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2016-05-17

Recipharm AB: The Board of Directors of Recipharm resolves on a rights issue of approximately SEK 805 million and announces terms

Not for release, publication or distribution, directly or indirectly,
in or into the United States, Canada, Australia, Japan, Hong Kong,
New Zealand, South Africa or any other jurisdiction where such
distribution of this press release would be subject to legal
restrictions

The Board of Directors of Recipharm AB (publ) ("Recipharm" or the
"Company") has resolved to, based on the authorization from the
Extraordinary General Meeting on 10 May 2016, launch a new share
issue with preferential rights for existing shareholders (the "rights
issue") and has determined the terms of the rights issue.

Recipharm announced on 18 April 2016, that the Company had signed two
separate agreements to acquire Kemwell's pharmaceutical CDMO
businesses. The first acquisition comprises Cirrus Pharmaceuticals
Inc. with operations in the US, which services include development of
inhalation, liquid, semi-solid, solid and parenteral products with
emphasis on early formulation work as well as development of
analytical methods and testing, and Kemwell AB in Sweden, which
services primarily includes manufacturing of APIs, solids and
semi-solid formulations. The second acquisition refers to Kemwell
Biopharma Private Ltd's pharmaceutical operations in India[1]
(http://file///G:/Shared/Corporate%20Development/IR/F%C3%B6retr%C3%A4dese...).
The operations comprise both development services as well as
commercial manufacturing of solid, semi-solid, liquid and topical
dose products.

In connection with the announcement of the acquisitions, the Company
announced that the Board of Directors intended to submit a proposal
for authorisation from an Extraordinary General Meeting, to carry out
first, a rights issue of approximately SEK 850 million for the
purpose of financing the acquisition of Kemwell Biopharma Private
Ltd's pharmaceutical operations in India, as described above, and an
issue in kind of Class B shares to the sellers of shares in Kemwell
AB[2]
(http://file///G:/Shared/Corporate%20Development/IR/F%C3%B6retr%C3%A4dese...),
that is, the operations in Sweden. The Extraordinary General Meeting
on 10 May 2016 authorized the Board of Directors to carry out the
rights issue and the issue in kind. In conjunction with the
Extraordinary General Meeting, the Board of Directors was also
authorized, in such case that the shares in the issue in kind will
not be registered before the record date of the rights issue, to
carry out a directed share issue (the "directed share issue") to the
sellers of Kemwell AB[2]
(http://file///G:/Shared/Corporate%20Development/IR/F%C3%B6retr%C3%A4dese...).
Closing of the acquisition of Kemwell AB is expected to take place
during the second quarter 2016 and in connection therewith, the Board
will decide on an issue in kind of Class B shares in Recipharm,
corresponding to a value of USD 55 million (SEK 453 million[3]
(http://file///G:/Shared/Corporate%20Development/IR/F%C3%B6retr%C3%A4dese...)),
to the sellers of shares in Kemwell AB,[2,4]
(http://file///G:/Shared/Corporate%20Development/IR/F%C3%B6retr%C3%A4dese...).
Given that closing of the acquisition will not be finalised in such
time that the shares from the issue in kind can be registered before
the record date of the rights issue, the Board of Directors has
decided to reduce the proceeds from the rights issue, from
approximately SEK 850 million to approximately SEK 805 million, if
fully subscribed and before transaction costs, and to instead carry
out a directed share issue of approximately SEK 51 million against
cash payment to the sellers of Kemwell AB[5]
(http://file///G:/Shared/Corporate%20Development/IR/F%C3%B6retr%C3%A4dese...).

The entire issue proceeds from the rights issue will be used to partly
finance the purchase price for the above described acquisition of
Kemwell Biopharma Private Ltd's pharmaceutical operations in India,
as announced on 18 April 2016.

The rights issue in brief

· The rights issue comprises no more than 2,537,143 Class A shares
and no more than 7,273,924 Class B shares, in total no more than
9,811,067 shares.

· The subscription price is SEK 82 per share. No commission will be
charged.

· The rights issue proceeds will amount to approximately SEK 805
million before transaction costs, if the rights issue is fully
subscribed.

· Those who on the record date, 23 May 2016, are registered as
shareholders of Recipharm will receive one (1) Class A subscription
right for each Class A Recipharm share held and one (1) Class B
subscription right for each Class B Recipharm share held. The
subscription rights entitle the holder to subscribe for new shares
with first priority preferential right, in which case five (5)
subscription rights of Class A and Class B, respectively, entitle the
holders to subscribe for one (1) new Recipharm Class A and Class B
share, respectively. Shares that are not subscribed for by
shareholders entitled to subscribe pursuant to first priority
preferential right shall, regardless of share class, be offered to
all shareholders for subscription (second priority preferential
right). In addition, investors will be invited to submit their
interest in subscribing for new shares without first or second
priority preferential right.

· The record date is 23 May 2016. The last day of trading in
Recipharm's Class B shares including the right to receive
subscription rights is 19 May 2016, and the first day of trading in
Recipharm's Class B shares excluding the right to receive
subscription rights is 20 May 2016.

· The subscription period will run from and including 25 May 2016 up
to and including 7 June 2016.

· Existing shareholders in Recipharm, controlling 58.7 per cent of
the share capital and 87.5 per cent of the votes, have committed or
indicated their intentions to subscribe for their respective pro rata
shares in the rights issue.

Background and reasons for the rights issue

On 18 April 2016, Recipharm announced that the Company had signed two
separate agreements to acquire Kemwell's pharmaceutical contract
development and manufacturing (CDMO) businesses. The first
acquisition, which comprises US[6]
(http://file///G:/Shared/Corporate%20Development/IR/F%C3%B6retr%C3%A4dese...)
and Swedish[7]
(http://file///G:/Shared/Corporate%20Development/IR/F%C3%B6retr%C3%A4dese...)
operations, is expected to close during the second quarter 2016. The
acquisition is subject to review by the Swedish Competition Authority
and confirmation from a third party regarding certain commitments.
The condition regarding review by the Swedish Competition Authority
has been met. The second acquisition, comprising operations in
India[8]
(http://file///G:/Shared/Corporate%20Development/IR/F%C3%B6retr%C3%A4dese...),
is conditional upon governmental approvals and expected to close
before year end.

The entire issue proceeds from the rights issue together with
available funds, existing credit facilities, and the issue proceeds
from the directed share issue, will finance the above described
acquisition of Kemwell Biopharma Private Ltd's pharmaceutical
operations in India. The acquisition of Cirrus Pharmaceuticals Inc.
and Kemwell AB is financed with available funds, existing credit
facilities, as well as the issue in kind of Class B shares in
Recipharm to the sellers of Kemwell AB, corresponding to a value of
approximately USD 55 million. For additional information on the
acquisitions, please refer to the press release published on 18 April
2016.

Terms and conditions for the rights issue

Those who on the record date, 23 May 2016, are registered by Euroclear
Sweden AB as a shareholder in Recipharm, will receive one (1) Class A
subscription right for each Class A Recipharm share held and one (1)
Class B subscription right for each Class B Recipharm share held. The
subscription rights entitle the holder to subscribe for new shares
with first priority preferential right, in which case five (5)
subscription rights of Class A and Class B respectively, entitle the
holder to subscribe for one (1) new share of Class A and Class B,
respectively. Shares that are not subscribed for by shareholders
entitled to subscribe pursuant to first priority preferential right
shall, regardless of share class, be offered to all shareholders for
subscription (second priority preferential right). In connection with
transfer of a subscription right (first priority preferential right),
the second priority preferential right is also transferred to the new
holder of the subscription right. In addition, investors will be
invited to submit their interest in subscribing for new shares
without first or second priority preferential right (without
preferential right).

The Company's share capital will be increased by not more than SEK
4,905,534 through the issuance of no more than 2,537,143 Class A
shares and no more than 7,273,924 Class B shares. The subscription
price is SEK 82 per share, corresponding to total rights issue
proceeds of approximately SEK 805 million before transaction costs,
provided that the rights issue is fully subscribed.

The existing Recipharm Class B shares are traded including the right
to receive subscription rights up to and including 19 May 2016 and
the first day of trading in Recipharm's Class B shares excluding the
right to receive subscription rights is 20 May 2016. The subscription
period runs from 25 May 2016 up to and including 7 June 2016.
Recipharm's Board of Directors has the right to extend the
subscription period which, when applicable, will be announced through
a press release.

Existing shareholders who choose not to participate in the rights
issue will have their ownership diluted by approximately 17 per
cent[9]
(http://file///G:/Shared/Corporate%20Development/IR/F%C3%B6retr%C3%A4dese...),
but are able to financially compensate for this dilution by selling
their subscription rights. Unexercised subscription rights must be
sold in order not to lapse without value.

Commitments and indications of intent

Recipharm's two main shareholders, Flerie Participation AB, which is
controlled by Recipharm's CEO Thomas Eldered, and Cajelo Invest AB,
wh...

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