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MultiPower ASA

19 November 2008

MultiPower ASA

('MultiPower' or the 'Company')

Notice of Extraordinary General Meeting

The board of MultiPower has today sent shareholders a notice of Extraordinary General Meeting ('EGM') to be convened for 12.00 Central European Time on Thursday 4 December 2008 at the Company's offices, Karenslyst allé 9A, 3rd Floor, Skøyen, Norway.

The principal business of the meeting is to resolve the entering into a significant distribution agreement with a related party, elect two new members to the board of MultiPower, to approve an issue of shares in the Company and to grant the board authority to issue shares.

Enquiries:

MultiPower   Jens M. Teigen / Thomas A. Kielland +4790045073 / +4740204428   

      

Hanson Westhouse Limited Bill Staple / Martin Davison + 44 20 7601 6100

An unofficial English translation of the notice sent to shareholders is here set out in full:

To the shareholders of MultiPower ASA

NOTICE OF AN EXTRAORDINARY GENERAL MEETING

Notice is given of an extraordinary general meeting of MultiPower ASA to be held on

Thursday 4 December 2008 at 12.00 hours CET

in the company's offices at Karenslyst allé 9A, 3rd floor at Skøyen (marked Fortel).

The following matters will be dealt with:

 

1. Election of person to chair the meeting

 

2. Election of person to co-sign the minutes

3. Approval of the notice and the agenda

 

4.Transaction with related party - U2-Soft AS

The board has decided that the entering into of a distribution agreement with U2-Soft AS for distribution rights to the Middle East and Africa shall be presented for the general meeting's formal approval. The company's auditor and the board have in this relation prepared a report according to section 3-8 of the Norwegian public limited liability companies act. Further details of this transaction are set out below. 

 

5. Election of board members

It is proposed that the general meeting elects the following board: 

Ian W. Kenworthy (new chairman), 

Jens M. Teigen (new board member); and 

Ellynor D. Brørvik (existing board member). 

Chairman: Mr. Ian W. Kenworthy (65)

Mr. Kenworthy is a partner in the law firm Steenstrup Stordrange DA and is admitted to the Norwegian Supreme Court. His previous work experience includes among others General Counsel in the legal department at Den norske Bank, temporary substitute as Executive Vice President at the Oslo Stock Exchange as well as member of the control committee from the establishment to the close down this year. Mr. Kenworthy is also member of the disciplinary committee of the Norwegian bar association.

Director: Mr. Jens M. Teigen (49)

Mr. Teigen is through his company Springfield AS the largest shareholder of MultiPower ASA. He has for the past 20 years worked as an entrepreneur and investor in the Telecom industry. Mr. Teigen is a member of several boards of directors and has been a central player in the liberalization and privatization of the Telecom sector in Norway.  He has been acting as interim CEO since 16 October 2008.

6. Remuneration of director

The board proposes that the newly elected chairman, Ian W. Kenworthy, shall receive an annual remuneration of NOK 120,000 excl. of vat for his work as chairman.

 

7. Alteration of the company's mission statement

In order to reflect the nature of the company's business in a better manner, the board proposes to alter section 2 of the company's articles of association to the following:

'The nature of the company's business is wholesale of products to distributors and retailers, and development and patenting of new products, where the main product category is related to digital communication devices. The company shall be able to make investments in shares and other investment objects.'

 

8. Power of attorney to the board for an increase in capital by issuance of new shares

The board proposes that the general meeting resolves to issue a power of attorney to the board to issue shares as follows:

The board is granted a power of attorney to increase the share capital of the company through the issuance of new shares up to an aggregate nominal value of NOK 2,351,207, representing 50 per cent of the nominal value of the ordinary share capital of the company, through one or more share issues. The power of attorney is valid for two years from the conclusion of the general meeting. The pre-emptive rights of the existing shareholders may be derogated from. The power of attorney replaces all existing powers of attorneys.

Given the weak financial situation of the company, the status of being in a substantial growth phase, and the current situation in the financial markets, the board wish to have the freedom of action to facilitate capital increases in the company by a power of attorney to the board enabling financing to be secured at short notice. 

 

9. Issue of shares

The board proposes that the general meeting resolves to issue shares as follows:

 

1.   The share capital of the company is increased with minimum NOK 500,000 and maximum NOK 676,562.475 from NOK 4,702,414.25, to minimum NOK 5,202,414.25, and maximum NOK 5,378,976.725 through the issue of minimum 20,000,000 and maximum 27,062,499 new shares with a par value of NOK 0.025.

 

2.   The subscription price per share is NOK 0.06, in aggregate minimum NOK 1,200,000 and maximum NOK 1,623,749.94.

 

3.   The preferential right of the existing shareholders are derogated from. The new shares shall be subscribed as follows:

Name	Number of shares	Receivable (NOK)
RAB Special Situations (Master) Fund Ltd. Springfield AS Lillian B. Olsson	13,531,250 6,364,583 2,500,000	811,875.00 381,874.98 150,000.00
GladiNOK AS	1,833,333	109,999.98
IT-Venture AS Tore Lervik Quantum Invest AS	1,666,667 833,333 333,333	100,000.02 49,999.98 19,999.98
Total:	27,062,499	1,623,749.94

 

 

4.   The shares shall be subscribed on 4 December 2008. Subscription of shares shall take place in the minutes of the general meeting.

 

5.   Up to NOK 1,623,749.94 of the share capital contribution shall be settled by way of a set-off of the subscribers' receivables against the company in the same amount. The set-off is effected upon the subscription of the shares.

 

6.   The new shares are entitled to dividend from the registration of the private placement with the Register of Business Enterprises.

 

7.   Section 4 of the articles of association is amended so that it states the share capital, the number of shares and the par value of the shares after the private placement.

The private placement is required in order to strengthen the liquidity position of the company. 

MultiPower is in need of funding in order to cover its costs related to the growth in sales generated from the distribution agreement with U2-Soft which gives access to 22 new markets in the Middle East and Africa.

Due to timing and to avoid substantial costs (including in connection with the preparation of a prospectus in connection with a rights issue) and given the immediate requirement for working capital, the placing has been restricted to a number of institutions, directors and individuals who are already direct or indirect shareholders of the company and who knows the company well.

Subscription of shares in the company implies inherent risks. Among other things, the stressed economic position of the company should be emphasised.

The annual accounts of the company and the unaudited account for the first half year are made available at the company's address and on the website www.multipowerasa. The report from the auditor is enclosed hereto.

* * *

Shareholders unable to attend the meeting may appoint a proxy (a form of direction has been sent to UK holders of Depository Interests).

Oslo, 18 November 2008

On behalf of the board in MultiPower ASA

Øystein Kvarme

Chairman

Further Re Related Party Transaction

Entering Into Distribution Agreement with U2-Soft AS (Formerly Soft City Holdings AS)

MultiPower ASA ('MTP') have, conditional on the approval by shareholders at an Extraordinary General Meeting of the Company, entered into a distribution agreement with U2-Soft AS (formerly Soft City Holding AS) ('U2'). The distribution agreement ('Agreement') gives MTP the distribution rights for a range of digital communication products under U2's agreement with Itsalat International Co ('i2'), a leading mobile distributor in the Middle East and Africa.

Background on U2-Soft AS

U2 was incorporated on 19 October 1994 and is involved in the design, production and distribution of content, applications and accessories for digital handheld devices with a current main focus on mobile phones. 

U2 is based in Oslo and is controlled by IT-Venture AS, which is controlled by Jens M. Teigen and Thomas A. Kielland. Mr. Teigen owns 100% of Springfield AS, which is a substantial shareholder in MTP. Messrs Teigen and Kielland are interim chief executive officer and non-executive director respectively. Ellynor D. Brørvik also has an interest in IT-Venture. Mr Teigen is being proposed as an executive director of the Company at the Company's EGM.

U2's principal activity is the fulfilment of a distribution agreement with the Saudi Arabian company Itsalat International co (known as i2-Group), and international licensing of the edutainment computer games 'Josephine'. 

Rationale Of Proposed Transaction

The Company has been loss making since its admission to AIM. Historically the Company has failed to effectively roll-out its existing product portfolio or expand its product portfolio to meet demand in a fast moving and competitive market place.

The Agreement gives the Company access to more than 19,000 points of sales in 22 countries in the Middle East and Africa. The board believe that the Agreement is considered a cost-effective method of quickly accessing these substantial markets. Furthermore, the Company strengthened its product portfolio in anticipation through agency agreements to utilise its enlarged distribution network.

A full list of the Company's current expanded product portfolio is available on the Company's website (http://www.multipowerasa.com/site/MultipowerProducts.pdf). 

The Agreement

Under the terms of the Agreement, the Company will act as U2's agent in the Middle East and Africa promoting, marketing and selling the products subject to the agreement. The products subject to the agreement are all physical products to be sold over the counter in i2's from time to time prevailing distribution network.

The Company is required to pay an up front fee of NOK 1,500,000 to U2 by way of contribution to U2's expenses in negotiating its agreement with i2. The one-time fee has been settled. This is considered a low entry cost compared to the equivalent expense the Company would have to incur to enter these market otherwise. The first order has been completed for deliveries to Saudi Arabia, one order has been received from Kuwait, and more orders are expected soon. Notwithstanding the above, the agreement can be unwound if shareholders do not approve the Agreement at the forthcoming EGM. In this instance the NOK 1,500,000 would not be recoverable from U2. The payment is substantially less than the costs incurred by U2 in reaching its agreement with i2.

The Company will receive a 50% share of gross profits generated under the Agreement with U2 receiving the remaining 50%. In addition, the other principal commercial elements are as follows:

• Access to i2's distribution network, which currently comprises about 340 own stores and all together more than 19,000 points of sales in 22 countries in the Middle East and Africa.

• The agreement is exclusive for MTP's disposable batteries.

• The term is for. 5 years with a renewal option. This reflect U2's agreement with i2

• MTP shall act as U2's representative, and shall also be responsible for billing.

• U2 shall have the top level responsibility for the implementation of MTP's rights under the agreement.

• Payment of U2's revenue share shall not fall due until payment is received from i2 by MTP.

• The agreement may be terminated by U2 if 5% or more of a single delivery has product defects, or if MTP fails to comply with delivery terms for 2 shipments during a calendar year. It is also stipulated that the total commission to U2 shall be at least NOK 1 million in 2009, NOK 20 million in 2010, NOK 30 million in 2011 and NOK 40 million in 2012 and the years thereafter.  

Comment

Øystein Kvarme, Chairman of the Company said: 'this deal represents a very good opportunity for MultiPower to significantly increase its revenue and broaden its distribution network.'

RELATED PARTY TRANSACTION

The Agreement is a related party transaction as defined in Rule 13 of the AIM Rules.

Where a company whose shares are quoted on AIM enters into such a transaction, the requirement is for those directors of the company who are independent of the transaction to consider, after consultation with the company's nominated adviser, whether the terms of the transaction are fair and reasonable insofar as the company's shareholders are concerned.

Øystein Kvarme and Cecilie Vanem have no interest in U2 and are therefore considered independent (the 'Independent Directors'). The Independent Directors, having consulted with Hanson Westhouse Limited, consider that the terms of the Agreement are fair and reasonable insofar as the Shareholders are concerned.

The Agreement is being put for approval to the general assembly at the EGM. As related parties, the following will abstain from the vote, Springfield AS, Megard AS and Xantin Invest AS.

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