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Desert Control AS - Announcement of a Fully Underwritten Rights Issue
NOT FOR DISTRIBUTION OR RELEASE, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED
STATES, CANADA, AUSTRALIA, THE HONG KONG SPECIAL ADMINISTRATIVE REGION OF THE
PEOPLE’S REPUBLIC OF CHINA OR JAPAN OR ANY OTHER JURISDICTION IN WHICH THE
DISTRIBUTION OR RELEASE WOULD BE UNLAWFUL. OTHER RESTRICTIONS ARE APPLICABLE.
PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT
Sandnes, Norway, 1 July 2026. Desert Control AS (the “Company”) hereby announces
a fully underwritten rights issue with preferential subscription rights (the
“Subscription Rights”) for the Company’s existing shareholders to raise gross
proceeds of NOK 70 million (the “Rights Issue”), which will be fully
underwritten by a consortium of underwriters (the “Underwriters”) comprising (i)
certain larger existing shareholders in the Company, representing approx. 67% of
the total underwritten amount (including approx. 45% commitment from existing
management and members of the Company’s board of directors (the “Board”)), and
(ii) new investors.
Comments from the CEO
"As outlined in our Capital Markets Day on 13 May, the Company is making
substantial progress across its business initiatives. In the first half of the
year, we completed 29 pilots across the American Southwest and a full commercial
application at Berkeley Country Club under our PAYS model. These pilots cover a
broad array of crop types and geographic areas within our focus region and are
largely with growers farming more than 1,000 acres.
We continue to see strong results regarding water and input savings and
promising early signs of yield improvement in several crop types. Encouragingly,
in addition to interest from our targeted permanent crop growers, we have seen
increasing interest from growers of high value vegetable crops in both
California and Arizona. With harvest season beginning in much of California, we
anticipate a temporary slowdown in piloting activity, but also an acceleration
in pilot results and commercial conversations.
Our R&D organization, led by our new CSO Mike Canady, continues to expand our
collaborations with customers and academic institutions to better understand
LNC’s ability to enhance yields and drive input savings. Finally, we expect to
be in the field in early July with our new LNC production unit. It has completed
extensive testing and we look forward to harnessing its capabilities to help our
customers improve the health of their soil."
James Thomas, CEO
Use of Proceeds
The net proceeds from the Rights Issue will be used to extend cash runway
through approximately 10 to 14 months following completion of the Rights Issue,
covering core operations, working capital and further investments in production
units and sales teams, as well as other general corporate purposes.
Proposed Rights Issue
The Rights Issue is subject to, inter alia, the following conditions (together,
the “Conditions”): (i) an extraordinary general meeting (the “EGM”) of the
Company, expected to be held on 16 July 2026, having resolved the Rights Issue,
(ii) the EGM granting the Board an authorization to increase the share capital
for the purpose of issuance of Consideration Shares (as defined below), (iii)
the Company having published a national prospectus (the “Prospectus”) as
registered in the Norwegian Register of Business Enterprises (“NRBE”) and (iv)
the Underwriting Agreements (as defined below) remaining in full force and
effect.
Arctic Securities AS has been engaged as sole manager (the “Manager”) for the
Rights Issue.
Subject to approval by the EGM, each existing shareholder of the Company as of
the date of the EGM (and being registered as such in Euronext Securities Oslo,
the Norwegian Central Securities Depository (the “VPS”) as at the expiry of the
second trading day following the EGM (the “Record Date”)) will be granted
Subscription Rights (rounded down to the nearest whole number of Subscription
Rights) in proportion to the number of existing shares registered in the
Company’s shareholder register as at the Record Date, cf. section 10-4 of the
Norwegian Private Limited Liability Companies Act. Each Subscription Right will,
subject to applicable securities laws, give the right to subscribe for and be
allocated one new share in the Company (the “Offer Shares”). The Subscription
Rights will be tradable and listed on the Euronext Growth Oslo (“EGO”) from and
including the first day of the subscription period and until 16:30 CEST four
trading days prior to the expiry of the subscription period. Over-subscription
with Subscription Rights will be allowed. Except for subscriptions by David
Borah (Company CFO) and Juli Jessen (Company Board member) as an integral
component of their underwriting obligation, subscription without Subscription
Rights will not be permitted.
The subscription price in the Rights Issue (the “Subscription Price”), and thus
the exact number of Offer Shares and the exact amount of the share capital
increase, will be proposed by the Board, based on a recommendation from the
Manager, on the day prior to the EGM. Pursuant to the Underwriting Agreements
(as defined below), the Subscription Price shall be equal to the theoretical
share price exclusive of the subscription rights (TERP), calculated on the basis
of the volume-weighted average price (VWAP) of the Company’s shares on EGO over
the three last trading days prior to the date of the EGM, less a discount of at
least 32.5%. The Board’s resolution in this respect will be announced through a
stock exchange announcement on the day prior to the EGM and be reflected in the
final proposed resolution to the EGM.
Notice of the EGM is expected to be distributed to the Company’s shareholders on
or about 2 July 2026 and published in a separate stock exchange announcement.
It is contemplated that the Rights Issue will be conducted with a two-week
subscription period, commencing on or about 27 July 2026, subject to
satisfaction of the Conditions for the Rights Issue.
All dates and other figures with respect to the Rights Issue included herein
remain tentative and subject to change. Any changes will be announced at the EGM
or through stock exchange announcements.
Underwriting
Pursuant to, and subject to the terms and conditions of the underwriting
agreements between the Company and the Underwriters (the “Underwriting
Agreements”), the Underwriters have undertaken on a pro-rata basis (not jointly)
to underwrite an aggregate subscription amount in the Rights Issue of NOK 70
million (the “Total Underwriting Obligation”). Any Offer Shares subscribed in
the Rights Issue will reduce the underwriting commitment of the Underwriters.
Each of the Underwriters is entitled to an underwriting fee of either (i) 10% of
the underwriting obligation if received as a payment in cash or (ii) 12% of the
underwriting obligation if received as new shares in the Company issued at the
Subscription Price (the “Consideration Shares”), such fee being subject to and
payable upon completion of the Rights Issue (i.e. upon registration of the share
capital increase pertaining to the Rights Issue with the NRBE).
Each Underwriter has undertaken to vote in favor of the resolutions required to
complete the Rights Issue at the EGM, provided that it is a shareholder in the
Company at the date of the EGM.
Allocation
The allocation principles for the Offer Shares in the Rights Issue will be set
out in the EGM resolution and in the Prospectus, but are expected to be as set
out below.
a)Firstly, allocation of Offer Shares to subscribers will be made in accordance
with granted and acquired Subscription Rights which have been validly exercised
during the Subscription Period. Each Subscription Right will give the right to
subscribe and be allocated one Offer Share in the Rights Issue.
b)Secondly, if not all Subscription Rights are validly exercised during the
Subscription Period and there are remaining unallocated Offer Shares following
the allocation pursuant to paragraph a) above, subscribers who have exercised
their Subscription Rights and over-subscribed, will be allocated additional
Offer Shares on a pro rata basis based on the number of Subscription Rights
exercised by each subscriber. To the extent that pro-rate allocation is not
possible, the Company will determine the allocation by drawing of lots.
c)Thirdly, Offer Shares not allocated pursuant to a) and b) above, will be
allocated to the underwriters David Borah (Company CFO) and Juli Jessen (Company
Board member), or their respective directly or indirectly controlled companies,
pro rata with an amount corresponding to the NOK equivalent of up to USD 100,000
each and USD 200,000 in aggregate.
d)Finally, Offer Shares not allocated pursuant to paragraph a) through c) above,
will be allocated to and subscribed by the Underwriters pursuant to, and in
accordance with, each Underwriter’s underwriting obligation pursuant to the
terms and conditions of Underwriting Agreements.
The final allocation principles resolved by the EGM and set out in the
Prospectus may deviate from those set out above.
Indicative timeline
According to the current tentative timetable, and subject to all of the
Conditions being met, it is expected that the Rights Issue will take place
according to the following tentative timeline:
EGM: On or around 16 July 2026
Last day including Subscription Rights: On or around 16 July 2026
First day of trading in the shares excluding Subscription Rights: On or around
17 July 2026
Record Date: On or around 20 July 2026
Publication of the Prospectus: On or around 23 July 2026
Commencement of the subscription period and first day of trading in the
Subscription Rights: On or around 27 July 2026
Last day of trading in the Subscription Rights: On or around 4 August 2026
Last day of the subscription period: On or around 10 August 2026
Allocation of the Offer Shares: On or around 11 August 2026
Payment of the Offer Shares: On or around 14 August 2026
Registration of the share capital increase with the NRBE: On or around 20 August
2026
All dates and other figures with respect to the Rights Issue included herein
remain tentative and subject to change. Any changes will be announced at the EGM
or through stock exchange announcements.
Advokatfirmaet Selmer AS is acting as legal advisor to the Company.
Advokatfirmaet Thommessen AS is acting as legal advisor to the Manager.
For more information, please contact:
David Borah
Chief Financial Officer
david.borah@desertcontrol.com
This information is considered to be inside information pursuant to the EU
Market Abuse Regulation and is subject to the disclosure requirements pursuant
to section 5-12 of the Norwegian Securities Trading Act. This stock exchange
announcement was published by David Borah, Chief Financial Officer of Desert
Control AS, at the time and date stated above.
About Desert Control:
Desert Control develops innovative solutions to enhance soil health, conserve
water, and promote ecosystem resilience. Its proprietary Liquid Natural Clay
(LNC) transforms sandy, fast-draining soils to improve water retention and
nutrient availability. The Company delivers customized, outcome-based solutions
that strengthen sustainability and operational efficiency across agriculture,
forestry, and green landscapes. Desert Control’s technology supports long-term
resource preservation and climate resilience.
Important Notice
This announcement does not constitute an offer of securities for sale or a
solicitation of an offer to purchase securities of the Company in the United
States or any other jurisdiction. Copies of this document may not be sent to
jurisdictions, or distributed in or sent from jurisdictions, in which this is
barred or prohibited by law. The securities of the Company may not be offered or
sold in the United States absent registration or an exemption from registration
under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”).
The securities of the Company have not been, and will not be, registered under
the U.S. Securities Act. Any sale in the United States of the securities
mentioned in this communication will be made solely to “qualified institutional
buyers” as defined in Rule 144A under the U.S. Securities Act. No public
offering of the securities will be made in the United States.
Any offering of the securities referred to in this announcement will be made by
means of the Prospectus.
This announcement is an advertisement and is not a prospectus for the purposes
of Regulation (EU) 2017/1129 of the European Parliament and of the Council of 14
June 2017 on prospectuses to be published when securities are offered to the
public or admitted to trading on a regulated market, and repealing Directive
2003/71/EC (as amended) as implemented in any EEA Member State (the “Prospectus
Regulation”). Investors should not subscribe for any securities referred to in
this announcement except on the basis of information contained in the
Prospectus. Copies of the Prospectus will, following publication, be available
from the Company’s registered office and, subject to certain exceptions, on the
website of the Manager. In any EEA Member State, this communication is only
addressed to and is only directed at qualified investors in that Member State
within the meaning of the Prospectus Regulation, i.e., only to investors who can
receive the offer without an approved prospectus in such EEA Member State.
In the United Kingdom, this communication is only addressed to and is only
directed at persons in the United Kingdom that are “qualified investors” as
defined in paragraph 15 of Schedule 1 to the Public Offers and Admissions to
Trading regulations 2024, and that are (i) investment professionals falling
within Article 19(5) of the Financial Services and Markets Act 2000 (Financial
Promotion) Order 2005, as amended (the “Order”) or (ii) high net worth entities,
and other persons to whom this announcement may lawfully be communicated,
falling within Article 49(2)(a) to (d) of the Order (all such persons together
being referred to as “relevant persons”). This communication must not be acted
on or relied on by persons who are not relevant persons. Any investment or
investment activity to which this communication relates is available only to
relevant persons and will only be conducted with relevant persons. Persons
distributing this communication must satisfy themselves that it is lawful to do
so.
This document is not for publication or distribution in, directly or indirectly,
Australia, Canada, Japan, the United States or any other jurisdiction in which
such release, publication or distribution would be unlawful, and it does not
constitute an offer or invitation to subscribe for or purchase any securities in
such countries or in any other jurisdiction. In particular, the document and the
information contained herein should not be distributed or otherwise transmitted
into the United States or to publications with a general circulation in the
United States of America.
The Manager is acting for the Company in connection with the Rights Issue and no
one else and will not be responsible to anyone other than the Company for
providing the protections afforded to their respective clients or for providing
advice in relation to the Rights Issue or any transaction or arrangement
referred to in this announcement.
Matters discussed in this announcement may constitute forward-looking
statements. Forward-looking statements are statements that are not historical
facts and may be identified by words such as “anticipate”, “believe”,
“continue”, “estimate”, “expect”, “intends”, “may”, “should”, “will” and similar
expressions. The forward-looking statements in this release are based upon
various assumptions, many of which are based, in turn, upon further assumptions.
Although the Company believes that these assumptions were reasonable when made,
these assumptions are inherently subject to significant known and unknown risks,
uncertainties, contingencies and other important factors which are difficult or
impossible to predict and are beyond its control. Such risks, uncertainties,
contingencies and other important factors could cause actual events to differ
materially from the expectations expressed or implied in this release by such
forward-looking statements. The information, opinions and forward-looking
statements contained in this announcement speak only as at its date and are
subject to change without notice. This announcement is made by, and is the
responsibility of, the Company.
Neither the Manager nor any of their affiliates makes any representation as to
the accuracy or completeness of this announcement and none of them accepts any
responsibility for the contents of this announcement or any matters referred to
herein. This announcement is for information purposes only and is not to be
relied upon in substitution for the exercise of independent judgment. It is not
intended as investment advice and under no circumstances is it to be used or
considered as an offer to sell, or a solicitation of an offer to buy any
securities or a recommendation to buy or sell any securities of the Company. No
reliance may be placed for any purpose on the information contained in this
announcement or its accuracy, fairness or completeness.
Neither the Manager nor any of their respective affiliates accepts any liability
arising from the use of this announcement.
Kilde
