On a day like today, when Smoltek’s press releas­es are full of details expressed in num­bers and finan­cial jar­gon, it is hard to see the for­est for the trees. But there is a solu­tion! Let’s rise above the tree­tops to get a heli­copter view of it all. So hop into my chop­per, and let’s go up.

Tender process

In yesterday’s blog post, Håkan Pers­son, CEO of Smoltek, explains that Smoltek is a deep tech incu­ba­tor or deep tech ven­ture studio.

Let’s unpack that a bit.

Deep tech is a term used to describe com­pa­nies that tack­le com­plex chal­lenges by push­ing the bound­aries of cur­rent tech­nol­o­gy through cut­ting-edge research and devel­op­ment. A key char­ac­ter­is­tic of deep-tech com­pa­nies is that they require sig­nif­i­cant cap­i­tal from per­sis­tent investors, as it takes long time  to turn advanced research into com­mer­cial­ly viable products.

A deep-tech incu­ba­tor or deep-tech ven­ture stu­dio is a deep-tech com­pa­ny that uses the intel­lec­tu­al prop­er­ty devel­oped through its R&D to build a port­fo­lio of com­pa­nies that will even­tu­al­ly be spun off. The deep-tech com­pa­ny pro­vides the ini­tial team, strate­gic direc­tion, and cap­i­tal to get each new ven­ture off the ground. Smoltek Semi and Smoltek Hydro­gen are such star­tups. They are part of the port­fo­lio of Smoltek Nan­otech­nol­o­gy Hold­ing AB.

Even­tu­al­ly, every port­fo­lio busi­ness will be spun-off, par­tial­ly or in its entire­ty, and sold to an indus­tri­al part­ner or investor. That’s the goal of an incu­ba­tor or  a ven­ture studio.

For Smoltek, this has an impor­tant twist. The spin-off com­pa­nies will typ­i­cal­ly pay roy­al­ties for the license to use our tech­nol­o­gy and pur­chase our ser­vices. Thus, Smoltek receives com­pen­sa­tion not only in the form of a pur­chase price, but also in the form of an ongo­ing rev­enue stream.

The nego­ti­at­ed license and ser­vice agree­ment with YAGEO is an exam­ple of this. Now that YAGEO has sus­pend­ed the final­iza­tion of it, Smoltek wants to find a new part­ner for Smoltek Semi.

Smoltek Hydro­gen is also approach­ing the point where it is rel­e­vant to sell all or part of their busi­ness to an indus­tri­al part­ner or financier. They have come a long way with their tech­nol­o­gy devel­op­ment and will soon take the next step.

Against this back­ground, Smoltek Nan­otech­nol­o­gy Hold­ing AB plans to ini­ti­ate a sys­tem­at­ic process to find buy­ers for all or parts of one or both of the com­pa­nies. This is expect­ed to take 6–12 months.

This was the main mes­sage of the press release on the bid­ding  process.

How Smoltek will be funded

As men­tioned in yesterday’s blog post, the plan was to use the rev­enue from the license and ser­vice agree­ment with YAGEO to fund Smoltek’s oper­a­tions and growth. Now that the agree­ment is on hold, Smoltek must find anoth­er way to fund the busi­ness while work con­tin­ues to find a new buy­er as described above.

Against this back­ground, the Board of Direc­tors of Smoltek has decid­ed to issue up to 57,685,506 new shares of SEK 0.45 each. Exist­ing share­hold­ers will have pref­er­en­tial sub­scrip­tion rights.

Smoltek’s four largest share­hold­ers, Board mem­bers and the CEO, among oth­ers, have com­mit­ted to sub­scribe for approx­i­mate­ly 20.4 per­cent of the shares. In addi­tion, Jin­der­man & Part­ners AB, UBB Con­sult­ing AB, JEQ Cap­i­tal AB, among oth­ers, guar­an­tee 30.6 per­cent of all shares. Both com­mit­ments are sub­ject to the con­di­tion that at least an addi­tion­al 29 per­cent of all issued shares are sub­scribed for. This means that at least 80 per­cent of the shares will be sub­scribed, rais­ing between SEK 20.8 mil­lion and SEK 26.0 mil­lion before the costs of the rights issue (approx­i­mate­ly SEK 1.5 million).

The raised mon­ey will be used

• to car­ry out pos­si­ble the sales of all or part of one or both of Smoltek Semi and Smoltek Hydro­gen, or only the con­cepts and intel­lec­tu­al prop­er­ty rights owned by each subsidiary.
• to con­tin­ue val­ue-adding tech­nol­o­gy devel­op­ment with­in Smoltek Semi and Smoltek Hydrogen
• to pay for ongo­ing costs in addi­tion beyond tech­nol­o­gy development

This was the main mes­sage of the press release on the new issue of shares.

Future direction

On June 4, Håkan Pers­son, CEO of Smoltek, will hold a webi­nar on the future direc­tion of Smoltek. There will be an oppor­tu­ni­ty to ask ques­tions. Do not miss it. Sign up today!