CLEVON AS TURNS ATTENTION OF THE SHAREHOLDERS TO THE STOCK EXCHANGE ANNOUNCEMENTS PUBLISHED BY CLEVON INVESTORS AS AND KONNA OÜ REGARDING THE VOLUNTARY TAKEOVER OFFERS OF CLEVON AS SHARES TO CLEVON AS SHAREHOLDERS
Introduction
On 02 October 2023, Clevon Investors AS, registry code 16686123, registered address Reinu tee 48, Viljandi, Viljandi County 71020, e-mail address info@clevoninvestors.com (hereinafter Clevon Investors) and Konna OÜ, registry code 10498082, registered address Viljandi County, Viljandi municipality, Sinialliku village, Konna, 71105, e-mail address arno@cleveron.eu made voluntary takeover offers to the existing shareholders of Clevon AS, registry code 16472103 (hereinafter Clevon), in order to take over their shares with the objective of concentrating at least 95% of all Clevon shares in the hands of Clevon Investors and Konna (hereinafter the Offers).
If the Offers are successful, i.e., provided that Clevon Investors and Konna acquire a minimum of 95% of all shares of Clevon, the trading in Clevon shares will discontinue in the multilateral trading system First North (hereinafter First North) managed by Nasdaq Tallinn AS.
If a situation has been achieved with the Offers where Clevon Investors and Konna jointly will acquire at least 95% of Clevon’s shares after the settlement, Clevon will publish a stock announcement on the exceeding of the 95% threshold and the Offers will remain valid for at least 2 weeks after the publication of the stock announcement.
As of the submission of the Offers, Clevon Investors holds 93.16% of all Clevon shares. Clevon Investors and Konna must acquire at least 1.84% of Clevon shares in order to reach the target.
Content of the Offers
The Offers by Clevon Investors and Konna are the following:
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Offer of Clevon Investors is directed to Clevon shareholders, who wish to continue as shareholders of Clevon via the Clevon Investors. As part of the offer, Clevon Investors makes an offer to the shareholders of Clevon to exchange their Clevon shares for shares of Clevon Investors with a 1:1 exchange ratio.
The stock exchange announcement and the information document for the Clevon Investors offer are available here: https://view.news.eu.nasdaq.com/view?id=b258fd246e62fd59a63d82025cbcbaca2&lang=en.
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Offer of Konna is directed to Clevon shareholders, who do not wish to continue as shareholders of Clevon and who wish instead to exchange their Clevon shares against the debt obligation offered by Konna. As part of the offer, Konna makes an offer to the shareholders of Clevon to exchange their Clevon shares for debt obligation of Konna with a 1:1 exchange ratio.
The stock exchange announcement, the information document and the terms of the debt obligation for the Konna offer are available here: https://view.news.eu.nasdaq.com/view?id=be6d3a585f0652d24966b0586cb9e248a&lang=en.
The need for making the Offers
Clevon is a rapidly developing start-up company that is in constant need of additional capital for the development of its main product, i.e., the unmanned vehicle CLEVON 1 and the technology contained therein, as well as for the marketing of the vehicle.
The financial resources previously raised by Clevon are about to run out. Clevon published the unaudited consolidated report for the first half of the year as a stock exchange announcement on 21.09.2023. The consolidated reports for the first six months of 2023 show that the loss for the corresponding period amounts to 3,305,301 euros, as of the end of June, cash and receivables amount to 120,305 euros and short-term liabilities total to 2,052,802 euros.
As of today, Clevon's financial situation has become even more difficult. The balance sheet includes investments in intangible fixed assets of EUR 5,290,384, which ensures that the equity requirement is met but does not allow to fulfil current liabilities. The disposal of intangible assets to meet liabilities implies to the cessation of the business activities of Clevon in its current form. If the accounts had not been prepared based on the principle of business continuity, the value of the assets would have been reflected as lower.
Clevon urgently needs additional capital in order to continue its business. Considering the development phase of Clevon, borrowing is not possible due to the lack of possible loan guarantees. Therefore, Clevon has to raise capital through a share emission.
By reason of world events (war in Ukraine, inflation, increase of the interest rates and lower risk appetite of the investors), a pessimistic situation has arisen in the financial markets, which is why Clevon's successful public raising of additional capital is extremely unlikely now and in the following fundraising rounds. Clevon has been looking for potential investors outside of First North for a long time. Such investors are venture capital investors, potential customers of Clevon and other start-up companies in synergy with whom it would be possible to develop the CLEVON 1 vehicle further.
Communication with potential investors has revealed that in order to raise capital for further development from them, Clevon has to leave First North. The key reasoning for leaving First North as a prerequisite for any investment is that investment policies of potential investors include certain restrictions that do not allow them to invest in public companies. Furthermore, the information disclosure requirements associated with being listed on First North, the impossibility of granting preferential rights to larger investors (e.g., the right to appoint members of the management or the right of veto) and the dependence of the company's value on the price formed in the course of trading on First North could also create obstacles to raising capital.
If Clevon fails to raise the required capital immediately, there is a significant risk that Clevon will become insolvent and will be forced to cease operations in the near future.
In this respect, it is essential to point out that Clevon's business model still can be developed and it certainly has the potential to succeed, but as seeing that it is a business model which requires considerable resources, its further development is in constant need of additional funding. If this funding is found, there are no other apparent obstacles to the further development of Clevon's business model. Therefore, the above described risk of facing financial difficulties can be managed by raising additional capital.
The probable further successful development of Clevon will also increase the value of minority shareholders' shares
Both the Clevon's management and larger investors continue to believe in the Clevon's success. In particular, the recent achievements of Clevon in Europe, where a number of pilot projects have been launched with major courier and retail companies such as DHL and Euronics in Estonia, IKI and LastMile in Lithuania, Colruyt in Belgium, as well as in the US, where the Clevon´s subsidiary has been established in Texas and CLEVON 1 has been actively introduced and tested confirm the success.
Clevon's management believes that the successful sale of Clevon's products is possible. As a result of successful pilot projects, Clevon also has its first paying customers. For the funds involved in the near term, Clevon plans to bring autonomy to the streets, for which Clevon sees interest from various potential customers in the medium and long term in the amount of tens of thousands of vehicles.
Clevon is in parallel also in talks with many potential customers to launch new pilot projects. Clevon has conducted various pilot projects with customers whose feedback has been very positive and they are interested in expanding the services. This allows to assume that with the inclusion of additional capital, in the coming years, Clevon will be able to further develop Clevon's products, services and business model and increase the value of Clevon. Clevon has reached the final stage of negotiations with several potential investors, and raising additional capital in the amount required by Clevon from outside First North is likely, but the potential investors have made the investment conditional on the termination of trading of Clevon's shares on First North.
The protection of minority shareholders when leaving First Norh is guaranteed
All shareholders will be treated equally during the delisting process from First North.
Termination of trading of Clevon's shares on First North does not harm the interests of investors (minority shareholders). If Clevon does not leave First North and does not raise the necessary capital, then Clevon will most likely become insolvent, as a result of which the value of all Clevon's shareholders' shares will decrease significantly (essentially changing to zero).
If Clevon leaves the First North, then Clevon is likely to be able to raise additional capital to continue business operations and Clevon will be able to overcome economic difficulties and increase the value of the investors' shares.
Therefore, exiting First North is in the investors' interest so that the value of their shares is preserved and can be increased in the future. Clevon's shares remain freely transferable and Clevon has only one type of shares. After trading in Clevon's shares on First North has stopped, minority shareholders can transfer their shares to other persons of their own free choice as well as to Clevon's existing and future investors, who will probably want to increase their shareholding in Clevon. Clevon's management has set the goal of publicly listing the shares in the medium or long term, so that Clevon's investors can exit the investment under good conditions and increase the liquidity and tradability of the shares.
In case of a possible sale of the majority of shares in the future, minority shareholders will also be able to realize their shares. Clevon is planning to merge with Clevon Investors. Clevon plans to extend the tag along right to all minority shareholders of Clevon, which is given to minority shareholders by the articles of association of Clevon Investors, in a situation where more than 50% of the shares are sold.
Termination of trading in Clevon shares does not give one part of the shareholders an unfair advantage over or at the expense of other shareholders, nor does it allow one part of the shareholders an unfair advantage over or at the expense of other shareholders, nor does it allow one part of the shareholders unfair profit or other benefit over or at the expense of other shareholders.
After leaving First North, the plan is to merge Clevon and Clevon Investors, which will bring together the remaining shareholders, as a result of which all Clevon Investors will be in a formally equal position. Leaving First North will not be used to gain any advantage. The purpose of the exit is to enable the raising of additional capital in the necessary volume, which is in the common interest of all Clevon shareholders, and not to treat shareholders unequally.
It is worth noting that several members of Clevon's management are themselves directly or indirectly Clevon's shareholders and bear the same risks as small shareholders, and thus are interested in the growth of the company's value.
Tiia Toom
Clevon AS member of the management board
tiia.toom@clevon.com
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