Kernel S A : Statement Regarding Additional Share Placement by Kernel Group of Companies

Due to recent discussions among certain minority shareholders of the company in the public domain concerning the issuance of new shares, we wish to communicate the following.

As of July 31, 2023, the credit portfolio of the Kernel group of companies exceeded USD 1.4 billion. Kernel is currently in the process of restructuring a significant portion of its debt.

Creditors have presented several conditions, one of which is to raise equity capital of at least USD 60 million. On August 18, 2023, we announced this creditor requirement, and on August 21, 2023, the Board of Directors decided to issue additional shares. We informed about this in company's current report.

The company has decided to issue shares exclusively among existing shareholders who are evidently willing to support the company in the long term. Additionally, the low probability of attracting external investors to the company was taken into account, given the ongoing missile attacks on the company's assets by the russian aggressor. Furthermore, considering the anticipated future delisting of the company's shares, new shares will not be admitted to trading on the exchange. For these reasons, the company has declined a public share offering to external investors.

Furthermore, Kernel initiated the share issuance solely among so-called "qualified" investors. This decision fully complies with EU legislation and is a common European market practice that allows for swift share issuance without the need for prospectus preparation, extensive financial and legal costs, market intermediaries, roadshows, and the like. All "qualified" investors who submitted their applications have the right to participate in the capital-raising auction. EU law prohibits the participation of "non-qualified" investors in such cases.

Please note that Kernel has previously conducted three additional share issuances after its IPO. Each time, the issuance took place exclusively with the participation of "qualified investors" within 1-2 days book building. No complaints or objections from minority shareholders have ever been received.

Moreover, the possibility of additional share issuance in case of necessity has been in existence since September 23, 2022, when extraordinary shareholder meeting adopted relevant decisions precisely for such purposes - the ability to swiftly raise capital as needed, taking into account the unpredictability of the situation in Ukraine.

Furthermore, the Board of Directors has decided to conduct an offer for additional share issuance in the form of a Dutch auction. In this format, the price and quantity of shares are determined by the shareholder participants, not the company itself. This decision was primarily influenced by Kernel's desire to raise the necessary amount in accordance with creditor requirements, rather than sell shares at a specific price. The company acknowledged the difficulties in setting a share price itself, given the ongoing conflict in Ukraine, where our production and export facilities are regularly targeted by Russian missiles, and maritime exports are blocked.

We understand that, unfortunately, many of our shareholders have incurred losses on their investments in the company's shares due to the sharp decline in share price following the full-scale invasion.

Kernel emphasizes that all of the company's actions regarding share issuance are in compliance with current EU legislation. Leading legal firms in Luxembourg and Poland have overseen the process of capital raise, preparation, and conducting of the auction. The Board of Directors was solely guided by the interests of the company in making the decision to issue new shares. We are fully confident in our full compliance with European legal framework.