Lehto Group Plc ("Lehto" or the "parent company") has today signed a letter of intent (the "Letter of Intent") concerning the sale of all the outstanding shares in its 100% owned subsidiaries Lehto Asunnot Oy, Lehto Tilat Oy, Lehto Components Oy and Insinööritoimisto Mäkeläinen Oy (the "Target Companies") (the "Transaction"). The Target Companies subject to the Transaction comprise in practice all of the current business operations of Lehto Group. In connection with the Transaction, also all assets, liabilities, resources, and personnel of the parent company that are material for the business of the Target Companies are contemplated to be transferred to the Purchaser (as defined below).

Lehto's counterparty in the Letter of Intent is a regulated European fund management company that is specializing in the real estate sector and has raised approximately EUR 5 billion of equity capital via a series of funds, one of which (the "Purchaser") would acquire the Target Companies on completion of the proposed Transaction. Pursuant to the Letter of Intent, immediately following the completion of the proposed Transaction the Purchaser intends to invest EUR 10 million of cash equity in the acquired business, which according to Lehto's view would cover the financing needs of all the Target Companies' current projects. In addition, the Purchaser intends to allocate additional equity financing for Target Companies' future projects thereafter subject to market opportunities.

According to the Letter of Intent, the debt-free value of the Target Companies is EUR 11.3 million in the aggregate and after deducting the bank liabilities of Lehto, Lehto would receive a cash purchase price of approximately EUR 3 million for the sale of the Target Companies upon completion of the proposed Transaction.

After completion of the proposed Transaction the parent company would retain cash, sundry assets and sundry liabilities of approximately net EUR 5-8 million in the aggregate with cash and cash equivalents representing approximately EUR 1-2 million of such net figure. In addition, the parent company would retain the convertible bond of EUR 15 million. The company expects to summon a meeting of the convertible bond holders in relation to the proposed Transaction, and it is possible therein that the bond holders will vote on certain proposed amendments to the terms and conditions of the convertible bond, including a potential conversion of the convertible bond into equity of Lehto. Assuming that the convertible bond, or a material proportion thereof, will not be converted into equity of Lehto, the retained net assets of Lehto after completion of the proposed Transaction are expected to be negative.

Lehto and the Purchaser intend to complete the Transaction during the last quarter of 2023. The Board of Directors of Lehto has initiated an assessment as to the business opportunities of the remaining parent company and expects to decide on the future strategy of Lehto by the time of the consummation of the Transaction.

The exact purchase price payable to the parent company and other details on the final terms and conditions of the proposed Transaction will be announced through a stock exchange release upon the conclusion of the final transaction agreement, after which the Board of Directors of Lehto will convene an Extraordinary General Meeting to decide on the approval of the Transaction.

Lehto announced on 30 January 2023 that it has started negotiations on structural and ownership arrangements in order to secure financing for the execution of its strategy and projects. During the year 2023 the management and Board of Directors of Lehto have been pursuing a number of different alternatives in order to find a best possible solution for Lehto and all of its shareholders.

The proposed Transaction would enable continuation of Lehto's business operations, and even though the Transaction causes a significant one-time loss and a write-down of certain balance sheet items of Lehto, it is the view of Lehto that the proposed Transaction is the best possible arrangement currently available for Lehto and all of its shareholders in the prevailing difficult market conditions.

"We are pleased with the signed letter of intent. We have found a business partner for the Target Companies' business who is solid, reliable and recognizes their future potential. The business partner has significant financial resources and a track record of investing in real estate backed businesses. From the perspective of the current shareholders of Lehto, the closing of the proposed Transaction is essential for the remaining parent company to be able to explore new business opportunities going forward. We believe the Transaction is the best possible arrangement currently available for Lehto and its shareholders in this challenging market situation in the construction industry", says Chairman of the Board, Eero Sihvonen.

The signing of the final transaction agreement is subject to, among other things, the completion of the Purchaser's due diligence review to the satisfaction of the Purchaser, approval for the transfer of certain liabilities of Lehto to the Target Companies by Lehto's financing partners and the convertible bond holders' meeting supporting the Transaction. The completion of the Transaction is also subject to other uncertainties typical for M&A transactions. The Letter of Intent signed today does not obligate the parties to complete the Transaction or any similar arrangement.

Further information:
Juuso Hietanen
CEO
Tel. +358 50 343 4023