H&K AG: Capital increase

NOT FOR DISTRIBUTION OR RELEASE IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA 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 RELEASE.

Publication of inside information pursuant to Article 17 of Regulation (EU) No. 596/2014

H&K AG resolves on capital increase with subscription rights against contributions in cash and in kind in order to convert hybrid loans into equity

Oberndorf am Neckar, April 23, 2023 – Today, the management board of H&K AG ("Company") (ISIN DE000A11Q133 / WKN A11Q13) resolved with the approval of the supervisory board on a capital increase with subscription rights for existing shareholders by making partial use of the Company’s authorized capital 2022. For this purpose, the share capital of the Company shall be increased from EUR 27,640,920.00 by up to EUR 7,897,405.00 to up to EUR 35,538,325.00 by issuing up to 7,897,405 ordinary bearer shares with no par value ("New Shares"), each such share with a notional value of EUR 1.00 in the Company's share capital and with the same dividend rights as all other outstanding ordinary shares of the Company, including full dividend rights for the financial year ended December 31, 2022 ("Capital Increase"). The subscription ratio is set at 7:2, i.e. seven (7) existing shares of the Company entitle to subscribe for two (2) New Shares.

The Capital Increase will be carried out against contributions in cash and in kind. The two shareholders of the Company, COMPAGNIE DE DEVELOPPEMENT DE L'EAU S.A., Luxembourg, Grand Duchy of Luxembourg ("CDE"), and Alter Domus Trustee Services (Malta) Limited, Malta, as trustee of Valletta Benefit Trust, Malta (together with CDE, "Contributing Shareholders"), will be given the opportunity to contribute as a contribution in kind their repayment claims against the Company under three shareholder loans granted in a total nominal amount of EUR 95.0 million (together, "Hybrid Loans") (without accrued interest). By converting the Hybrid Loans, which are currently recorded as liabilities under the German Commercial Code (Handelsgesetzbuch), into equity, the Company expects to improve its balance sheet situation and reduce its indebtedness and thus interest burden.

Subject to the approval of the securities prospectus ("Prospectus") by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht – "BaFin") and the publication of the approved Prospectus on the website of the Company, 801,624 New Shares will be offered to the existing shareholders of the Company (with the exception of the Contributing Shareholders) by way of indirect subscription rights in the course of the Capital Increase during the subscription period beginning April 26, 2023 (inclusive) and ending May 9, 2023 (inclusive) at a subscription price of EUR 13.40 per New Share in accordance with the terms and conditions of the subscription offer, which is expected to be published on or about April 25, 2023 in the Federal Gazette (Bundesanzeiger). A trading in subscription rights on a stock exchange is not envisaged.

The Contributing Shareholders will be admitted to subscribe directly for 7,095,781 New Shares, also at a subscription price of EUR 13.40 per New Share, which they will subscribe for directly on the basis of investment agreements with the Company, partly against contribution of the Hybrid Loans (without accrued interest) as contribution in kind and partly against additional cash contributions.

The maximum gross proceeds from the planned Capital Increase (excluding contributions in kind) can amount to up to EUR 10.8 million. The Company intends to use the net proceeds from the Capital Increase for investments in production and infrastructure at its site in Oberndorf am Neckar.

Further information on the Capital Increase can be found on the Company's website (www.heckler-koch.com) in the section "Investor Relations – Capital Increase 2023".

Contact 

H&K AG

Dr. Björn Krönert

CFO of H&K AG

Phone: +49 7423 79-0

Fax: +49 7423 79-2350

E-mail: info.ir@heckler-koch-de.com

Important notice

This release may not be published, distributed or transmitted in the United States of America (including its territories and possessions, any state of the United States and the District of Columbia, "United States"), Canada, Australia, Japan or any other jurisdiction in which the publication, distribution or release would be unlawful. This release does not contain or constitute an offer of, or solicitation of an offer to purchase or subscribe for, securities to any person in the United States, Australia, Canada or Japan or in any other jurisdiction to whom or in which such offer or solicitation is unlawful.

This release constitutes neither an offer to sell nor a solicitation to buy securities of the Company. A public offer of the securities in Germany will be made solely on the basis of the Prospectus yet to be approved by BaFin. An investment decision regarding the securities of the Company should only be made on the basis of the Prospectus. The Prospectus will be published promptly upon approval by BaFin and will be available free of charge on the website of the Company (www.heckler-koch.com) under the "Investor Relations – Capital Increase 2023" section. The approval of the Prospectus by BaFin should not be understood as an endorsement of the securities offered. Investors should purchase securities solely on the basis of the Prospectus and should read the Prospectus before making an investment decision in order to fully understand the potential risks and rewards associated with the decision to invest in the securities.

In the member states of the European Economic Area other than Germany, this release is only addressed to and directed at persons who are "qualified investors" within the meaning of Article 2(e) of Regulation (EU) 2017/1129 of the European Parliament and of the Council of June 14, 2017 on the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market ("Prospectus Regulation").

This release may be distributed in the United Kingdom only to, and is only directed at, persons who are "qualified investors" within the meaning of Article 2(e) of the Prospectus Regulation as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018, and who are also (i) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended ("Order"), or (ii) persons falling within Article 49(2)(a) to (d) of the Order (high net worth companies, unincorporated associations, etc.) or (iii) persons to whom an invitation or inducement to engage in an investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities may otherwise be lawfully communicated or caused to be communicated (all such persons together being referred to as "Relevant Persons"). This release is directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity in securities of the Company is available only to Relevant Persons and will be engaged in only with Relevant Persons.

This release is not an offer of securities for sale in the United States. The securities mentioned herein have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended ("Securities Act") or with any securities regulatory authority of any state or any other jurisdiction of the United States. The securities may not be offered or sold in the United States absent registration or an exemption from the registration requirements of the Securities Act. The securities referred to herein have not been approved, disapproved or recommended by the U.S. Securities and Exchange Commission, any state securities commission in the United States or any other U.S. regulatory authority, or have any of the foregoing authorities passed upon or endorsed the merits of the offering of the securities referred to herein. There will be no public offer of these securities in the United States.

The securities referred to herein may not be offered of sold in Australia, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, Canada or Japan subject to certain exceptions.

Certain statements contained herein may constitute "forward-looking statements". Forward-looking statements are based on the current views, expectations, assumptions and information of the management of the Company which the Company has made to the best of its knowledge, but which do not claim to be correct in the future (in particular where such forward-looking information is in relation to matters outside the control of the Company). Forward-looking statements should not be construed as a promise of future results and developments and involve known and unknown risks and uncertainties. Various factors could cause actual future results, performance or events to differ materially from those described in these statements, and neither the Company nor any other person accepts any responsibility for the accuracy of the opinions expressed in this release or the underlying assumptions. The Company does not assume any obligations to update any forward-looking statements. Moreover, it should be noted that all forward-looking statements only speak as of the date of this release and that neither the Company nor the bank, except as required by law, to update any forward-looking statement or to conform any such statement to actual events or developments. Each of the Company and the bank and their respective affiliates expressly disclaims any obligation or undertaking to update, review or revise any forward-looking statement contained in this release, whether as a result of new information, future developments or otherwise.