Schmolz+Bickenbach - Thoughts

All,

Some thoughts on Schmolz’ shareholder agreement yesterday:

1) It’s fundamentally positive to have any agreement at all.

2) The thus far continued opposition by FINMA to grant a restructuring exemption still makes a RI materially above the current share price unpracticable. Issuing the new shares above market would have maximised Haefner’s stake - and control is what he wants. The company has filed an appeal and the decision is awaited before the morning of Monday 9th.

3) If Liwet - having vaguely indicated to support the rights issue with a “substantial sum” - could hold the keys to triggering Haefner’s CoC when a majority of free float shareholders do not take up their rights, by then closing not to take part in the “international auction”.

4) But Haefner is doubling down, offering bridge financing to the company in case his bid for control triggers a CoC.

Overall, the result is:

- The Rights Issue has become more likely.

- The chances of a CoC are slightly reduced.

- The fallout from triggering a CoC is contained.

Wolfgang