of the outstanding convertible debt, CP Group would hold 44.58 percent of the capital and 40.27 percent of the votes in the Company. If CP Group would be the only convertible holder accepting the Offer, resulting in a set-off of in total SEK 318 million of the outstanding convertible debt, CP Group would hold 53.72 percent of the capital and 47.59 percent of the votes in the Company.

If CP Group does not request or obtain an exemption but wants to keep their holding just below 30 percent and assuming that all convertible holders accept the Offer, the maximum amount that can be set off will be SEK 324 million. If CP Group would be the only convertible holder accepting the Offer and wants to keep their holding just below 30 percent the maximum amount that can be set off will be SEK 134 million.

If CP Group submits a request for exemption from the mandatory bid obligation, a separate press release on the Swedish Securities Council's decision will be announced prior to the Extraordinary General Meeting, as soon as such decision is received.

The Company's Board of Directors has today issued a separate press release with the notice for the Extraordinary General Meeting to be held on 8 March 2017. See separate press release regarding notice to the Extraordinary General Meeting for further information.

Indicative timetable for the Offer

The timetable below is preliminary and may be subject to changes.


28 February                 Year-end Report 2016 is published

2 March                              Record date for participating in the Extraordinary General Meeting in the Company

7 March                              Announcement of complete terms and conditions of the share issue, including subscription price

8 March                      Extraordinary General Meeting in the Company

15 March                            Record date for convertible holders in the Company to receive the information letter and application form

17 March                            Preliminary date for publication of the prospectus

Information letter and application form is distributed to the holders of convertibles

20 March-31 March          Subscription period

5 April             Result of the Offer is published

11 April                               The new shares are admitted to trading on Nasdaq Stockholm

For further information, please contact:
Jim Van heusden, CEO, Karolinska Development AB
Phone: +46 72 858 32 09, e-mail: 

Christian Tange, CFO, Karolinska Development AB   
Phone: +46 73 712 14 30, e-mail:



About Karolinska Development AB
Karolinska Development AB is an investment company focused on identifying medical innovation and investing in the creation and growth of companies developing these assets into differentiated products that will make a difference to patients' lives and provide an attractive return on investment.

Karolinska Development has access to world-class medical innovations at the Karolinska Institutet and other leading universities and research institutes in the Nordic region. The Company aims to build companies around scientists who are leaders in their fields, supported by experienced management teams and advisers, and co-funded by specialist international investors, to provide the greatest chance of success.

Karolinska Development has established a portfolio of 10 companies targeting opportunities in innovative treatment for life-threatening or serious debilitating diseases.

The Company is led by a team including investment professionals with strong venture capital backgrounds, experienced company builders and entrepreneurs, with access to a strong global network.

For more information, please visit


This information is information that Karolinska Development AB (publ) (Nasdaq Stockholm: KDEV) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of Jim Van heusden, at 9:30 pm CET on 6 February 2017.

This announcement is distributed by Nasdaq Corporate Solutions on behalf of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely responsible for the content, accuracy and originality of the information contained therein.
Source: Karolinska Development AB (publ) via Globenewswire




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