9 Sep 2011: NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART DIRECTLY OR INDIRECTLY, IN AUSTRALIA, CANADA, JAPAN OR THE UNITED STATES.
 
Reference is made to NorDiag ASA's ("NorDiag" or the "Company") stock exchange announcement on 25 August 2011 in relation to the Company's Q2 report and cash requirements. In order to address the Company's financial situation, NorDiag proposes to carry out a rights issue of approximately 150 million to 200 million new shares at a subscription price of NOK 0.10, rising gross proceeds of approximately NOK 15 million to NOK 20 million, with pre-emptive subscription rights for existing shareholders (the "Rights Issue"). The Company has received indications from certain existing shareholders in the Company that they will underwrite for a total amount of NOK 7 million in the Rights Issue. It is a condition for these indications to become binding commitments that the aggregate underwritten amount is NOK 15 million prior to the extraordinary general meeting (the "EGM") that shall resolve the Rights Issue.
 
Existing shareholders and new investors are invited to participate in the underwriting syndicate. The underwriting invitation is expected to be closed on Thursday 15 September 2011 at 17:30 CET. Investors that are interested in participating in the underwriting syndicate may contact DnB NOR Markets, Corporate Finance at tel +47 22 94 88 80.
 
The Company may enter into liquidation if the minimum amount of the Rights Issue is not underwritten prior to the EGM, and if a bridge loan is not obtained to finance operations in the period from the EGM until the completion of the Rights Issue.
 
NorDiag management and representatives of NorDiag's Board of Directors (the "Board") will invite shareholders to a shareholder information meeting on Tuesday 13 September 2011. Specific time and place will be announced separately.
 
Cash situation
As communicated in NorDiag's Q2 report and its stock exchange announcement on 25 August 2011, the Company needs access to additional financial resources in Q3 2011 to continue its operations. Break-even run-rate on cash flow is estimated to be reached in 2013. The capital needed to finance the Company to cash flow break-even is estimated to be in the range of NOK 25 million to NOK 35 million.
 
Together with its advisors, the Company has been assessing its financing alternatives, and has in this respect also obtained feedback from the largest shareholders of the Company, as well as potential new investors. It is the view of the Board that the long-term development of the Company will require owners that are committed to support the Company financially or industrially. The proposed Rights Issue is intended to satisfy the Company's financing needs for the next 6 to 9 months. Within this period, the Board will pursue strategic options for the Company, with the aim to either offer the shareholders an exit opportunity, or to secure the Company's long-term capital need by attracting strategic investors. The Board has resolved a plan to execute on this strategy, and will in the near term engage external advisors to manage and ensure the quality of the process.
 
The Company is in an ongoing dialogue with its main creditors to secure the necessary flexibility to be able to complete the proposed Rights Issue and secure continued operations. The Company has a credit line of NOK 5 million with DnB NOR Bank. The amount outstanding under the credit line is approximately NOK 2.8 million. The lender may terminate the credit line and require repayment of the outstanding amount if the Company in the opinion of the lender is in a situation where the Company may not be able to fulfill its obligations to the lender. To support predictability with regards to the capital need for the Company going forward, DnB NOR Bank has under certain conditions agreed to restructure the outstanding loan amount into a loan with a 6 months duration, and the Company may not draw any additional amounts under the loan beyond what is already drawn. The restructuring of the loan will be dependent on the approval of the Rights Issue by the EGM, a satisfactory underwriting for a minimum amount of NOK 15 million in the Rights Issue, the establishment of a satisfactory bridge loan for the period until settlement of the Rights Issue, and certain other commitments from the Company's other lender, Innovasjon Norge.
 
The Company has two loans from Innovasjon Norge of NOK 4 million and NOK 6 million. Repayment of these loans is scheduled to commence on 10 December 2011, with a quarterly installment of NOK 0.7 million for the two loans combined. The Company will apply for a postponed repayment schedule for these loans. In addition, Innovasjon Norge has granted a loan of NOK 3 million to be disbursed upon delivery of the Company's new Arrow automated production line which is expected to be delivered late September2011. The disbursement is subject to customary market conditions. The Company is in a dialogue with Innovasjon Norge, and has received positive indications that postponed repayment schedule will be accepted and that disbursement of the new loan will take place if the EGM approves the Rights Issue, and the underwriting and bridge loan is obtained.
 
The Company is in the process of implementing a cost cutting program that is expected to reduce the Company's existing cost base by approximately 15%, with majority of the effect starting 1 January 2012. This includes a proposal to reduce salaries of key employees by up to 20% over the next 24 months starting from 1 October 2011. To compensate key employees for a reduction in salary and assure aligned interests between the shareholders and key employees, it is proposed that such employees will be granted warrants to subscribe for a number of shares equal to the nominal amount of salary reduction divided by NOK 0.10, subject to approval in the EGM.
 
The Rights Issue
The Board has today resolved to call for the EGM to be held on 30 September 2011 to resolve the Rights Issue.  The notice of the EGM is attached to this announcement.
 
The Company will issue minimum 150,000,000 and maximum 205,809,435 new shares in the Rights Issue. Shareholders as of 14 November 2011 will be given three transferrable rights  ("Subscription Rights") for each share held in the Company as per such date. Each Subscription Right will give the right to subscribe for and be allotted one new share with a nominal value of NOK 0.02 at a subscription price of NOK 0.10.
 
The current nominal value of the shares in the Company is NOK 1. In order to facilitate the subscription price of NOK 0.10 in the Rights Issue, the Board is proposing that the EGM resolves a share capital reduction in which the share capital of the Company is reduced by NOK 67,231,082.10 from NOK 68,603,145 to NOK 1,372,062.90 by a reduction of the nominal value of the shares from NOK 1 to NOK 0.02 (the "Share Capital Reduction"). The reduction amount will be transferred to other equity. The completion of the Share Capital Reduction cannot take place before the expiry of a statutory two-months' creditor notice period that will commence as soon as possible following the EGM.
 
Completion of the Rights Issue is conditional upon (i) the minimum Rights Issue amount of NOK 15 million being underwritten prior to the EGM, (ii) a bridge loan of approximately NOK 8 million being made available to the Company, (iii) the EGM approving the Rights Issue and the Share Capital Reduction, (iv) the completion of the Share Capital Reduction and (v) the subscription period for the Rights Issue commencing no later than 31 December 2011.
 
Underwriting
The Company has received indications from certain existing shareholders in the Company that they will underwrite for a total amount of NOK 7 million in the Rights Issue, out of which approximately NOK 1 million has been indicated by members of the Company's management and the Board. In the period leading up to the EGM, NorDiag will aim to obtain underwriting commitments for this amount and an additional NOK 8 million in order for the minimum Rights Issue amount of NOK 15 million being underwritten as of the date of the EGM.
 
The underwriters will on a pro rata basis in proportion to their respective participation in the underwriting syndicate be liable to subscribe for any unsubscribed shares in the Rights Issue required in order for an amount equal to the total underwritten amount to be subscribed for in the Rights Issue.
 
Each underwriter will receive (i) preferred allocation of new shares in the Rights Issue prior to over-subscriptions or subscriptions without subscription rights by investors who are not participating in the underwriting syndicate, (ii) a commission of 2.5 per cent of its respective underwriting commitment corresponding to up to an amount equal to its pro rata portion of the maximum amount of the Rights Issue based on the underwriter's shareholding in the Company as of 8 September 2011 and (iii) 5.0 per cent of any excess underwriting commitment.
 
Shareholders and other investors that desire to participate in the underwriting syndicate may contact DnB NOR Markets, Corporate Finance at tel +47 22 94 88 80. The minimum commitment amount for underwriters is NOK 400,000. The Company may at its own discretion decide to invite a limited number of investors to participate with a lower amount.
 
The allocation of  underwriting commitment for each underwriter will be decided at the sole discretion of the Company on the basis on inter alia i) timing of the application, ii) size of the application, iii) existing shareholding in the Company, and iv) investor quality.
 
Bridge loan
Due to the need for completion the Share Capital Reduction prior to completion of the Rights Issue, the subscription period for the Rights Issue is expected to be from 18 November to 2 December 2011, and the registration of the new share capital is expected on or about 15 December 2011. To provide the necessary funds to finance operations in the period from the EGM until the completion of the Rights Issue, NorDiag  is in dialogue with several large shareholders to establish a shareholder loan of approximately NOK 8 million as a bridge financing. The disbursal of the shareholder loan to the Company will be dependent on the approval of the Rights Issue in the EGM, and a satisfactory underwriting for a minimum amount of NOK 15 million of the Rights Issue, as well as certain commitments from creditors.
 
The shareholder loan may be used as settlement for shares subscribed in the Rights Issue by the lenders.
 
Indicative time schedule
Below is an indicative time schedule for the Rights Issue:
•    9 September to 17:30 CET on 15 September 2011: Underwriting syndicate to be established
•    30 September 2011: EGM to resolve Share Capital Reduction and Rights Issue
•    14 November 2011: Last day of trading in NorDiag shares inclusive Subscription Rights
•    18 November 2011: First day of subscription period for the Rights Issue
•    2 December 2011: Last day of subscription period for the Rights Issue
•    5 December 2011: Expiry of creditor notice period for Share Capital Reduction
•    8 December 2011: Allocation of new shares
•    14 December 2011: Payment for new shares
 
If the minimum amount of the Rights Issue is not underwritten prior to the EGM, the Company may enter into liquidation. In parallel with the effort to secure the underwriting, the Company will continue to explore other potential sources of financing. However, it is uncertain whether such other sources of financing can be made available to the Company, or that an agreement to obtain such financing will offer any remaining value to the current shareholders.
 
For further information, shareholders are encouraged to contact the Company.
 
See enclosed notice for ex.ord.  general meeting
 
Contact:
CEO Mårten Wigstøl                     Phone. +47 911 65775
CFO Tone Kvåle                          Phone: +47 915 19576
 
About NorDiag:
NorDiag is a biotechnology company developing, manufacturing and marketing automated solutions (instruments and reagents) for sample preparation of DNA from difficult biological samples. DNA diagnostics give more rapid and precise answers, and are the fastest growing field within diagnostics. The Company's sample preparation solutions are today used in connection with STI, tuberculosis, MRSA, respiratory pathogens and viruses on instruments for large and small laboratories. NorDiag was founded in 2003 and has its headquarters in Oslo, Norway. The Company has offices and laboratories in Stockholm, Sweden and in Atlanta (GA), USA. The group has today 34.3 man-labour years. NorDiag is listed on the Oslo Stock Exchange with ticker NORD.
 
For further information - www.nordiag.com

Find the enclosed documents here

Read the notice in Norwegian here