Element ASA sells all OSEAD funds/CMT units for EUR 1.300.000 in cash

(OSLO, NORWAY, 25 OCTOBER 2019) ELEMENT ASA (ELEMENT, OSE: ELE) HAS TODAY ENTERED INTO AN AGREEMENT TO DIVEST THE INDIRECT OWNERSHIP IN COMPAGNIE MINIÈRE DE TOUISSIT SA (CMT), BY SELLING ITS 396 UNITS IN OSEAD FUND TO MANCO GROUPE OSEAD S.A (MANCO) FOR A TOTAL CONSIDERATION OF EUR 1,300,000. THE UNITS COMPRISE 3.96% OF THE CURRENTLY OUTSTANDING UNITS IN THE FUND.

“We´re pleased to announce the divestment of the indirect ownership in CMT, representing another important step in the restructuring of the company towards a focused digital strategy. Following this divestment, we will continue the process of divesting our other non-core assets, “ says Geir Johansen, Chief Executive Officer of Element.

In August 2018, the company entered into a call option agreement with Manco, whereby Element was granted a right to acquire up to 50% of the units in the fund in order to gain an indirect ownership in Compagnie Minière de Touissit SA (CMT), the second largest mining company in Morocco. For further information about the call option agreement and CMT, please see https://newsweb.oslobors.no/message/457310. Element has subsequently acquired the units pursuant to the call option agreement.

In March 2019, the company decided to not exercise the call option and therefore not to acquire any further units in the fund. For further information on the decision to not exercise the call option, please see https://newsweb.oslobors.no/message/473401.

“The CMT divestment follows our decision to not exercise the option to further increase the ownership in a large mining operation that would require significant capital deployments. We´re today delivering on the strategy of value creating exits of non-core assets and to refocus our resources toward digital initiatives, “ says Thomas Christensen, Chairman of Element.

Further information about the sale of the units is given in stock exchange announcement, pursuant to Section 3.4 of the Continuing Obligations of the Oslo Stock Exchange.

DESCRIPTION OF THE TRANSACTION
The agreement for the sale of the Units to Manco has been entered into and consummated today. Under the agreement, Element is entitled to a consideration of EUR 1,300,000 (corresponding to a uinit price of EUR 3,282.83 per unit, whereby EUR 1,000,000 has been settled in cash by Manco and EUR 300,000 has been settled by release of funds held in separate restricted account pursuant to the call option agreement.

The company may become entitled to an additional purchase price if Manco sell any units in the fund for a unit price exceeding the Unit Price during the first 12 months after the date of the agreement. If Manco makes such sale within six months, Element shall receive 50% of the consideration exceeding the unit price. If Manco makes such sale after six months, but before 12 months, Element shall receive 30% of the consideration exceeding the unit price.

DESCRIPTION OF THE FUND
The fund is a securitization fund within the meaning of the Luxembourg. The fund owns 100% of Osead S.A which owns 100% of Osead Maroc Mining which in turn holds 37% of the shares of CMT.
The fund does not have any directors nor employees.

The fund is not under any obligation to prepare annual accounts and the fund has therefore not prepared any annual accounts.

THE SIGNIFICANCE OF THE TRANSACTION FOR THE COMPANY
The sale of the units imply that Element has now completely divested its investment in CMT, and will also provide Element with additional EUR 1,3 million of capital which can be used for investments and funding of the company's operations. The transaction will improve the net result of Q4-19 by approximately USD 0.4 million.

OTHER
The transaction will not involve any specific rights to the benefit of the members of the Board of Directors or the executive managements of Element or the fund, nor is any such agreements expected to be entered into.

For further information, please contact:

Geir Johansen
CEO
E-mail: gj@elementasa.com
+47 4771 0451

Thomas Christensen
Chairman
+47 9225 5444