Otovo and EDEA announce merger plan

Otovo and EDEA announce merger plan

07 Apr 2022 09:28 CEST

Oslo, 7 April 2022: The board of directors of Otovo AS ("Otovo" or the
"Company") today announces a merger plan with European Distributed Energy Assets
Holding AS ("EDEA").

On 10 November 2021 Otovo offered an all-share offer for EDEA, and after the
completion of the transaction Otovo had increased its ownership from 18.63% to
88.43%. Now in order to optimise the ownership structure of EDEA, and to reduce
excess reporting and operational expenses in EDEA the board of directors of
Otovo and EDEA have jointly prepared a merger plan for the merger between the
companies, where Otovo will be the acquiring entity and EDEA will be the
transferring entity. The merger will be completed by the dissolvement of EDEA
and by the transfer of all of EDEA's assets, rights and liabilities to Otovo.

As consideration, the shareholders of EDEA, with the exception of Otovo, will
receive 1.7 new shares in Otovo for each share owned in EDEA. The
share-for-share exchange ratio is based on fair values in accordance with
recognised valuation principles. In the merger, Otovo is valued at a total
equity value of NOK 3,484,390,351 based on volume-weighted trades on Euronext
Growth Oslo in the period from 25 March 2022 to 29 March 2022 and EDEA is valued
at a total equity value of NOK 285,132,515. Otovo currently owns 88.43% of the
shares in EDEA and no merger consideration will be issued for such shareholding.

The merger will result in a share capital increase in Otovo of NOK 12.660,70, by
the issuance of 1.266.070 new shares. The new shares will be admitted to trading
on Euronext Growth Oslo immediately after the merger has been completed,
together with Otovo's other shares.

The reason for the Merger is to optimise the business of EDEA. Since Otovo
established EDEA, leasing has proven to be attractive to customers in Europe,
and access to capital and the interest in investing in this space has increased
significantly. While the unlevered internal rate of return for EDEA's current
portfolio is around 10%, higher return on the equity can be obtained by
financing parts of the balance sheet by debt. Volume is key to increase the debt
to equity ratio and unlock additional value in EDEA. Therefore, it is preferable
to increase marketing spending and other customer acquisition efforts but this
is difficult in today's setup where Otovo decides the marketing spend, but is
not exposed to the full value creation in EDEA.

The market practice in the residential solar sector is increasingly to have the
financing entity of leasing assets as a fully-owned subsidiary within the same
group as the origination company that sells the leasing contracts. In such a
setup, the interests between the originator and the financier are aligned, and
the origination company is incentivised to increase the leasing share of sales
thereby increasing the total value created. The merger is further expected to
reduce excess reporting and operational expenses in EDEA, and the merged company
is expected to be better positioned for accelerated growth and have greater
flexibility in terms of capitalization and future strategy for financing leasing
of solar constructions.

The merger plan will be submitted to the annual general meetings of Otovo and
EDEA for approval, both scheduled for 26 April 2022. Subject to approval by the
general meetings, the merger is expected to be completed in mid-June 2022
following expiry of the creditor notice period.

Further information and the merger plan will be provided in the notice of the
general meeting which is expected to be distributed no later than 12 April 2022.

About Otovo

For homeowners, Otovo is the easiest way to get solar panels on the roof, and
batteries in the home. Otovo is a marketplace that organises hundreds of local,
high quality and qualified energy installers. The company uses its proprietary
technology to analyse the potential of any home and finds the best price and
installer for customers based on an automatic bidding process between available
installers.

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Follow us on investor.otovo.com for reports, financial calendar, contact
details, and more.
For further information please contact:

Petter Ulset
CFO
[email protected]
+47 97 34 37 47

Lars Ekeland
General Counsel
[email protected]
+47 9160 70 53

More information:
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Source

Otovo AS

Provider

Oslo Børs Newspoint