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AAC Clyde Space to acquire U.S. SpaceQuest for 8.4 MUSD

2020-10-15 AAC Clyde Space AB (publ)
AAC Clyde Space ("AAC") has reached an agreement to acquire 100 % of the shares in SpaceQuest, Ltd in an all shares deal in a payment of 24,000,000 new AAC shares to the current owners of Space Quest. 8.4 MUSD is calculated on an AAC share price of SEK 3.15 per share and an exchange rate of 9.0 SEK to one (1) US dollar. The acquisition is subject to approval by the AAC Extraordinary General Meeting (EGM) and The Committee on Foreign Investment in the United States (CFIUS).

· SpaceQuest is a successful small satellite company operating in the world's largest and most dynamic space market.

· SpaceQuest operates a highly profitable Space as a Service (SaaS) business including mission operations of in-orbit satellites, allowing AAC Clyde Space to rapidly grow the SaaS business line.

· Through AAC's global reach, SpaceQuest's offering will be marketed to the global audience in need of mission critical data from space.

Commenting on the announcement AAC Clyde Space CEO Luis Gomes stated "It is great to have SpaceQuest join the AAC family. This acquisition represents the next step in our strategy to grow our operations in the US, and to expand our Space as a Service business. SpaceQuest's fleet of satellites and ground station network represent a great addition of capability to our SaaS offering and further strengthens our plans to change the economics of delivering data services from space."

Chairman Rolf Hallencreutz commented on the deal, "We are transforming AAC into a true leader in the small satellite field. With SpaceQuest we gain a commercially attractive Space as a Service business and a strong foothold in the U.S, the largest and most dynamic space market. Last week's announcement of the acquisition of Hyperion shows our commitment to providing state of the art technology. By bringing these two companies into the group we become a truly global supplier of space systems and a very attractive partner for companies who are looking to exploit opportunities based on data from space."

Founder and CEO of SpaceQuest Dino Lorenzini says "With the access of AAC world class designs SpaceQuest will be able to successfully grow in the very dynamic US space market. There is a growing market demand for quality suppliers of satellite technology. The combination of SpaceQuest's brand name, products and satellite infrastructure, along with the platform designs from AAC opens up new opportunities for us. The combination of SpaceQuest, Hyperion and AAC Clyde Space creates a powerful and synergistic capability."

SpaceQuest is a pioneer in small satellite technology that has built and launched 20 spacecrafts and supplies satellite components for many commercial aerospace companies and institutions, such as NASA, the Department of Defense, and Universities. It designed its first satellite 20 years ago. Currently Space Quest operates a fleet of satellites that hosts experimental payloads for several clients and collects AIS (Automatic Identification System) messages used in numerous maritime applications in a "Space as a Service" model.

With the acquisition of SpaceQuest, AAC extends its operations to the US with a new location in Virginia, growing its workforce to 107 staff at three different locations (Uppsala, Glasgow and Fairfax). The combined group's pro-forma revenue is approximately 51 MSEK in Q1-Q2 2020.

With the acquisitions of SpaceQuest and of Hyperion (see press release 17 October 2020), the AAC proforma group revenue for 2020 is estimated at 135 MSEK (approximately $15M), a 35% increase over the previous published estimate (see press release 18 September 2020). Adding two profitable companies to the AAC Group facilitates AAC's goal to be EBITDA and operational cash flow positive in the near future.

Background and rationale

The U.S. is the world's largest and most dynamic space market with a significant and growing demand for small satellites. Although AAC is already present in the U.S. market supplying subsystems and satellites to commercial and some institutional customers, it would benefit further from a more significant U.S. presence, particularly in relation to US government organizations. Through SpaceQuest, AAC gains local manufacturing and may benefit from longstanding business relations with U.S. customers.

The two companies' market positions, technology competencies, resource bases, product offerings and customers are very complementary. Bringing together the product lines and service offerings of both companies will offer the market a unique range of capabilities and products, spanning satellite components, platforms, missions, operations, and the supply of data services from space.

The merging of product lines offers great potential for a joint market approach. Chief among those is the manufacturing of satellites and components developed by AAC in the US, allowing AAC products to reach a wider market.

Moreover, SpaceQuest has an impressive infrastructure, including its own satellite constellation and ground station network currently delivering a highly successful satellite data service. These capabilities will be instrumental in developing AAC's offer of SaaS.

The transaction

The acquisition is to be paid for with 24,000,000 new shares in AAC, representing a consideration of 8.4 MUSD, equivalent to approximately 75.6 MSEK. The number of shares is calculated on a share price of 3.15 kronor per share and an USD/SEK exchange rate of 9.0. The total consideration of 75.6 MSEK may change depending on the development of share price until the acquisition is completed. Following the acquisition, the shareholders of SpaceQuest will own approximately 20 per cent of the total number of shares and votes in AAC excluding the shares intended to be issued to Hyperion shareholders.

Additional revenue-based earn-out amounting to a maximum of 0.9, 1.0 and 1.3 MUSD for 2021, 2022 and 2023 respectively based on a USD 3M annual growth, will bring the SpaceQuest 2023 revenue to $12M (approximately SEK 105 M). 2021 and 2022 earn-outs will be paid out in AAC shares while the 2023 earn-out will be paid out in cash. Earn-out 2021 represents a maximum of 2,314,285 shares and earn-out 2022 represents a maximum of 2,571,428 shares.

Lock-up undertakings

The AAC shares received are subject to a lock-up undertakings as follows: one third of the shares are subject to lock-up for 6 months, one third for 12 months and one third for 18 months.

Conditions

The acquisition, and the related share issue, is subject to standard conditions to closing, including approval by the General Meeting in AAC. The Board of Directors will call a General Meeting to resolve on the issues on 16 October 2020.

The acquisition also requires approval of the Committee of Foreign Investment in the United States (CFIUS). CFIUS is an interagency committee authorized to review certain transactions involving foreign investment in the United States in order to determine the effect of such transactions on the national security of the United States.

The parties expect to receive required approvals in the coming months.

About SpaceQuest Ltd.

SpaceQuest was founded by its CEO Dr. Dino Lorenzini in 1994 and is based in Fairfax Virginia. The company is a pioneer in small satellite technologies with capabilities in satellite and component designs, and manufacturing with extensive test facilities. It has completed 11 launch campaigns, 20 spacecrafts and multiple component qualification programs. It has designed, built, launched and operates it own fleet of satellites using its own and leased ground network infrastructure.

The company has an extensive client base, including companies such as LeoStella, Orbcomm, Iceye, Northrop Grumman, and organizations such as CSA, NASA, Air Force, Navy, as well as many Universities. The company has US Department of State and Commerce export licensing experience.

The company has a long history as a highly profitability company. Revenue for the first six months of 2020 amounted to 0.9 MUSD with an EBITDA margin of 20 %. Revenue for full-year 2020 is estimated to be 2.5 MUSD.

Dr. Lorenzini is a retired Colonel in the US Air Force where he held senior management responsibilities for several major space development projects, including the Apollo Lunar Module, the Peacekeeper Missile Guidance and Control System, NAVSTAR Global Positioning System, DARPA's Space Based Laser Program and the Strategic Defense Initiative. He is a Distinguished Graduate of the U.S. Air Force Academy. He received his Ph.D. and M.S. degrees in Astronautical Engineering from MIT and holds an MBA from Auburn University. Dr. Lorenzini will continue his work for SpaceQuest and the AAC Clyde Space Group. See www.spacequest.com.

Timeplan

· 16 October 2020: Notice to Extraordinary General Meeting in AAC is announced on the Company's webpage

· 5 November 2020: Extraordinary General Meeting in AAC

· November/December 2020: Settlement date depending on approval from CFIUS

Advisors

Setterwalls Advokatbyrå is legal advisor to AAC as regards Swedish law. Cooley and Latham&Watkins are legal advisors as to US law and PwC is financial advisor in connection with the transaction.

FOR MORE INFORMATION:
Please visit: www.aac-clyde.space or contact:
CEO Luis Gomes investor@aac-clydespace.com
CFO Mats Thideman, investor@aac-clydespace.com, mobile +46 70 556 09 73

The information in this press release is such that AAC Clyde Space AB (publ) shall announce publicly according to the EU Regulation No 596/2014 on market abuse (MAR). The information was submitted for publication, through the agency of the contact person set out above, at 19:00 CET on 15 October 2020.

ABOUT AAC CLYDE SPACE
The group AAC Clyde Space offers turnkey solutions and services from mission design to on-orbit operations, including reliable customizable satellite platforms in the range of 1 to 50 Kg and a full range of subsystems for cube and small satellites. With unrivalled flight heritage and end-to-end service, AAC Clyde Space enables customers to reach their mission goals through a single, trusted point of contact.

AAC Clyde Space's shares are traded on Nasdaq First North Premier Growth Market. Erik Penser Bank AB, e-mail certifiedadviser@penser.se, telephone +46 8 463 83 00, is the Certified Adviser.

25 November 2021
Regulatory

2021-11-25 AAC Clyde Space AB (publ)
The previous owners of Omnisys Instruments AB converts a third of their warrants into shares in AAC Clyde Space. AAC Clyde Space has consequently issued 5 780 033 shares, bringing the total number of shares in AAC Clyde Space to 192 200 029.

25 November 2021
Regulatory

2021-11-25 AAC Clyde Space AB (publ)

22 November 2021

2021-11-22 AAC Clyde Space AB (publ)
AAC Clyde Space AB, a leading new space company, has won an order from U.S. Aegis Aerospace to supply its Starbuck power systems and battery solutions worth 500 kUSD (approx. 4.5 MSEK) for a satellite mission carried out on behalf of the U.S. Department of Defense (DoD).

15 November 2021

2021-11-15 AAC Clyde Space AB (publ)
AAC Clyde Space, a leading New Space company, has named Chris Fauquier, currently COO at SpaceQuest, as CEO for the US subsidiary. The move follows Dr. Dino Lorenzini's transition to the role of Group Chief Science Officer (CSO) of AAC Clyde Space. Dr. Lorenzini is the founder of SpaceQuest and was until now its CEO.

09 November 2021
Regulatory

2021-11-09 AAC Clyde Space AB (publ)
AAC Clyde Space and its partners, have successfully completed the first phase of the xSPANCION project with a successful Preliminary Design Review, conducted jointly with the European Space Agency (ESA). Together with the partners, the company has agreed to accelerate the project by kicking off the Spacecraft Manufacturing Preparation Phase. To achieve this, a Phase 2 has been introduced to the project valued at 5.6 MEUR (approx. 57.3 MSEK), of which the UK Space Agency, through the ESA's Pioneer Partnership Projects, will contribute 2.8 MEUR (approx. 28.7 MSEK).

26 October 2021

2021-10-26 AAC Clyde Space AB (publ)
AAC Clyde Space AB, a leading New Space company, has entered a Memorandum of Understanding to cooperate with ORBCOMM and Saab to develop the next generation of global maritime communication services based on a VHF Data Exchange System (VDES). The parties, collaborating under a new brand named AOS, aim both for services directed to end customers as well as for safety of navigation services. The goal of the consortium is to create a global maritime communication network enabling ship-to-ship and ship-to-shore communication everywhere on the globe.

14 October 2021

2021-10-14 AAC Clyde Space AB (publ)
AAC Clyde Space, a leading new space company, has been contracted by OHB Sweden to deliver its Sirius command and data handling unit worth approx. 545 kEUR (approx. 5.6 MSEK) to ESA's Arctic Weather Satellite.

30 September 2021

2021-09-30 AAC Clyde Space AB (publ)
AAC Clyde Space, a leading New Space company, has been selected to deliver the Sirius Command and Data Handling system to a new client. AAC will provide a standardized system as qualification model in Q2 2022 in a contract valued at 320 000 EUR (approx. 3.3 MSEK)

29 September 2021
Regulatory

2021-09-29 AAC Clyde Space AB (publ)
AAC Clyde Space, a leading New Space company, has recruited Stefania Mandirola as Chief Operating Officer as part of a strengthening of its management team to meet the broader needs of the group that now spans six companies on three continents.

28 September 2021
Regulatory

2021-09-28 AAC Clyde Space AB (publ)
AAC Clyde Space, a leading New space company, has been selected by OHB Sweden to deliver core avionics worth approx. 797 kEUR (approx. 8.2 MSEK) to ESA's Arctic Weather Satellite. The order has been preceded by a tightening of the original requirements of the systems.

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IR CONTACT

Mats Thideman CFO and Deputy CEO
+46 70-556 09 73 mats.thideman@aac-clydespace.com

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