The Target Company is a newly formed Swedish limited liability company which, through subsidiaries, holds and manages property portfolios consisting of a total of 4 Swedish properties, with a total agreed underlying property value of approximately SEK 273 million, and has in addition thereto through a subsidiary entered into an agreement to acquire an additional property portfolio consisting of in total 9 Swedish properties, with a total agreed underlying property value of approximately SEK 470 million as well as property-related debt securities in the form of senior unsecured green notes with ISIN SE0016101810 issued by Ilija Batljan Invest AB, with a total nominal amount of SEK 700 million.

The purpose of the acquisition is to complement the existing operation in Episurf with a stable platform consisting of geographically diversified and yielding real estate assets. The preliminary purchase price for the acquisition amounts to approximately SEK 1,147 million, of which SEK 770 million concerns the bonds, and will be paid through promissory notes. The promissory notes have an annual interest rate of STIBOR 3 months plus 3.25 percent. Promissory notes of SEK 797 million are due for payment on 30 June 2026, and promissory notes of SEK 350 million are due for payment in Q3 2029. Approximately SEK 377 million of the promissory notes that are due for payment on 30 June 2026 will be repaid by Episurf issuing of Class B shares and convertible debentures that are convertible into Class B shares to the Seller. The Class B shares will be issued, and the convertibles debentures converted into Class B shares, at a subscription price of SEK 0.045 per share. The promissory note, which is due for payment in Q3 2029, can be repaid by the Seller subscribing for Class B shares with the support of warrants that Episurf will issue to the Seller, at a subscription price corresponding to SEK 0.045 per share.

Background and rationale

The Board of Directors of Episurf has for some time evaluated the company’s financial position and ability to secure external financing for the continued operation of the existing business. Taking into account the current market conditions and the company’s historical development, it is considered challenging to secure additional external financing for Episurf in its current form. The Board of Directors has therefore decided on the acquisition.

“We are very pleased to present this transaction, where Episurf’s business is growing to include primarily a growing and exciting real estate business. The background to this change in our business is that our medical technology part in individualized orthopaedic implants has come a very long way, but we can also state that we operate in a segment that requires extremely large resources, both financially and in terms of time. Scientifically and regulatorily, we have achieved much of what we wanted to achieve, but at the same time we believe that the commercial scale-up globally has not reached the speed that we had both believed and hoped for. In light of this, and in light of an increasingly tough financing climate, we made the assessment that we needed to evaluate other alternatives to take advantage of the great value that we believe exists in the Episealer® technology. This deal is a result of that work, and it opens up new opportunities for our business. The newly formed Company’s strategy will not only include management and development of commercial properties, but also medical technology development, production and sales. We look forward to achieving further milestones and commercial success for our Episealer® technology, especially in the important US market. This transaction ensures Episurf’s survival and enables continued development, while giving Episurf’s shareholders the opportunity to take part in value creation in new business operations. We believe this is a good strategy for Episurf, and we are proud to present this deal” says Ulf Grunander, Chairman of Episurf, and Katarina Flodström, CEO of Episurf, in a joint statement.