Our latest research update stated that we would not be surprised to see another directed share issue shortly. However, the free-of-charge rights issue of units consisting of series TO4 and TO5 surprised us, given the scale of the potential cash injections. The loan and the terms of the loan are the second surprise to us. Wyld recently paid back a loan of cSEK5 partly due to bad terms. However, we don’t find the terms of this new loan very attractive either. A 5% upfront cost, a yearly interest rate of c16% and c1.9m warrants could prove expensive. However, overall, we consider the financing solution advantageous for Wyld Networks, and given the current market conditions, the c10% discount in the directed share issue should be considered reasonable. A regular rights issue would likely demand a higher discount, resulting in a more extensive dilution. Further, the free-of-charge rights issue of units somewhat compensates for the dilution from the directed share issue to all existing shareholders.

If all the warrants of series TO4 and T05 were to be exercised, Wyld Networks would receive approximately SEK117m, based on a maximum subscription price (SEK14.24 for TO4 and SEK16.61 for T05). However, we have taken a more modest approach to the subscription of the TO4 and TO5 series. In both cases, we estimate a 98% subscription rate, given that the units are free of charge and the high subscription rate in previous warrant exercises. We forecast a cash injection of cSEK32 (estimated share price SEK12 x 70%) in April 2024 and a cash injection of cSEK40 (estimated share price SEK15 x 70%) in November 2024. Nevertheless, we estimate it is sufficient to take Wyld to break even.

As a result of the directed share issue, the rights issue and the loan issue, we adjusted our valuation for the new shares and estimated net proceeds. Our P&L estimates are left intact. Our adjusted Base case amounts to SEK15 per share (20), Bull case is SEK29 (43), and Bear case is SEK5(4).