Rights issue 2022

Zhoda Investments (“Zhoda”) has resolved to conduct a preferential rights issue of SEK 13 million. The issue will enable the company to take the successful wine operations in Croatia to the next level, to maintain and with time develop the oil operations in Ukraine and to strengthen the financial position of the company. The Board of Directors and Management have declared their intent to subscribe for their preferential rights, which amounts to SEK 6.3 million or 49 per cent of the maximum issue.

“In a short period of time, Zhoda has established Testament Winery as one of Croatia’s leading and most innovative wineries. We have built a strong brand and managed to double sales each of the four last years to 200 000 bottles in 2021. The situation for the oil operations in Ukraine is more challenging. However, although there are disruptions, the oil field is intact and is producing crude oil. All oil that we produce is consumed in Ukraine, and as such we are contributing to reducing Ukraine’s energy dependency on Russia and Belarus. The issue with preferential rights for current shareholders will give us the financial strength to create new significant value”, says Robert Karlsson, CEO of Zhoda Investments.

Main terms in the rights issue

At the annual general meeting in Zhoda Investments held on 23 June 2021, the shareholders resolved to provide a mandate to the board of directors to conduct a preferential rights issue of shares. Based on this mandate, the board of directors has resolved to conduct an issue with the following main terms:

The issue, made with preferential rights, can raise a maximum of SEK 13.1 million
For each 3 A shares and/or B shares held, the shareholders receive subscription rights with the right to subscribe for 2 A shares and 2 B shares respectively
The subscription price for each A share and B share amounts to SEK 0.05 per share
The subscription period starts on 28 April 2022 and lasts until 12 May 2022, with a record date on 26 April 2022
Upon full subscription, the share capital will increase with SEK 7,000,000, from SEK 10,500,000 to SEK 17,500,000. The number of shares will increase by no more than 261,257,458, from 391,886,187 shares to 653,143,645 shares. The new shares will amount to 40 per cent of the total outstanding amount of shares following the issue. Prior to the issue, the company has 15,999,900 A shares with 10 votes per share and 375,886,287 B shares with one vote per share
The Board of Directors and Management of Zhoda Investments have declared their intent to subscribe for their preferential share of the issue, which is SEK 6.3 million, equivalent to 49% of the total maximum issue

Valuation of Zhoda in the rights issue

The company’s valuation in the issue is significantly lower than the company’s equity.

The subscription price amounts to SEK 0.05 per share, which implies a pre-money valuation of approximately SEK 19.6 million.
Equity per share attributable to Zhoda’s shareholders as of 31 December 2020 in the latest published annual report amounted to SEK 0.21 per share and equity to SEK 81.5 million

The company’s shares are traded at Bequoted’s OTC market.

Future development and use of funds

Zhoda Investments’ Board of Directors and Management have identified several opportunities to continue to create significant value in the wine operations. Testament Winery is Croatia’s first Swedish winery. The winery is already top 20 in size on Croatia’s fragmented wine market.

The objective is to create Croatia’s best wine and to become the country’s top exporter of premium wines. Early on, Testament Winery recruited two of Dalmatia’s leading winemakers and their wines have in a short period of time become well established brands in Croatia. The wines have earned several gold medals in Decanter, the world’s largest and most influential wine competition, and are served in six Michelin star restaurants.

Croatia is one of the original wine countries, boasting the world’s oldest continuously cultivated vineyard, now a part of the UNESCO world heritage. Beaten only by the Vatican State and Andorra, Croatia is the world’s third largest consumer of wine per capita.

Zhoda has been active in the production of oil in Ukraine for several years. During the past few years, Zhoda has received SEK 18 million in dividends from these operations. Following Russia’s invasion of Ukraine, there is an uncertainty connected to the oil operations. However, the oil field is intact and producing, although with some disruptions. It is the opinion of the company that the operations will return to normal once the situation in the country has stabilized.

An investment in Zhoda is standing up for Ukraine’s sovereignty as well as reducing the country’s energy dependence on Russia and Belarus. All oil produced at Zhoda’s field is consumed in Ukraine.

The funds from the rights issue will be used to: 1. Develop the wine operations towards the vision of a production of 1 million bottles per year, 2. To maintain and with time develop the oil operations, 3. Strengthen the balance sheet by settling a SEK 4.5 million short-term bridge financing from the company’s shareholders and 4. To cover working capital requirements.